Hina Nainani
4 min read
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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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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.
For investors holding crypto indirectly — such as through exchange-traded funds like the iShares Bitcoin Trust ETF (NASDAQ:IBIT) or stocks like MicroStrategy Inc. (NASDAQ: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.
