Roughly 1 in 7 people are leaving unclaimed property on the table, according to the National Association of Unclaimed Property Administrators. While the recent heavy selling in bitcoin and ether is rightly getting all the short-term attention, this estate planning issue is a longer-term one that's likely to be exacerbated as crypto adoption and ownership increase.
Many people neglect to account for cryptocurrency in their estate plans, or they don't let their heirs know how to access their crypto holdings. With surveys in recent years from Gallup and Pew Research estimating that 14% to 17% of U.S. adults have owned cryptocurrency, losing access to those funds is a growing concern.
"Leaving property or mutual funds behind in a will is pretty cut and dried, but with more and more assets placed in cryptocurrency, a large share of inherited assets are in danger of forfeiture," said Azriel Baer, partner in the estate planning and administration group at law firm Farrell Fritz.
This issue could be mitigated, in part, by crypto ETFs, which are gaining popularity with investors since the first batch of spot bitcoin ETFs were approved by the SEC in 2024, such as the iShares Bitcoin Trust (IBIT), followed a few months later by ethereum spot price ETFs, such as the Fidelity Ethereum Fund ETF (FETH). These ETFs allow investors access to the crypto asset class without actually owning crypto outright, helping reduce the chances of actual crypto getting lost.
Nevertheless, estate planning mistakes among crypto owners are common and can be avoided. Here are some of the biggest issues cryptocurrency owners need to tackle sooner rather than later.
Wills, if they exist, often don't include digital assets language
Only 24% of Americans have a will that describes how they want their money and estate managed after their death, according to a survey from Caring.com. Even people who have wills in place have not updated them for many years, with nearly one in four Americans saying they haven't touched their wills since their original was drafted, according to the survey.
This can be problematic for many reasons. An old will may no longer reflect people's current wishes. In a crypto-specific context, anyone who hasn't updated their estate plan in the past several years may not have language to provide legal authority for the trustee or executor to gain access to digital assets.
"It's very common for people not to update their estate planning documents for 10, 20 years or sometimes longer. If that's the case, you're behind," said Patrick D. Owens, shareholder at Buchalter and a member of the law firm's tax, benefits and estate planning practice group.
Absent language about digital assets, your heirs might have to go to court to get the authority for the executor or administrator of the estate to gain access to the crypto assets. Most likely they'll get access, "but it's a hassle," Owens said. "Obviously, it means time and money going into court."
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