Estate planning for cryptocurrency is becoming increasingly important.

Economic variables have undergone significant shifts throughout history.

What was once a barter system for goods and services has moved largely to a monetary system of compensation.

In recent years, the rise of cryptocurrency has created yet another avenue for storing and building wealth.

Because crypto holdings are password-protected and decentralized, they are essentially impossible to recover without the relevant keys or proper documentation.

Yikes!

That explains the increase and frequency of my blog posts on this topic, yes?

In addition, some of our clients are getting big into "crypto," while an increasing number are "dipping their toes" in the crypto waters before deciding whether to take the plunge.

Regardless, the very nature of this asset class makes estate planning for it both challenging and essential.

Cryptocurrency can easily be lost forever if your heirs cannot access it.

Why Estate Planning for Cryptocurrency Is Essential

Unlike a bank account or other investment accounts, cryptocurrency is not held in a centralized institution.

What does this mean?

In a practical sense, there is no place to visit or person to call if something is amiss.

Your estate executor will be unable to seek support from a third party if you do not provide information regarding the existence of the asset or how to access it.

Where can you store your cryptocurrency?

Crypto is generally stored in a mobile app, hardware wallet, or digital exchange.

Any of these typically require a complex series of private keys, passcodes, or other credentials to access the fund.

While these elements are critical for securing the asset, they can simultaneously make accessing the asset impossible after your death.

Therein lies the risk of total asset loss.

Through estate planning, you can designate someone you trust to both locate and access these assets after you have died.

Your estate plan must also document your cryptocurrency, its storage location, and how to access it, while also avoiding the triggering of a security risk to this asset during your lifetime.

What You Should Include in Your Estate Plan

Because the value of cryptocurrency fluctuates frequently, you do not need to include the exact sum in your estate plan.

What you must include is the types of cryptocurrencies you hold and where each is stored.

Common storage sites include mobile wallets, cold wallets, or online exchanges.

Your estate plan should also provide detailed instructions on how to access the required passwords or private keys.

These should be stored in a secure yet separate location from the central system.

Because a traditional executor may not have the technical expertise to manage your crypto securely, you should consult with an estate planning attorney who understands your state laws around crypto.

You should ultimately designate a knowledgeable fiduciary who can effectively handle digital assets as your executor.

Tools to Protect Digital Assets

Those who prefer to store passwords for digital assets outside of the digital world would benefit from keeping cryptocurrency credentials in a safe deposit box or a fireproof safe.

For those who do not mind keeping this data online, a password management service could be beneficial.

Another option would be to include a digital asset memorandum with your primary estate planning documents.

What is this?

As an informal letter, the memorandum complements your trust or last will and testament, listing information related to your cryptocurrency.

You can update this document without having to change your formal estate planning documents.

The result is a flexible and secure means of sharing your digital asset information.

Neglecting to address cryptocurrency in your estate plan could leave your heirs unable to claim your digital assets.

What are Key Cryptocurrency Takeaways?

Because crypto is decentralized, recovering it without advanced documentation will be nearly impossible.

Although heirs and executors will need access to your passwords and private keys for your cryptocurrency, these should be stored securely.

Crypto information should be placed in a secure, encrypted storage system or in a digital asset memorandum.

If digital assets are an important part of your estate, you should choose an executor who can securely manage and transfer digital assets.

Because cryptocurrency introduces additional complexity to estate planning, it is essential to work with an experienced estate planning attorney to create a plan that addresses the legal and technical needs.

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: Investopedia (March 23, 2025) “Estate Planning for Crypto: What Happens When You Die?”