Roughly 600 million people worldwide now own some form of cryptocurrency, and industry surveys suggest that perhaps half or a bit more use at least one self‑custody wallet where they control their own private keys, rather than relying solely on custodial platforms.

And that, estate planning attorney Harry Margolis said in a recent interview, can be a headache waiting to happen for heirs of those accounts. What follows is an edited transcript of that interview, revised for clarity and brevity.

The growing estate planning problem with crypto

Robert Powell: Many more people own Bitcoin and cryptocurrencies these days. But how do you leave those assets to your heirs without giving them the private key before you die? Here to talk with me about that is Harry Margolis, author of “Get Your Ducks in a Row.”

Harry, this is a new question the world is asking now that people own Bitcoin and crypto. People want to know how to pass it down to their heirs.

Harry Margolis: Yeah, it’s a tough question, and it’s coming up more and more. It involves a number of different issues.

From a legal standpoint, the easiest part is no different from any other asset. If your will says, “I give everything to my kids,” or to your dog Bozo, that governs most of the legal issues. You can give it away like any other asset.

The practical challenge of access

But there’s a practical problem, which your question raises. Your executor is supposed to carry out your wishes, but how do they actually access the account?

If you don’t want to give them your private key before you die, you’re going to have to find some way of providing access. That could mean writing it down and putting it in a safe deposit box. It could mean writing it down somewhere else and letting your executor know where to find it. It could mean storing it in a file on your computer and giving them access to the computer.

But you’re going to have to find some way to give them the information.

Exchange rules add another layer

Then there’s a third factor, which is also legal. A lot of people hold their crypto assets through an exchange.

In that case, you have to follow the rules of the exchange, and those rules are contractual. Even though your will may say, “I give everything to my kids,” you also have a contract with the exchange that governs how the account can be accessed. Your executor has to follow those rules.

So you really have three things to deal with:

• The estate planning documents that convey the property
• The contractual arrangement with the exchange
• The information that has to be conveyed, or at least be discoverable, when needed

Lost keys, lost inheritances

Robert Powell: Yeah, it’s complicated. In my case, I once owned, and maybe still do, an obscure cryptocurrency that I had to buy through a trust wallet that required seed words to access it. I’d be hard-pressed to tell you what those seed words are.

That asset isn’t going to anyone. It’s going to sit in some obscure wallet from here to eternity, I think.

Harry Margolis: I guess so. It’s unfortunate. Hopefully it’s not too valuable.

Robert Powell: I don’t think it’s valuable at all, which is the good news. But it does raise a broader issue. People who own crypto through trust wallets really need to keep track of everything someone would need to access that account, especially after they die.

Harry Margolis: Exactly.

Trusts complicate matters further

And it gets more complicated with trusts. A lot of people want to avoid probate, so they use trusts. But a trust only works if it’s funded, meaning the assets are properly titled in the name of the trust.

How that works with Bitcoin or other crypto isn’t always clear. To be honest, I’m not exactly sure how that’s handled in every case. That can make things difficult.

Simpler ownership may reduce risk

Robert Powell: Given the complexity you’ve outlined, it seems that owning crypto directly, where a private key is required, creates a real hurdle. Maybe it would be easier for people who want exposure to crypto to own it through an ETF or something that’s more easily transferred.

Harry Margolis: That certainly would be a lot easier.

A problem likely to grow

Robert Powell: And I imagine this problem isn’t going away. More people are interested in owning crypto and Bitcoin, and the problem only gets worse. I suspect there may be a lot of disappointed heirs who can’t access what they think is a significant fortune.

Harry Margolis: Yes, just like the people who have already lost great fortunes in Bitcoin because they lost their keys.

Final thoughts

Robert Powell: Any other advice before we wrap up?

Harry Margolis: Just what you said. There are new ways to own crypto, such as ETFs, and that may solve some of these problems.

Related: Does naming a beneficiary eliminate the need for a trust?