Can We Unlock Mom's Phone After She's Buried?' The Crypto Inheritance Crisis No One's Talking About

With the rise in cryptocurrency investments, a new challenge is quietly surfacing: what happens to digital assets after the owner passes away?

According to Barron's, many investors fail to properly plan for the inheritance of their Bitcoin or crypto holdings, leaving families in the dark or locked out entirely.

Estate and business attorney Laura Cowen told Barron's that even financially savvy clients often overlook crypto in their estate plans. "The biggest risk with crypto isn’t so much someone stealing it or going to the wrong family member," she said. "It’s more just that families don’t know that their loved ones owned it."

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The Security That Protects You Can Also Keep Out Your Heirs

Cryptocurrencies are bearer assets, meaning whoever controls the private keys can access the funds. While this offers strong protection against theft, it becomes a major hurdle if executors or heirs aren't informed or equipped to access wallets, Alex Tapscott, managing director of the digital asset group at Ninepoint Partners, told Barron's.

"The question isn't, ‘Where are the keys to mom's apartment?' The question is, ‘Can we get through a biometric lock on her cellphone after she's been buried or cremated?'"investment advisor Bill Ulivieri told Barron's, highlighting how crypto inheritance is reshaping traditional estate planning considerations. 

How You Own Crypto Makes a Big Difference

For investors holding crypto indirectly — such as through exchange-traded funds like the iShares Bitcoin Trust ETF IBIT or stocks like MicroStrategy Inc. MSTR — executors can typically access these assets as they would with any traditional brokerage holdings, according to Barron's.

However, direct holdings on exchanges or in wallets pose unique challenges. According to Coinbase, heirs need access to private keys to claim an account. But unlike traditional custodians, many crypto platforms do not allow account beneficiaries to be named, and support for estate executors may be limited.

David Haughton, senior corporate counsel at Wealth.com, told Barron's that executors may be left to navigate the process alone if heirs can't access login credentials or authentication devices.

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Best Practices for Crypto Estate Planning

Experts cited by Barron's recommend that crypto investors document and securely store key information for their heirs. This includes a list of coins owned, where they are stored, such as on an exchange, in a digital wallet, or offline, as well as private keys and seed phrases needed to recover access. Passwords for cryptocurrency exchanges, email accounts, and two-factor authentication apps should also be provided, along with PINs for any hardware wallets. 

For coins stored on locked devices, heirs will also need alternate methods to unlock biometric protections, such as passcodes. Ulivieri emphasized the importance of naming a digital fiduciary to work alongside the estate executor and attorney.

A Real-World Example: Crypto Passed On Correctly

Craig Robson, managing director at Regent Peak Wealth Advisors, told Barron's how he helped a widow recover her late husband's Bitcoin after their estate planner lacked the necessary technical expertise. The husband had left specific instructions for locating the private keys, allowing Robson to transfer the funds into secure offline storage.

Robson said crypto can be easily divided among heirs, but timing is critical due to volatility. Instructions on whether heirs should hold or liquidate crypto assets should be spelled out in the estate plan, he added.

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Services and Legal Considerations

According to Coinbase, investors can use both physical solutions, that is, written seed phrases, and digital services designed to facilitate crypto inheritance. Several companies are now developing tools to simplify the transfer of crypto assets upon death.

Because of the high stakes, experts recommend appointing an executor who is proficient with cryptocurrency, according to Barron's. If no will is in place, heirs may be permanently locked out, as the assets cannot be recovered without access credentials.

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