Dealing with Cryptocurrency (Bitcoin) in Wills + Estate Planning
Will - Updating Will - Invalid or No Will - Power of Attorney - Personal Directive
To schedule an appointment, contact our law firm at 403-400-4092 or Chris@NeufeldLegal.com
When it comes to dealing with cryptocurrency (i.e., Bitcoin, Ethereum, Tether, XRP) upon your death, the process is a bit more complex than listing a bank account with your will (especially as you do not wish to reveal sensitive information). Furthermore, because cryptocurrency is self-sovereign, if your heirs don't have the private keys (or the means to find them), your digital assets might be effectively lost forever, such that appropriate arrangements need to be put in place.
The most harrowing concern with cryptocurrency-related estate planning is the absolute nature of the lost key. Unlike a traditional savings account, where a bank manager can verify a death certificate and reset a password, cryptocurrencies, like Bitcoin and XRP, exist on a decentralized ledger that recognizes only mathematical proof of ownership. If your heirs do not have the private keys or the recovery seed phrase, the asset is effectively burned - locked away in a digital vault that no amount of legal intervention or court orders can open. This creates high-stakes pressure to ensure information is accessible but not vulnerable.
A significant privacy concern arises from the fact that a will often becomes a public document once it enters probate. If you were to include sensitive details (such as the existence of a specific high-value hardware wallet or, worse, the access codes themselves) within the body of the will, you are essentially publishing a treasure map for bad actors (especially with probate being increasingly undertaken through electronic communications operated by governmental institutions). Balancing the need for legal clarity with the necessity of cryptographic Steiner-secrecy is a delicate act, requiring a separation between your public legal intentions and your private technical instructions [more on importance of a digital asset memorandum].
Security becomes a double-edged sword; the more secure you make your digital assets (i.e., crypto) from hackers, the more likely you are to accidentally secure it from your heirs. A major concern is the single point of failure, where one lost piece of paper or one forgotten PIN renders the entire inheritance unreachable. Conversely, if you make the access too simple (like leaving a seed phrase on a sticky note), you invite the risk of theft by anyone who enters your home (or through the electronic communications that are being undertaken on government computer systems). And even with digital executor services, you require legal oversight that is exclusive to yourself [more on digital executor services]. Your strategy must solve the paradox of making the assets hard to steal but easy to inherit.
Moreover, there is often a significant gap between the technical proficiency yourself, as the purchaser of the cryptocurrency, and the person who is entrusted to deal with it upon your death (as well as those who are destined to inherit it). A primary concern is that your executor (or your heirs), in their grief or confusion, might inadvertently lose the funds by sending them to a wrong address, falling for a recovery scam, or accidentally deleting a digital wallet. You have to account for the incompetency gap, ensuring that you not only provide understandable instructions, but also look to have appropriate safeguards, given that your executor (or your heirs) may have never interacted with digital assets and a blockchain before, without sacrificing the security of the setup.
These are but a few of the challenges and concerns potentially arising from dealing with cryptocurrencies and other digital assets when undertaking estate planning, with certain digital platforms taking steps to reduce these issues and create efficiencies for their investors/subscribers. However, each arrangement needs to be appropriately understood and planned for, given that no one should be jeopardizing thousands, if not millions, of dollars worth of cryptocurrency, by instituting appropriate legal measures to assure its transference upon their death (or upon their personal incapacity). The extraordinary cases of Matthew Mellon's lost XRP fortune (valued in excess of a half billion dollars) and Mircea Popescu's lost Bitcoin fortune (rumored to have been as much as one million Bitcoins), reflects the dangers of inaction (and not taking appropriate legal steps to protect your cryptocurrency / digital assets for future generations - or yourself should you become incapacitated) - with a 2025 report from Coin Ledger contending that between 16 - 20% of the Bitcoin supply has been permanently lost (as a result of the owner's death, incapacity and lost private keys).
If you are looking at legal avenues to protect the transference of your digital assets, in conjunction with the development of your will and other estate planning documents, we welcome you to contact our law firm today at 403-400-4092 or via email at Chris@NeufeldLegal.com to schedule an initial consultation.
IMPORTANT NOTE: This website is designed for general informational purposes. The site is not designed to answer specific questions about your individual situation or entitlement. Do not rely upon the information provided on this website as legal advice in respect of your individual situation nor use it as substitute for individual legal advice. If you want specific legal advice, you need to engage a lawyer under established legal engagement procedures that have been specifically agreed to by that lawyer.
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