A cryptocurrency investor who died in an accident at age 33 had allegedly accumulated about $60 million in Bitcoin, Ethereum, RP, and Cardano. We’ll still never know if this was true because his crypto millions died with him. His estate plan did everything but address his digital assets, reports the article “Estate Planning With Cryptocurrencies” from Think Advisor.

No one knew how to access his cryptocurrency; he left no information about his digital passkeys and lost whatever he may have owned.

First, Educate Yourself about Cryptocurrency

By no means are we suggesting that anyone buys cryptocurrency, while our team at Frankel Rubin are very experienced at Estate Planning and a myriad of other legal practices including litigation, corporate, and family law, we are not experts in cryptocurrency or investing generally. We recommend doing your research before you buy. It is important to not only research what cryptocurrency you want to buy, but to make sure you research the best way to store it before you buy. You’ll need to know about blockchain, cryptocurrency v. non-fungible token, private keys v. public keys, custodial wallet v. non-custodial wallet, hardware wallet v. electronic wallet,  exchanges, and the inherit risks from volatility in the market to loss or theft to properly reporting losses and gains to the IRS.

What we can advise you on as to this relatively new asset class, is to have a plan to transfer assets to your loved ones and protect any wealth you create from investing from being lost. Many people who are invested in cryptocurrency tend to be younger and aren’t thinking about dying. However, as the example above illustrates, they need to think differently.

Accessing digital investments is impossible without the correct information. Cryptocurrencies are decentralized, so there’s no one to call when the owner dies. Another issue: as investors become wealthier, they are more likely to become targets of scammers who are aware of the vulnerabilities of this asset.

Second, Make a Plan for Accessing Your Cryptocurrency

Executors, trustees and heirs must have the information about storage and private keys. Unless someone else knows about private keys and how to access them, the cryptocurrency may be lost forever if you are incapacitated or have died. The cryptocurrency may also be tangible or intangible property, depending upon whether it is stored on an external hard drive, in a digital wallet, or on a cryptocurrency exchange.

Knowing how to access a crypto wallet is critical. However, there’s more to know. Information should not be in a will, which becomes publicly available upon probate. Anyone who has access to the private key can withdraw funds.

A letter of instruction may be the best way to provide information and ensure privacy. For self-custodied wallets, using third parties for security and verification may be a better approach.

It might make more sense to hold cryptocurrencies in trust, making sure the trustees are familiar with digital investments and know how to manage and access the accounts. By putting your cryptocurrency in a trust you avoid probate court, make your trustees and beneficiaries aware of the asset, keep the asset private from all others, and can direct what happens with your cryptocurrency upon your incapacity or passing.

Third, Get Help with Your Plan

As the cryptocurrency sector continues to grow, it becomes more critical to have an estate planning attorney prepare for digital and traditional assets. Smart decisions about how to hold cryptocurrencies will make the difference between a legacy of wealth and millions lost in cyberspace.

Once you have educated yourself and know how you want to proceed, book a call with one of our experience Estate Planning attorneys to discuss how to implement your plan for your digital estate. Frankel Rubin’s attorneys are licensed in Missouri and Illinois and our law firm services all of the St. Louis Metropolitan Area. We are especially convenient for estate planning in Clayton, Brentwood, Des Peres, Frontenac, Glendale, Webster Groves, Kirkwood, Ladue, Maplewood, Olivette, Overland, Richmond Heights, Rock Hill, Shrewsbury, Town and Country, Creve Coeur, Affton, Crestwood, Sappington, Sunset Hills, Maryland Heights, University City, Warson Woods, and St. Louis City.

Reference: Financial Advisor (Jan. 6, 2025) “Estate Planning With Cryptocurrencies”