Cryptocurrency and Fiduciary Duty: What Every Estate Planning Attorney Should Understand

The Growing Importance of Digital Wealth

Estate planning used to revolve around real estate, retirement accounts, and investment portfolios. In 2025, cryptocurrency isn’t replacing those assets, but it is becoming a factor that can’t be ignored. Gallup reports that ownership among U.S. investors has risen from single digits in 2021 to 17% today. Globally, more than 560 million people hold digital assets, with growth fastest among high-net-worth individuals (Triple A).

For attorneys, the rise of digital assets signals a new layer of complexity in estate planning conversations. Unlike traditional assets, crypto’s decentralized and anonymous structure makes it uniquely vulnerable to being lost forever if not properly planned for. That raises important fiduciary questions about marshaling, securing, and distributing these digital assets.

A Client Walks In: The Case of David Martinez

Imagine this scenario. You sit down with a new client, David Martinez, a 48-year-old divorced entrepreneur with two pre-teen children. David has the usual estate planning needs: trusts, life insurance, real property, but he also says:

“I hold about 15 Bitcoin on Coinbase, 400 Ethereum in a hardware wallet, and 10,000 Solana plus some Dogecoin in a mobile wallet. All told, these assets are currently worth just over $3 million. I want to make sure my kids can inherit them smoothly if something happens to me.”

This is where many attorneys might hesitate. Traditional assets are documented, traceable, and accessible through banks or custodians. Crypto is different. For lawyers advising clients like David, the conversation should cover three key areas: identifying the assets, securing access, and planning for distribution.

Step 1: Marshaling Digital Assets

The first challenge is simply making sure assets are known and locatable. Unlike a 401(k), there’s no annual statement mailed to the client’s home. Without disclosure, crypto can disappear into the digital ether.

In David’s case, the inventory is clear: Bitcoin on Coinbase, Ethereum in a hardware wallet, and Solana/Dogecoin in a mobile app. But not every client will be so organized. That’s why it’s critical to draw out this information methodically.

Key questions you should ask:

What kinds of crypto do you own, and in what amounts?
Where are they stored—exchange account, hardware wallet, software wallet, or custodial broker?
Do you keep transaction history, wallet addresses, or account records?
Are there clues in bank statements that show transfers to or from crypto exchanges?

By thoroughly identifying and documenting crypto holdings early, attorneys can ensure they’re accounting for the full scope of a client’s wealth. This step lays the foundation for effective estate planning and helps prevent assets from being overlooked or lost later.

Step 2: Securing Access for the Future

Next comes the thornier issue: access. Crypto security today can create estate nightmares tomorrow if handled poorly.

Coinbase (15 BTC): The executor or successor trustee will need David’s account information, a death certificate, and probate or trust documents. Coinbase, like other exchanges, has a process, but the executor or trustee must know the account exists.
Hardware wallet (400 ETH): This device resembles a USB stick, but it’s useless without the 24-word recovery phrase. If David doesn’t securely pass along both, the Ethereum is unrecoverable.
Mobile wallet (10,000 SOL + DOGE): Access depends on David’s phone’s passcode and the wallet’s seed phrase. If neither is documented, the assets vanish.

You must advise David on balancing today’s security (keeping wallets safe from hackers) with tomorrow’s accessibility (ensuring fiduciaries and heirs can actually access them). Options might include:

Step 3: Planning for Distribution

Even if crypto assets are inventoried and accessible, distribution raises another set of questions. If the estate planning documents are silent on how to manage and/or distribute the crypto assets, a successor trustee or executor may feel compelled to sell the crypto assets as soon as possible, as those assets may not meet the UPIA (Unified Prudent Investor Act) standards for investment management. So, you may want to address the following issues in your estate planning documents:

In kind or liquidate? Should heirs receive the crypto directly, or should assets be sold and distributed as cash? Given crypto’s volatility, distribution timing can have huge financial consequences.
Heirs’ knowledge: Are David’s children or their Guardians comfortable managing crypto wallets? Or would transferring coins directly set them up for mistakes and losses?
In-Trust or outright distribution? Distributing crypto assets into an irrevocable trust can allow for smoother transitions and on-going oversight, but the trustee must be prepared to manage these digital assets.

As crypto is still a relatively new asset type, many professional fiduciaries and institutional trustees may not be comfortable administering them, so it would be important to discuss a client’s situation with potential successor fiduciaries, to ensure that they will be willing to serve when the client needs them.

Practical Takeaways for Estate Planning Lawyers

David’s example illustrates how crypto assets complicate the estate planning process. Lawyers should consider integrating these questions into their standard practice:

Inventory

Access

Administration

By raising these issues early, lawyers fulfill their duty to safeguard assets and ensure client wishes are carried out.

Final Thoughts: Bridging Tradition and Innovation

Crypto assets highlight the evolving nature of fiduciary duty. They require trustees and executors not only to marshal, secure, and distribute wealth, but to do so in a way that accounts for new technology, new risks, and new expectations.

For lawyers, the takeaway is clear: crypto is no longer a fringe asset. It can represent millions of dollars in client wealth, as David’s story shows. Estate planning that fails to address it risks leaving heirs locked out—or worse, permanently losing assets.

By asking the right questions and partnering with fiduciaries who understand both traditional and digital wealth, attorneys can provide clients with peace of mind in an increasingly digital age. If you’re working with clients who hold cryptocurrency, now is the time to build strategies for marshaling, securing, and distributing those assets. Claridge Fiduciary Services can help you navigate these complexities with confidence.

Here’s how to connect: 503.899.2672 or darrell@claridgefs.com