Cryptocurrency is an increasingly prominent asset to be inherited.
Not too long ago, cryptocurrency was something the average American knew little to nothing about.
Since its inception, this asset class has become less of a niche investment and more of a significant asset class for people.
Because crypto is an asset, those who own a small or large amount should include it in their estate plans.
Leaving cryptocurrency as an inheritance looks different than passing on a traditional investment portfolio or bank account.
Because crypto involves secure access credentials and specialized knowledge, these details must be communicated prior to incapacity or death to ensure the asset is not lost forever.
With comprehensive estate planning, owners of these investments can successfully transfer these assets when they die.
Brokerage firms, banks, and other institutions have procedures in place to govern the transfer of assets under their management when the owner has died.
In contrast, crypto ownership, access, and transfers are governed solely by the possession of recovery phrases or private keys known only to the owner.
If these credentials are not communicated, even a perfectly drafted last will and testament will be powerless to recover the cryptocurrency.
Digital assets are only growing more prominent, meaning estate planning must account for this expanding asset class.
The most crucial aspect of estate planning for cryptocurrency is ensuring executors or heirs can locate and access the digital asset when the time comes.
Heirs may be permanently prevented from inheriting crypto if the recovery phrases, passwords, or hardware wallets are lost.
Yikes!
Because this information gives complete access to the crypto, it is important to put appropriate safeguards in place to protect against theft or unauthorized transfers.
Crypto owners must balance accessibility and security in their estate planning.
Those who own cryptocurrency should be proactive in addressing it as a key component of their comprehensive estate planning.
When estate planning, it is essential to have a detailed list of assets.
For cryptocurrency, people should have a current record of all crypto holdings, storage platforms, and wallet locations to simplify estate administration.
As investments change, the inventory also should be reviewed and updated.
Death is not the only time cryptocurrency can be vulnerable to loss.
Incapacity can also threaten the security of crypto holdings.
Durable powers of attorney should be reviewed and updated to ensure the authority granted to the trusted individual includes management of digital assets.
Incapacity planning should be addressed prior to times of crisis.
While an estate plan may have been effective at the time of its creation, changes to circumstances can render it unhelpful for current needs.
Regular reviews and updates are essential to ensure beneficiary designations, trusts, and wills address changes or growth in cryptocurrency holdings.
Although ensuring trusted people have access to cryptocurrencies to avoid loss is important, owners of crypto must take actions to prevent theft.
Because some estate planning documents become accessible publicly during estate administration, all recovery phrases, private keys, and other sensitive information should be securely stored outside of estate planning documents.
It is important to create a secure system to protect access information and, consequently, this key asset on behalf of the owner and future beneficiaries.
More families will find cryptocurrency part of their estate planning discussions as the asset class continues to grow.
Failing to address this investment proactively can lead to significant complications and losses.
By considering evolving investment strategies and financial technologies in estate planning, owners can transfer assets according to their wishes and the unique requirements of the assets.
While cryptocurrency creates new investment opportunities, it also introduces new responsibilities.
Owners of digital assets must incorporate them in their estate plans to protect their security and accessibility to heirs.
A comprehensive estate plan will coordinate the inclusion of digital and traditional assets to leave a lasting legacy to loved ones.
Cryptocurrency introduces new challenges to estate planning.
For heirs to take possession of crypto holdings, they must have the access keys.
Because cryptocurrency is a digital asset, it must be addressed in powers of attorney, wills, and trusts.
To prevent theft of crypto holdings, digital assets and their access keys must be secured while simultaneously ensuring they can be accessed after death or incapacity.
An experienced estate planning attorney can help in navigating the interplay of state law, federal law, and digital asset strategies.
This post is for informational purposes only and does not provide legal advice. You should consult an attorney for advice on any specific issue or problem. Nothing herein creates an attorney-client relationship between Harvest Law KC and the reader.
Reference: InvestmentNews (May 22, 2026) "Why cryptocurrency can be an estate planning 'nightmare"
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