Approximately one in seven adults leave unclaimed property behind, according to the National Association of Unclaimed Property Administrators. While the recent sell‑off in bitcoin and ether dominates headlines, a quieter but equally consequential issue is emerging: how crypto holdings are treated in estate planning. As digital assets become more mainstream, the risk that heirs cannot access or inherit these assets is poised to grow dramatically.
Surveys from Gallup and Pew Research indicate that between 14 % and 17 % of U.S. adults have owned cryptocurrency at some point. Yet many owners have not incorporated their digital holdings into a will or trust, and they often fail to disclose the means of access to their heirs. The result is a growing pool of “orphaned” crypto that could be worth millions.
“Leaving traditional assets such as cash or mutual funds in a will is straightforward, but cryptocurrency introduces a layer of technical complexity that can lead to forfeiture,” says Azriel Baer, partner in the estate‑planning and administration group at Farrell Fritz.
One partial remedy is the rise of crypto‑focused exchange‑traded funds (ETFs). The Securities and Exchange Commission’s approval of spot bitcoin ETFs in 2024—most notably the iShares Bitcoin Trust (IBIT)—and subsequent spot ether products such as the Fidelity Ethereum Fund (FETH) give investors exposure to the asset class without the need to manage private keys directly. By holding the ETF, investors reduce the likelihood that their holdings become inaccessible after death.
Nevertheless, ETF exposure does not replace a comprehensive estate plan for those who retain direct ownership of digital coins. Below are the most common pitfalls and the steps owners should take now to protect their legacy.
Wills often omit digital‑asset provisions
Only 24 % of Americans have a will that outlines how their estate should be managed after death, according to a Caring.com survey. Of those, nearly one‑quarter have never updated the document since it was first drafted. Outdated wills typically lack language granting executors the authority to access crypto wallets, leaving heirs facing a court battle to obtain the necessary permissions.
“It’s very common for people to go a decade or more without updating their estate documents,” notes Patrick D. Owens, shareholder at Buchalter. “When that happens, you’re effectively behind the curve.”
Without explicit digital‑asset clauses, courts must intervene to authorize an executor’s access to encrypted wallets. While most judges will eventually grant such authority, the process incurs legal fees and delays, eroding the value of the assets—particularly in a volatile market.
Probate can lock up crypto assets
A traditional will is inexpensive to prepare but can subject assets to probate, a public and time‑consuming process. Many attorneys now recommend pairing a revocable living trust with a “pour‑over” will. By transferring crypto holdings into a revocable trust, the designated trustee gains immediate access upon the owner’s death, bypassing the probate backlog that can last six to eight months or longer.
Baer explains, “If the market is declining, waiting months for probate could mean selling at a substantial loss. A revocable trust eliminates that risk and preserves privacy.”
Failing to disclose private‑key information can cost millions
Having a will does not guarantee that heirs will know how to locate or use private keys—the cryptographic passwords that unlock blockchain assets. In one case Baer handled, tens of millions of dollars in cryptocurrency were effectively lost because the heirs had no knowledge of the keys.
Owners should store key information securely—such as in a sealed safe deposit box, a physical safe, or with a trusted attorney—but never embed private keys directly in a will, which becomes public record during probate. Emerging “crypto inheritance services” offer encrypted vaults that release keys under predefined conditions, adding a layer of both security and accessibility.
Designated fiduciaries may lack crypto expertise
Even a well‑drafted trust can falter if the appointed fiduciary does not understand how to manage digital assets. Crypto’s steep learning curve, combined with its price volatility, can lead to costly mistakes. Owens recounts a client whose institutional trustee refused to handle a half‑million‑dollar crypto portfolio, forcing the family to appoint a specialized trustee—a process that added both time and expense.
Owners should assess whether their chosen executor or trustee possesses the technical know‑how or is willing to engage a qualified advisor. Some professional trustees now offer “digital‑asset custodial services” that include secure key storage, transaction signing, and compliance monitoring.
Neglecting crypto‑related tax planning
Crypto holdings can trigger significant tax liabilities, both during the owner’s lifetime and at death. The federal estate‑tax exemption sits at $13.99 million for 2025, but high‑value crypto portfolios can easily exceed that threshold, especially as institutional investors pour capital into the space. Moreover, many states maintain their own estate‑tax regimes.
Jonathan Forster of Weinstock Manion advises high‑net‑worth clients to structure their holdings through entities such as limited‑liability companies (LLCs). By transferring crypto into an LLC and then gifting an ownership interest to an irrevocable trust for the benefit of minor children, families can lower the taxable estate while retaining control over the assets.
Accurate cost‑basis tracking is also essential. Without a clear record of the original acquisition price, heirs may face unexpected capital‑gains taxes when the assets are eventually sold. Modern portfolio‑tracking software and blockchain analytics tools can automate basis calculation, ensuring compliant gifting and inheritance.
Tech‑driven solutions shaping the future of crypto inheritance
Beyond traditional trusts, a new wave of blockchain‑native inheritance protocols is emerging. Decentralized key‑management platforms—such as “dead‑man’s‑switch” smart contracts—allow owners to designate heir addresses that receive encrypted keys after a predefined inactivity period. Similarly, multi‑signature vaults can require multiple trusted parties to co‑sign a transaction, distributing risk and preventing a single point of failure.
Institutional players are also entering the space. Custodians like Fidelity and Coinbase now offer “in‑trust” services, where the firm holds the private keys on behalf of a trust, subject to strict fiduciary controls and auditability. These services bridge the gap between the security of self‑custody and the convenience of professional oversight.
Regulators are beginning to scrutinize these arrangements. The SEC’s recent guidance on “digital‑asset trusts” emphasizes the need for clear documentation, robust cybersecurity measures, and transparent reporting to mitigate fraud and ensure compliance with anti‑money‑laundering (AML) standards.
As the cryptocurrency market matures, integrating digital assets into a comprehensive estate plan is no longer optional—it is a prudent component of wealth preservation. By leveraging revocable trusts, secure key‑storage solutions, and emerging blockchain‑based inheritance protocols, owners can safeguard their crypto legacy against probate delays, tax pitfalls, and the risk of permanent loss.
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