How to Leave Cryptocurrency in Your Will: Protect Your Digital Assets

As cryptocurrency like Bitcoin, Ethereum, Ripple, Litecoin, and other digital assets such as non-fungible tokens (NFTs) have become more popular, it’s more important than ever to ensure your estate plan includes a strategy for passing cryptocurrency on to your intended beneficiaries. Unlike traditional financial assets such as stocks, bonds, ETF’s, etc., cryptocurrency doesn’t have a physical currency record, such as a bank account or a brokerage account. Or unlike real estate, cryptocurrency doesn’t require the transfer of a deed to provide proof of ownership. Instead, cryptocurrency lives on the blockchain, where access is everything. If you pass away and your loved ones can’t access your digital wallet or private keys, your crypto assets could be permanently lost. At Lane, Lane & Kelly, we help clients across Massachusetts integrate cryptocurrency into their estate plans to ensure these valuable digital assets are not only preserved, but are properly passed down to your loved ones.

Why Cryptocurrency Needs Special Planning

When you pass away, your Personal Representative is responsible for inventorying, collecting, managing, and distributing your assets. For a full guide to the “Who’s Who of Your Estate Plan,” read our legal blog here. Once your Personal Representative is officially appointed through the Probate Court, they will receive what are called “Letters of Authority.” This is a certified, court-generated document that grants your Personal Representative the power to take the necessary steps to act in the best interest of the estate. This includes things like opening up an estate bank account, contacting financial institutions to withdraw funds and close out accounts, as well as buying or selling any real estate. Digital assets such as crypto, however, require additional planning because:

• Crypto is managed on the blockchain, a decentralize, digital ledger that records and verifies transactions. Thus, crypto not tied to any one financial institution.
• Access to crypto assets, typically stored in digital wallets (such as Coinbase, Crypto.com, or Exodus, just to name a few), do not have a reset button or a “forgot password” button if your login and access information is lost or becomes inaccessible.
• Ownership and access to these platforms depends solely on access to private keys, passwords, or seed phrases.

If no one knows where your crypto is stored or how to access it, those assets are essentially gone. Forever. With more and more of the population investing in crypto assets each year, you cannot risk losing your hard-earned assets and appreciation of those assets just because your legal heirs or loved ones don’t know how to access those accounts. In 2024, approximately 6.8% of the global population invested in some form of cryptocurrency. That represents over 562 million people worldwide. This number represents a 33% increase in crypto investors in 2024 compared to 2023.

The Proper Way to Include Cryptocurrency in Your Will

While your Will outlines how your assets are to be distributed, it should not contain personal access information for your crypto assets, or any of your assets for that matter. That is because when a Will goes through the probate court, it is filed as a public record. Anybody can look at your Will either online or request it in-person at the Probate Court. This is what makes the incorporation of a Revocable Trust in your estate plan so attractive, which would work in conjunction with your pour-over Will. Executing a Revocable Trust keeps all of your distributions, your beneficiaries, and the terms of your trust completely private. This option utilizes your pour-over Will more as a “catch all” for any assets that were accidently left in your individual name. But when done properly, you can leverage Pay-on-Death (POD) beneficiary designations along with titling certain assets (such as your real estate) in the name of your Revocable Trust, and avoid the Probate process altogether.

If you only have a Will, you need a thorough plan to ensure the facilitation of your crypto assets are taken care of without listing any sensitive, personal information in your Will itself. Your Will should not include any passwords, PINs, seed phrases, or private keys to your crypto accounts. This would cause a significant security risk and put your assets in jeopardy due to the public nature of the probate process.

Instead, your Will should clearly:

• Identify the type of cryptocurrency you own and make reference to where any digital assets may be stored;
• Name the beneficiaries who will receive each asset. Or, you can utilize a clause in your Will to include your cryptocurrency assets as part of the “Residue and Remainder” of your estate. This allows you to add your cryptocurrency and their subsequent values to your full estate, and then outline how you wish for the total value of your estate assets to be distributed on a percentage basis.
  • This is the option we recommend, as specifically bequeathing an individual asset to a beneficiary can have unintended consequences. Especially for cryptocurrency assets which are considered to be highly volatile, where their values can significantly fluctuate over time. Click here to read our legal blog post outlining the other top mistakes people make when creating their Will and how you can avoid them.
• Explicitly grant your Personal Representative the power and authorization to access, buy, and sell your digital assets, in accordance with the terms of the Will.

Create a Digital Access Guide

Since your Will becomes public record and will not contain your digital access information, the best solution to streamline the transfer of your crypto assets is to create an accompanying “Digital Access Guide” that is left for your Personal Representative and beneficiaries along with your Will. This Access Guide works similarly to a Personal Property Memorandum. Massachusetts General Laws c.190B § 2-513 allows a Will to make reference to, “a written statement or list to dispose of items of tangible personal property not otherwise specifically disposed of by the will.” There are other legal requirements surrounding this type of written memorandum, so it is essential to work with a trusted attorney, such as those at Lane, Lane & Kelly, to ensure your memorandum is legally enforceable. This type of memorandum allows you to maintain a written document during your lifetime where you can outline who you wish to receive special items of personal property, such as jewelry, antiques, family heirlooms, furniture, etc. At Lane, Lane & Kelly, we draft and incorporate these “Personal Property Memorandum’s" into all of our estate plans to aid you in the distribution of your most prized personal possessions.

Similar to the Personal Property Memorandum, we can assist anyone that owns cryptocurrency with the creation of a crypto “Digital Access Guide” which will be incorporated by reference to your Will. These memorandums are referenced in the Will, but are not required to be submitted to the Probate Court and thus, they do not become public record. These memos are also beneficial because they can be changed during your lifetime, and are far easier to update compared to changing your Will (which would require a Codicil to be prepared by an Attorney). As a result, if you sold any crypto assets during your lifetime, changed digital wallets or seed phrases, or changed any information that would be needed to access your digital assets, all you would have to do is update your Digital Access Guide. It is recommended that the Access Guide include the following information:

• A list of all digital assets that you own, including any cryptocurrencies, tokens, NFT’s, etc.
• The location of these digital assets, such as the digital wallet, the wallet type (hardware, software, exchange-based, etc.), website names and URLs, or apps on your phone/computer.
• All login information associated with your cryptocurrency, such as: usernames, passwords, passcodes, PIN’s, secret phrases, seed phrases, security questions and answers, private keys, etc.
• Any other applicable information that your Personal Representative may need in order to access your digital assets based on where they are stored.
• Multi-factor authentication methods, if applicable.

What Happens If You Don’t Plan?

Without proper planning, you run the risk that your cryptocurrency may be lost forever. Blockchain networks are completely decentralized, and once transactions are recorded on the ledger, they become irreversible. If you were to pass away without anyone having access to your digital credentials, there is no way to recover your assets. Loved ones can’t simply “call customer service” or reset your password. These assets would be lost to the blockchain forever. Just do a quick Google Search for "Lost Passwords Lock Out Crypto Millionaires" to see the vast number of horror stories that exist showcasing the amount of crypto millionaires out there that have lost the entirety of their wealth, solely because they lost their digital login information.

And because crypto is not always traceable or easily discovered, there’s a chance that your Personal Representative may not even know it exists, unless you’ve left clear instructions and a thorough access guide to assist them in discovering, accessing, and distributing your digital assets.

If you have purchased/mined cryptocurrency in the past few years, it is very likely that these assets have appreciated and hold substantial value. Don’t risk losing these assets to the blockchain. You wouldn’t let your hard-earned retirement accounts get lost without having a beneficiary named. Contact Lane, Lane & Kelly today to setup your estate plan and your Digital Access Guide to ensure your crypto assets are properly distributed the way you intended.

Current Massachusetts Law for Digital Assets

Massachusetts is one of the few remaining states that has not adopted a version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). The RUFADAA is a model law developed by the Uniform Law Commission that grants fiduciaries, like Personal Representatives or Trustees, the authority to access and manage a person's digital assets after their death or incapacity. More importantly, states that have adopted a RUFADAA law also gives the custodians of the digital assets a method to disclose information to fiduciaries while protecting the user’s privacy. This ensures that the custodian of the assets (such as the platform that holds your crypto wallet) can legally assist the fiduciary in accessing the accounts, so long as the original user (the decedent) has explicitly directed the custodian to disclose information pertaining to the users’ digital assets.

Until Massachusetts adopts a version of the RUFADAA, it will remain imperative for individuals that own cryptocurrency to leave explicit instructions for their fiduciaries so they can access your digital assets. Most crypto platforms do not currently offer the ability to name a POD benficiary the same way most banks and brokerage platforms do. Thus, leaving your fiduciary explicit instructions to access your crypto assets is the only way to guarantee access to them after your death. Because as the law stands today, crypto custodians and trading platforms are not legally obligated to share any information with appointed fiduciaries.

Don’t Let Your Crypto Disappear

Digital assets are real property—just like cash, real estate, or typical financial investments, but they don’t come without their own unique risks. With recent developments in technology and the advancement of cryptocurrency and digital assets gaining popularity with investors, creating a plan for the transfer of these assets to your loved ones is crucial. Without proper planning, your cryptocurrency could be locked away and lost on the blockchain forever.

If you own crypto, NFTs, or any blockchain-backed assets, now is the time to integrate them into your estate plan. Our team of experienced estate planning attorneys at Lane, Lane & Kelly can help you:

• Create or update your Will or Trust to include digital assets and a Digital Access Guide.
• Create a secure Digital Access Guide with clear instructions for your Personal Representative or successor Trustee.
• Ensure that your estate plan, and all accompanying memorandums, such as your access guide, comply with Massachusetts law.
• Protect your crypto assets and help facilitate the smooth transfer of these assets.

Do you own cryptocurrency and have questions about incorporating these assets into your estate plan? Call us at (781) 848-0040 or click the link below to schedule your completely free, no obligation consultation and secure your digital assets today!

This blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this blog you understand that there is no attorney client relationship between you and Lane, Lane & Kelly, LLP.