According to the National Association of Unclaimed Property Managers, approximately one in seven people leave unclaimed property on the table. The recent intense sell-off Bitcoin and ether While understandably garnering short-term attention, this estate planning issue is a long-term problem that is likely to worsen as cryptocurrency adoption and ownership increases.
Many people neglect to consider cryptocurrencies in their estate planning or do not let their heirs know how to access their crypto holdings. Recent surveys by Gallup and Pew Research estimate that 14% to 17% of U.S. adults own cryptocurrencies, raising concerns about losing access to those funds.
“It’s very easy to leave real estate or mutual funds in a will, but with more and more assets being put into cryptocurrencies, a large portion of inherited assets is at risk of being forfeited,” said Azriel Baer, a partner in the estate planning and management group at law firm Farrell Fritz.
This problem may be partially alleviated by crypto ETFs, such as the iShares Bitcoin Trust (IBIT), which have gained popularity among investors since the first batch of spot Bitcoin ETFs were approved by the SEC in 2024. Ethereum spot price ETFs such as the Fidelity Ethereum Fund ETF (FETH) followed a few months later. These ETFs allow investors to access the crypto asset class without actually owning the cryptocurrencies outright, helping to reduce the chance of losing actual cryptocurrencies.
Nevertheless, estate planning mistakes by crypto holders are common and can be avoided. Here are some of the biggest issues that crypto holders need to address immediately.
Even if a will exists, it often does not include language regarding digital assets.
According to a study by Caring.com, only 24% of Americans have a will that describes how they want their money and assets to be managed after they die. Research shows that even those who write wills haven’t updated them in years, with nearly one in four Americans saying they haven’t touched their wills since their original wills were created.
This can be problematic for a variety of reasons. Old wills may no longer reflect people’s current wishes. In a cryptocurrency-specific context, those who have not updated their estate plans in the past few years may not have language that gives legal authority for trustees and executors to access digital assets.
“It’s common to not update estate planning documents for 10, 20 years, or even longer. If you do, you’re behind the curve,” said Patrick D. Owens, a Buchalter shareholder and member of the firm’s Tax, Benefits, and Estate Planning practice group.
If there is no language regarding digital assets, heirs may have to go to court to obtain executor or administrator authority to gain access to crypto assets. Maybe they’ll have access, “but it’s a hassle,” Owens said. “Obviously going to court is going to cost time and money.”
Even if there is a will, crypto assets may get stuck in court
While a standard will is appropriate for many people, many attorneys recommend that their clients also utilize a revocable living trust as part of their estate planning. Although creating a will is less expensive, a revocable living trust provides more privacy and can help limit the time and expense of the probate process after death.
Baer advises clients to transfer cryptocurrencies into revocable living trusts so that the trustee can immediately access them upon the owner’s death. It can take six to eight months or more for a will to go through probate, during which time your heirs will have no access to your assets. For example, if the price of cryptocurrencies is falling rapidly and the property goes into probate, you may have to wait to sell it. He said many problems can be avoided by placing crypto assets in a revocable trust to avoid probate.
Generally, revocable trusts are combined with pour-in wills so that assets not included in the trust upon an individual’s death are transferred to the trust and distributed accordingly.
Failure to share basic crypto information could result in millions of dollars in losses
You don’t need to tell your heirs that you’re worth a fortune in Bitcoin before you die, but you do need to make sure your heirs know how to access your cryptocurrency after you’re gone.
Baer was working on an estate where tens of millions of dollars in crypto assets were lost because the heirs did not know the decedent’s private keys. Private keys act as digital passwords that grant access to cryptocurrency funds and prove ownership of blockchain assets.
Behr said someone should know how to access their assets, whether through written instructions kept in a safe or home safe, instructions kept with a lawyer, or one of the various crypto inheritance services that ensure crypto assets are passed on to family members. These private keys and other sensitive information should not be included in a will, as the will will be made public through the probate process, he added.
Many designated trustees cannot handle cryptocurrencies
The person you choose to handle your other assets may not be the right person to handle the crypto portion of your assets.
Not everyone understands cryptocurrencies, the volatility that comes with them, and how to trade digital currencies, which can lead to you accidentally losing a lot of money. Recent fluctuations in Bitcoin prices are a reminder that financial losses can be significant for those who take weeks to figure out how to trade Bitcoin, Baer said. “Uncle Bob may be a great guy, but he may have additional difficulties trading with asset classes that are completely unfamiliar to him,” he added.
In some cases, even institutional trustees may not be able to take responsibility for cryptocurrencies. Owens died leaving his client $500,000 in Bitcoin and Ether. The institutional trustee that oversaw customer accounts refused to take responsibility for the cryptocurrencies, and a special trustee was appointed. Fortunately, the client had a nephew who took over the role, but Owens said finding a suitable replacement is often expensive in terms of time and money.
Cryptoasset tax planning failure
Jonathan Forster, a shareholder at law firm Weinstock Manion, said that due to the massive explosion in value around cryptocurrencies, many people are holding large amounts of cryptocurrencies, which could result in large taxes owed such as income tax and inheritance tax, which could negatively impact families if not planned.
For example, inheritance tax may be due depending on the size of the estate. The federal estate tax exemption for 2025 is $13.99 million per individual. Some states also impose state-level inheritance taxes.
Knowing how owning crypto assets affects your wealth is an important consideration during your lifetime. Foster has clients with crypto assets worth more than $50 million. They wanted to make gifts in an efficient way to get money from their estate for the benefit of their children. According to Forster, they formed a limited liability company, transferred the virtual currency to the LLC, and gifted an interest in the LLC to an irrevocable trust with an independent trustee for the benefit of the minor.
Many crypto investors don’t know the cost basis, which can be problematic for a variety of reasons, including if you’re considering gifting digital assets during your lifetime. If you want to gift assets during your lifetime, Baer said, you need a basis that will allow the recipient to properly account for the assets if the virtual currency is eventually sold. “Tracking the evidence can be tedious, but it’s important,” he says.
