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What’s the password? Here’s a hint: It’s definitely not “swordfish.”
More than 95% of the 21 million Bitcoin that will ever exist has already been mined. But millions of those coins are gone, lost to forgotten passwords and misplaced private keys. For clients and their heirs, that can mean fortunes vanishing permanently instead of being passed down. With crypto, estate planning failures don’t just cause delays, but often irreversible losses.
“Crypto investors who don’t plan for access are unintentionally creating assets that are inheritable, in theory, but unreachable in practice,” said Scott Bishop, co-founder of Presidio Wealth Partners. “That’s the biggest estate-planning failure we see in the digital asset space.” He’s seen cases where seven-figure holdings were lost simply because no one knew how to access them.
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By design, crypto is, well, cryptic. Unlike traditional investment accounts, crypto wallets don’t come with beneficiary forms or customer service backstops. Assets are typically held in self-custodied wallets, or through platforms like Coinbase or Binance, where advisors may have limited visibility but not control. Without the private key (a long, complex string of characters or phrases) assets are effectively locked forever. “There’s no legal override if credentials are missing,” Bishop said. “Courts can’t compel a blockchain to release assets.”
That creates a unique challenge for estate planning. “If you’re the person with a piece of paper with 24 words written on it, and something happens to you, it’s a problem,” said Dmitry Tokarev, founder of Bron, a fintech firm focused on crypto key recovery solutions. “Your partner, children and loved ones have no course of action.”
Let Me In. The issue is growing more urgent. Roughly 37% of US baby boomers hold some crypto, according to one survey, and that’s included in the $124 trillion expected to transfer to heirs over the next two decades.
There needs to be a clear and secure blueprint in place, Bishop said. “Estate documents should explicitly authorize fiduciaries to manage digital assets, while access instructions should be stored securely outside of wills,” he said. “A structured digital asset inventory gives executors a roadmap without exposing sensitive information during a client’s life.”
This post first appeared on Retirement Upside. To receive actionable insights for financial advisors guiding clients through the strategies, products, and policy shifts shaping retirement outcomes, subscribe to our free Retirement Upside newsletter.
