Crypto, Private Keys, and What Happens When You Die

Cryptocurrency is the only asset class where a loss of access — not a market decline — can erase everything. That risk doesn’t disappear when you die.

In 2013, a British IT worker named James Howells accidentally discarded a hard drive during a home cleanout. The drive contained the private key to 8,000 Bitcoin. For over a decade, he has attempted to persuade local authorities to allow him to excavate the landfill where he believes it is buried — offering to purchase the site, fund the excavation, share proceeds. The answer has remained no.

As of 2025, that buried drive represents approximately $923 million in value.

I lead with this story not for dramatic effect but because it illustrates something that every cryptocurrency holder and every estate planning client needs to understand: crypto is fundamentally unlike any other asset. A private key is not a password that can be reset. It is not a credential that a financial institution can restore. It is the proof of ownership. Without it, the asset doesn’t become difficult to access. It becomes permanently, irreversibly inaccessible.

And that risk doesn’t end when you die. If your executor cannot locate your wallet, your seed phrase, and the authentication steps required to access your holdings, your crypto may be worth nothing to your estate regardless of what the market does.

Crypto is the only asset where losing access — not the market — can erase everything. Plan accordingly.

Crypto Has Entered the Mainstream

This is not a niche concern. A June 2025 Gallup survey found that fourteen percent of all US adults own Bitcoin or another cryptocurrency — rising to nearly twenty-five percent among men ages eighteen to forty-nine. Other estimates put US crypto ownership as high as sixty-five million adults.

Bitcoin's ten-year return has exceeded 26,000 percent, a figure that has drawn not just individual investors but institutional capital, financial advisors, and mainstream retail investors. Bitcoin alone holds a market capitalization near $2 trillion. The IRS treats cryptocurrency as property under existing guidance, meaning that sale, transfer, or exchange events trigger capital gains — a consideration that extends into estate administration when assets are sold to satisfy debts or distribute to heirs.

Crypto is no longer an edge case in estate planning. For clients who hold it, it is a material asset that requires specific, deliberate planning.

What Makes Crypto Different in an Estate Plan

Most financial assets have institutional backstops. A bank account can be accessed by a court-authorized executor. A brokerage account has a custodian with established procedures for estate transfers. Crypto, particularly self-custody crypto, has none of that. There is no institution to call. There is no recovery process. The blockchain itself is decentralized by design — which is part of what makes it appealing, and part of what makes it uniquely risky without planning.

The access architecture for crypto typically involves some combination of the following: a private key, a seed phrase (a sequence of twelve to twenty-four words that can regenerate the private key), a hardware wallet or device, multi-factor authentication through an authenticator app, and in some cases a custodial exchange account with its own login credentials. Each of those elements needs to be documented, stored securely, and accessible to the right people — without being so accessible that they create a theft or security risk.

That is a precise balance. And it is one that requires advance planning, not a note left in a drawer.

The Estate Planning Gaps I See Consistently

When clients come to me holding cryptocurrency, the gaps in their existing structure tend to cluster around a few consistent issues.

The first is disclosure. Many clients don’t mention crypto holdings unless asked directly. Small experimental positions, wallets opened years ago, holdings across multiple platforms — these don’t always surface in an initial planning conversation. The result is that an executor may not know the asset exists, let alone where to find it.

The second is access documentation. Even when clients know their crypto exists and want it preserved, the access information — seed phrases, private keys, hardware wallet locations, exchange credentials — is often stored insecurely, incompletely, or in a way that a non-technical executor couldn’t navigate. A handwritten note in a drawer is not an access plan.

The third is executor readiness. Many executors are not technically equipped to manage cryptocurrency. They may be trustworthy and organized, but unfamiliar with wallets, seed phrases, or blockchain transfers. Naming a digital executor or co-executor with the technical competency to handle this, or ensuring that the primary executor has clear guidance, is part of the planning work.

The fourth is document authority. A will or trust that authorizes a fiduciary to manage financial accounts may not expressly authorize access to digital wallets under California’s digital assets law. Without express authorization, even a well-intentioned executor may face legal barriers. The documents need to be drafted specifically to address this.

Without a private key plan in your estate documents, your executor has no legal mechanism to recover what you’ve built.

What a Crypto-Inclusive Estate Plan Looks Like

At Ettienne Law, digital assets are a standard component of a Comprehensive Legacy Assessment — not an add-on. For clients who hold cryptocurrency, that means working through several specific questions.

Is the crypto held in self-custody or through a custodial exchange? Self-custody requires private key documentation. Exchange-held crypto requires account credentials and beneficiary designation review, since many exchanges have their own transfer-on-death procedures that may or may not align with your estate plan.

Are the access credentials documented, stored securely, and accessible to the right people without being a security vulnerability? This is not the same as sharing passwords with family members. It means a structured, secure, and legally coherent access plan that a fiduciary can execute.

Do the estate planning documents expressly authorize fiduciary access to digital assets under applicable California law? This is a document drafting question, not an assumption.

Is the executor technically equipped to handle crypto transfers, or does naming a digital executor or co-executor make sense?

Are the tax implications of estate crypto transfers understood? Crypto held at death receives a step-up in basis under current law, but the treatment of gains during estate administration requires tax coordination.

These are not theoretical questions. They are the operational details that determine whether your crypto actually reaches your intended beneficiaries or disappears into an inaccessible wallet.

Your Next Step

If you hold cryptocurrency and your current estate plan doesn’t specifically address it — or if you’re unsure whether it does — that gap is worth closing before it becomes someone else’s problem.

A Comprehensive Legacy Assessment is the right starting point.

You may schedule a complimentary 15-minute discovery call to explore next steps.

This article is provided for general informational and educational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship. Cryptocurrency regulations, tax treatment, and estate planning requirements vary and are subject to change. You should consult with a qualified attorney and tax professional regarding your specific situation before taking action.