I still remember the phone call. A friend’s widow was in tears because her late husband had left behind what she thought was “some bitcoin stuff” – turns out it was worth eight figures. Nobody could find the keys. The coins are still sitting there today, untouched and untouchable. Forever.
If that story makes your stomach turn, good. It should. Because as more of us pile money into cryptocurrency, the same nightmare is waiting for thousands of families. And honestly, most crypto investors I talk to haven’t done a single thing to stop it from happening to theirs.
The hard truth? Your bitcoin doesn’t care that you love your kids. Without proper planning, those coins can disappear the moment you do.
Why Crypto Breaks Every Traditional Estate Rule
Traditional assets are easy. Bank accounts have statements. Brokerage accounts have beneficiaries. Real estate has deeds. When you die, there’s a paper trail a mile long.
Crypto? It’s the opposite. You are the paper trail. If you’re gone and nobody knows your seed phrase or private keys, the money might as well never have existed. Courts can’t help. Exchanges can’t help. Even Satoshi himself couldn’t help.
I’ve watched grown adults – smart, successful people – shrug and say “I’ll deal with it later.” Later usually means never. And never costs millions.
Mistake #1: Treating Crypto Like It’s Just Another Investment in Your Will
Here’s something that drives estate attorneys absolutely crazy: people who finally get around to writing a will, proudly list “my bitcoin” in there, and think they’re done.
That’s like hiding the only key to your safe inside the safe and telling everyone “it’s in there.” Technically true. Completely useless.
A will that simply says “I leave my cryptocurrency to my children” is better than nothing – but not by much.
Why? Because wills go through probate. Probate is public. Probate takes months – sometimes years. And probate definitely does not include your seed phrase (and if it does, congratulations, you just handed thieves the keys to the kingdom).
During that probate period your coins are frozen. If bitcoin drops 50% while the court shuffles papers, tough luck. Your heirs eat the loss.
The Fix Very Few People Use (But Should)
Move your crypto into a revocable living trust. Immediately.
When you die, the successor trustee steps in the same day. No court. No delay. No public record. They already have legal authority to access and manage the assets. I’ve seen trusts set up in an afternoon that saved families six-figure headaches.
- Full control while you’re alive
- Zero probate delay when you’re gone
- Private – nothing hits public record
- Works with hardware wallets, exchange accounts, everything
Mistake #2: Keeping Your Private Keys a Total Secret
I get it. Opsec is religion in crypto. “Not your keys, not your crypto” – we chant it like a prayer. But there’s a difference between careful and suicidal.
I worked with an estate where the decedent had been militant about security. Multiple hardware wallets. Encrypted drives. No cloud backups. Perfect opsec… right up until the car accident.
Result? Roughly $42 million in various coins, gone. The family still doesn’t know if the keys were destroyed, lost, or hidden so well nobody will ever find them.
The goal isn’t to keep your heirs guessing. The goal is to keep everyone else guessing.
– Estate planning attorney I know
Practical Ways to Share Access Without Compromising Security
- Split your seed phrase with Shamir’s Secret Sharing (3-of-5 shares in different safe deposit boxes)
- Use a dead-man’s switch service that releases instructions after X days of inactivity
- Store encrypted instructions with your attorney plus the decryption key in a separate safe
- Give one trusted person a hardware wallet with a small amount and instructions where to find the real one
- Write the seed on stainless steel, lock it in a bank box, and list the box in your trust
Pick one. Pick two. Just don’t pick zero.
Mistake #3: Naming the Wrong Person to Handle Your Crypto
Your sister is amazing with money. She’s handled your parents’ estate perfectly. She’s your executor. Perfect, right?
Maybe not. If she thinks “cold wallet” sounds like a beer cooler, you’ve got a problem.
Crypto moves fast. If prices are crashing and your executor needs three weeks to figure out how to move coins from a Ledger to an exchange, that’s real money burning.
I’ve seen institutional trustees outright refuse to touch crypto. One bank told a family, “We don’t custody digital assets.” They had to appoint a special administrator – at $500 an hour – just to move the coins.
Who Should Actually Manage Your Crypto After You’re Gone
- A crypto-native friend or family member (and name a backup)
- A digital-asset-friendly trust company (they exist now)
- A professional fiduciary who already custodies crypto for clients
At minimum, give your primary executor a “crypto co-pilot” they can call the day you die.
Mistake #4: Ignoring Taxes Because “Crypto Is the Future”
Every bull run creates paper millionaires who suddenly have estates large enough to trigger federal estate tax. In 2025 the exemption is $13.99 million per person – sounds like a lot until you bought bitcoin at $300.
Add in state estate taxes (hello, New York, Massachusetts, Oregon) and you can easily owe 40-50% above the exemption.
And don’t get me started on cost basis. If you’ve been trading since 2017 and never tracked anything, good luck reconstructing ten years of transactions for the IRS when your heirs sell.
Smart Tax Moves Crypto Holders Can Make Today
- Start gifting – $18,000 per person per year (2025) with no gift tax
- Transfer coins to an LLC then gift LLC units (keeps control while reducing estate size)
- Set up irrevocable trusts for kids or grandkids
- Harvest losses now to establish basis
- Use tools like Koinly or CoinTracker from day one
Every dollar you move out of your estate today is a dollar your kids won’t pay 40% tax on tomorrow.
The ETF Escape Hatch (And Why It’s Not Perfect)
Spot bitcoin and ethereum ETFs have been a godsend for this exact problem. No keys, no seeds, no probate nightmares. When you die, the shares pass like any other stock.
But here’s the catch I always remind people: you’re giving up actual ownership. You don’t control the keys. You’re trusting BlackRock or Fidelity to hold them forever. For some people that trade-off is worth it. For others – especially the maximalists – it feels like surrender.
My take? Use ETFs for the portion you’re okay centralizing, and keep the rest self-custodied with proper planning. Best of both worlds.
Your 30-Day Crypto Estate Action Plan
Don’t let this article be another thing you bookmark and forget. Do these four things this month:
- Inventory every wallet, exchange account, and hardware device you own
- Decide who actually needs access and how you’ll give it to them securely
- Call an estate attorney who understands digital assets (yes, they exist now)
- Move at least your largest holdings into a revocable living trust
Thirty days. That’s all it takes to go from “my family is screwed” to “my family is taken care of.”
Because here’s the bottom line: the whole point of stacking sats is freedom – for you and for the people you love. Don’t let sloppy planning turn your life’s work into a cautionary tale.
Your coins deserve better. Your family definitely does.
