Cryptocurrencies are a new, exciting, and rapidly growing asset class. The problem is that they're not treated like other assets and for the most part competent estate planning has not been implemented in most portfolios.

Ask yourself, do you know what will happen to your crypto if something happens to you? Are they held with a broker, like Coinbase or Binance, or are they held in a private wallet?

Due to its anonymity and risk, traditional estate planning documents, including a Last Will and Testament and Trust Agreement are not well-suited to affect a transfer of cryptocurrency. Not only must a practitioner examine where digital assets exist online and how the cryptocurrency will be accessed/transferred to the beneficiaries, but they must also ensure that there is specific language included in the client’s estate plan which permit fiduciaries to access and manage the cryptocurrency.

Moreover, it is particularly important to document your cryptocurrency holdings with your estate planning attorney. Consideration must be made to ensure that assets are not lost following the owner’s death and can ultimately be distributed to intended beneficiaries. If an owner dies without passing on their private key, or if a key is discarded after death, heirs may ultimately discover the assets, but be unable to access them.

Whether you have $100 in your crypto wallet or keep a lifetime’s worth of crypto savings stowed offline in cold storage, you should have a plan to help your next of kin access the money in case you die. An unknown amount of Bitcoin — which has max of 21 million coins — is likely already lost forever, due to buyers who have died without a clear plan for succession and handling of their digital assets.

There are many real-life examples of this:

In 2019, the founder of Canada's largest crypto exchange Gerald Cotten's unexpected death led to a shock wave when his wife told the investors that the private customer keys to $135 million in cryptocurrency were only with Cotten.

In another incident, James Howells from the United Kingdom who had mined 7,500 Bitcoins and stored them on the hard drive of his laptop, were lost when he inadvertently threw away the hard drive while cleaning his home in 2013. According to today's price, those bitcoins are worth approximately $255 million.

In total, nearly $30 billion worth of Bitcoin has been lost to date, according to Coincover

Don’t let your hard work and competent investing go to waste. When it is time for your assets to be distributed be prepared.

If you found this interesting, subscribe to our blog. More articles on Cryptocurrency are coming, including important tax information.