Heirs Inheriting Crypto? Don't Make It a Headache for Them
If you have cryptocurrency in your estate, you'll need meticulous plans and clear instructions to ensure beneficiaries don't lose out after you're gone.


As cryptocurrency becomes an increasingly common part of personal wealth, it also introduces unique challenges to estate planning. Traditional tools, like wills and trusts, must adapt to the decentralized and secure nature of digital assets. And just like any other asset, cryptocurrency can be locked in probate for months without proper planning.
Why probate is a concern for cryptocurrency
Probate is the legal process of validating a deceased person’s will and distributing their assets, an often slow-moving and potentially costly process. One of the biggest concerns with cryptocurrency is volatility. Cryptocurrency values can fluctuate rapidly, meaning delays in probate could result in significant financial loss.
Beneficiaries’ access to these cryptocurrencies is another concern. Ownership of cryptocurrency is tied to private keys — without them, beneficiaries have no way to access the assets. And since cryptocurrencies such as bitcoin (BTC) and ethereum (ETH) are decentralized, operating on blockchain technology, there’s no centralized institution to intervene if credentials are lost. To avoid these risks, proactive estate planning is essential.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Bypass probate with beneficiary designations
One of the simplest ways to bypass probate is by designating beneficiaries, if the cryptocurrency exchange offers it. This process is similar to naming a beneficiary for a bank account or retirement plan. To set it up, you’ll need to log into your account and locate the beneficiary designations. Some platforms may call this a Transfer on Death, or TOD, form. Fill out the form by providing the beneficiary’s full legal name, birth date and contact information, and keep a copy for your records.
Understanding digital wallets is also critical to effectively planning your estate with cryptocurrency. Digital wallets store the private keys required to access, send and receive digital assets, and there are various types with various features. Similar to some cryptocurrency exchanges, private wallets such as Ledger, Trezor and MetaMask typically don’t offer built-in beneficiary designation features. Therefore, keeping a record of access credentials and securely storing private keys is a must.
As you're planning your estate, include detailed instructions on how to access the wallet, including passwords, recovery phrases or locations of physical devices. As for storing private keys, consider using a hardware wallet or an encrypted file. In some situations, a custodial solution may be the answer. Some custodial services specialize in managing digital assets and may allow for simplified beneficiary designations.
Using trusts to manage cryptocurrency
Implementing a trust agreement is another option for those who own cryptocurrency. Placing your digital assets into a trust can ensure they’re managed and transferred according to your wishes without involving probate.
If you want to take your planning a step further, a revocable living trust may be worth looking into. These trusts allow you to retain control of your cryptocurrency during your lifetime while specifying how it should be distributed upon your death. An estate planning attorney can help you draft the trust document that explicitly includes provisions for digital assets. Once the trust is set up, you’ll need to move your cryptocurrency to a wallet owned by the trust. In some cases, this may involve creating a new wallet under the trust’s name or transferring funds to an existing wallet.
Once ownership is transferred to the trust, you’ll need to designate a trustee. This person will be responsible for safeguarding private keys and recovery phrases and should know how to navigate the specific wallets or exchanges holding your assets.
Practical tips
Cryptocurrency offers exciting opportunities for wealth building but requires careful planning to integrate into your estate plan. Here are some practical tips for estate planning with cryptocurrency:
- Secure storage of keys and credentials. Use a hardware wallet or encrypted digital storage for private keys. Ensure your executor or trustee knows how to access these safely.
- Maintain an updated inventory. Document your cryptocurrency holdings, including wallet addresses, types of currency and approximate values. Regularly update this inventory to reflect changes.
- Provide instructions in estate documents. While it’s essential to maintain security, your estate documents should include enough information for your executor or trustee to locate and access your cryptocurrency.
- Plan for less popular cryptocurrencies. If you hold altcoins or tokens not supported by mainstream platforms, document these assets clearly to ensure they are not overlooked.
For guidance tailored to your unique situation, consult with an estate planning attorney experienced in digital assets. Taking these steps now can save your loved ones significant stress and ensure your legacy is protected in the digital age.
Patrick Simasko is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Simasko Law is a separate entity and not affiliated with CoreCap Advisors. The information provided here is not tax, investment or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Related Content
- Digital Estate Planning Guide: Get Your Digital Assets in Order
- How to Tackle Digital Estate Planning in Four Easy Steps
- How to Protect Your Digital Assets From Estate Tax
- All About Designating Beneficiaries in Estate Planning
- Is Your Estate Ready if You Experience Cognitive Decline?
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Patrick M. Simasko is an elder law attorney and financial adviser at Simasko Law and Simasko Financial, specializing in elder law and wealth preservation. He’s also an Elder Law Professor at Michigan State University School of Law. His self-effacing character, style and ability have garnered him prominence and recognition throughout the metro Detroit area as well as the entire state.
-
Stocks Slide to Start September: Stock Market Today
Seasonal trends suggest tough times for the stock market as we round into the end of the third quarter.
-
Here's What You'd Have If You Invested $1,000 Into Sherwin-Williams 20 Years Ago
Sherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
Stocks Slide to Start September: Stock Market Today
Seasonal trends suggest tough times for the stock market as we round into the end of the third quarter.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have Today
Sherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
Where is the Foreign Dividend Boom Headed?
It's been a golden six months for foreign dividend stocks, but can any be relied on for predictable income going forward? Here are some options.
-
The Unsung Hero of Aisle 5: A Tale of Forgotten Change and Compassion at the Supermarket
This supermarket manager went above and beyond to help when a child forgot her change at the checkout counter. You might be surprised at some of the complications that supermarkets face when it comes to customers' forgotten change.
-
Train, Integrate, Retain: A Strategic Playbook for Adviser Onboardings
Build a thriving practice by training new advisers with clear goals, structured processes and consistent mentorship for strong team growth.
-
Why is My First Medicare Bill So High?
Your first Medicare bill may be higher than expected for several reasons. If your premiums aren't taken out of your Social Security benefit, the bill can be huge.
-
11 Unforgettable Road Trips to Take in Retirement
More than a travel trend, the road trip is a quintessential American tradition, with millions of us taking them each year. Here's a guide to helping you choose your next adventure.
-
I'm a Financial Professional: Here Are Four Ways You Can Use Debt to Build Wealth
Using debt strategically, such as for homeownership, education and more, can lead to greater financial stability and growth.