Crypto Estate Planning Lags, Putting Billions at Risk of Being Lost to Heirs

The rapid expansion of cryptocurrency ownership in the United States is exposing a critical weakness in traditional estate planning: many digital assets may never reach their intended beneficiaries. Attorneys who specialize in estates say investors frequently overlook basic steps—such as updating wills, creating trusts or sharing access credentials—that are necessary for heirs to claim Bitcoin, Ether and other tokens.

Growing ownership, limited preparation

Recent polls by Gallup and Pew Research Center estimate that 14% to 17% of U.S. adults have held cryptocurrency. At the same time, the National Association of Unclaimed Property Administrators reports that roughly one in seven Americans leaves property unclaimed. Estate lawyers warn that those two trends are converging, placing an unprecedented amount of digital wealth in danger of permanent forfeiture.

Part of the problem is simple procrastination. A Caring.com survey found only 24% of Americans have a will, and nearly one-quarter of that group has not revised the document since it was drafted. Older wills seldom mention digital assets, leaving executors without explicit authority to retrieve tokens from exchanges or personal wallets.

Legal gaps can force heirs into court

Without digital-asset language, heirs often must seek court approval before an estate’s executor can obtain private keys or negotiate with cryptocurrency platforms. Attorneys say the approval is usually granted, but the process consumes time and legal fees. During the wait, crypto prices can move sharply—potentially eroding the value of the inheritance.

Trusts can bypass probate delays

Many estate advisers now recommend placing cryptocurrency in a revocable living trust. Because a trust survives the owner’s death, the designated trustee gains immediate control of the assets, avoiding the six-to-eight-month probate period that a standard will typically faces. A pour-over will can complement the arrangement by transferring any assets not already in the trust at the time of death.

Exchange-traded funds that track spot prices, such as the iShares Bitcoin Trust (IBIT) and the Fidelity Ethereum Fund ETF (FETH), offer another workaround. Since ETFs are held like conventional securities, they are easier for executors to locate and distribute, though they do not eliminate the need for clear instructions.

Access credentials remain a weak link

Possession of private keys or recovery phrases is essential to unlock most cryptocurrencies. Estate planners recount cases in which families lost holdings worth tens of millions of dollars because no one knew the decedent’s passwords. Specialists advise storing written directions in a secure location—such as a safe-deposit box, a home safe or an attorney’s files—and ensuring at least one trusted individual knows how to find them. Sensitive data should not be placed directly in a will, because probate documents are public records.

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Choosing the right fiduciary

The person selected to administer an estate may be adept at handling property and investment accounts yet unfamiliar with blockchain technology. Market volatility adds another layer of urgency; a steep downturn while a fiduciary learns to transact could wipe out significant value. In some instances, institutional trustees decline responsibility for digital assets, forcing families to appoint a special trustee and incur additional costs.

Tax exposure and record-keeping

Cryptocurrency appreciation can trigger substantial estate or income tax obligations. For estates settled in 2025, the federal exemption stands at $13.99 million per individual. Several states impose their own estate taxes as well. Investors with large positions, sometimes exceeding $50 million, are using limited liability companies and irrevocable trusts to shift appreciation out of their taxable estates.

Accurate cost-basis records are vital, especially for lifetime gifts. Without documentation, recipients may struggle to calculate capital gains when they sell inherited tokens. The Internal Revenue Service emphasizes the need for thorough records on its page devoted to estate and gift taxes, and attorneys say the same principles apply to digital assets.

As cryptocurrency moves further into the financial mainstream, experts caution that estate plans must evolve in tandem. Failing to incorporate wallets, keys and tax strategies can leave families entangled in lengthy court proceedings—or, worse, permanently locked out of generational wealth.

Crédito da imagem: Koron | Getty Images