Written by Reid A. Winthrop, Managing Partner, Winthrop Law Group, PC Digital assets have moved from the fringes of speculation into the mainstream of finance. According to CoinDesk, stablecoins alone now account for more than $288 billion in circulation, with nearly 99% pegged to the US dollar. Tokenised bonds, real estate and even art are being traded daily across distributed ledgers and these real world assets that have been tokenised are projected to be worth $24 billion by the end of 2025 and up to $30 trillion by 2034. Yet beneath the promise of borderless liquidity and programmable money lies a vulnerability often overlooked until it is too late. What happens to digital wealth when its owner dies? 5% of Ethereum tokens and 20% of Bitcoins potentially lost forever Source: X/Coinbureau The central problem is one of irretrievability. In traditional finance, executors can locate bank accounts, contact custodians and obtain court orders to access frozen funds. On the blockchain, there is no such recourse — lose the private keys, and the assets are gone forever. Chainalysis estimates that as much as 3.7million Bitcoins worth approximately 20% of all Bitcoin has been lost and 5% of Ethereum tokens are lost due to inaccessible wallets, some forever locked behind forgotten seed phrases. The BBC reported the case of James Howells, who inadvertently threw away a hard drive containing 8,000 BTC, now worth close to a billion and the local council will not allow him to go search for his computer in the refuse tip where he believes the Bitcoins are stored. Unlike a misplaced stock certificate, blockchain-powered digital assets can vanish without a trace once authentication fails. Lawmakers are only beginning to grapple with this new frontier of inheritance. In the United States, adoption of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has given executors conditional rights to access accounts, provided explicit authorisation exists in wills or trusts. The Uniform Law Commission notes, however, that implementation varies widely across states, leaving estates vulnerable to patchwork enforcement. In the United Kingdom, the proposed Property (Digital Assets) Bill aims to classify crypto holdings as property, making them formally inheritable. Yet even here, the General Data Protection Regulation in Europe complicates matters, sometimes preventing executors from accessing personal digital data without explicit pre-death consent. In emerging markets, where tokenisation is accelerating fastest, probate systems often do not recognise digital assets at all, leaving heirs with no enforceable claim. The legal uncertainty is compounded by technical barriers. Many exchanges and platforms employ strict two-factor authentication systems that are tied to personal devices. If a phone is lost or a SIM card deactivated, heirs can find themselves permanently locked out. Terms of service often bar third-party access, even for executors with court approval. Big technology firms have tried to provide workarounds: Apple has introduced its “Legacy Contact” program, allowing users to designate successors to iCloud data and Google offers an “Inactive Account Manager” that transfers access after prolonged inactivity. Yet these remain fragmented solutions in a world where most blockchain-native platforms lack similar mechanisms. At the heart of the issue lies a deeper philosophical tension between self-custody and traditional custody services. Advocates of self-sovereignty argue that control of private keys embodies the very ethos of blockchain — financial independence from institutions. Yet this autonomy creates a profound estate planning risk if owners fail to pass on keys securely. According to Fidelity, fewer than 15% of holders of digital assets in 2024 had included these assets in their estate plans. By contrast, custodial models, where banks, platforms or exchanges manage client assets, allow smoother inheritance procedures but often blur the line between ownership and custodianship. When FTX and Celsius collapsed, users discovered that “their” crypto was legally part of the bankruptcy estate, leaving heirs with nothing more than creditor claims, as Reuters has detailed. Solutions are emerging, but none are yet universal. Some estate planners recommend maintaining a secure digital asset inventory, i.e. an encrypted record of wallets, platforms and authentication instructions kept offline or in a safety deposit box. Blockchain developers are experimenting with inheritance modules in smart contracts where ownership can automatically shift to heirs upon verification of a death certificate through trusted oracles. Multi-signature wallets, where heirs, executors and the original owner each hold a share of the signing authority, provide another safeguard, although they require technical literacy and trust. The notion of a “digital executor” is also gaining ground: a professional specifically tasked with navigating the technical and legal dimensions of digital estate transfer. But without global standards, such roles remain vulnerable to conflict across jurisdictions. Beyond the legal and technical hurdles lies a human reality — inheriting wealth is already a time of emotional complexity and therefore adding layers of cryptographic processes can deepen the burden. For heirs unfamiliar with digital finance, a stablecoin wallet or tokenised property dashboard may feel alien, even intimidating; the risk is that assets are sold prematurely, transferred incorrectly, or abandoned entirely. Clear communication in life, explaining what digital assets exist, how they fit into an investment strategy and why they were chosen may be as important as estate planning when it comes to digital assets. In the end, inheritance is not just about transmitting value, but about transmitting meaning. The next decade is likely to bring significant convergence between law, technology and financial practice. Regulators are beginning to recognise that tokenisation is not a niche but a structural shift. The European Union’s plan for a unified digital identity wallet could eventually integrate inheritance rights across borders. Platforms issuing tokenised assets may embed succession planning into their protocols, allowing owners to set heirs, contingent beneficiaries, and even conditional allocations directly into smart contracts. This could reduce disputes and ensure that assets remain productive rather than frozen in limbo. Yet technology cannot erase the paradox at the heart of the issue. The same features that make blockchain valuable (immutability, decentralisation and autonomy) make it resistant to human contingencies such as death. Will we see digital assets that have not been claimed or moved for 15 years being subject to the UK’s Dormant Assets Scheme, which, already, according the UK government, “has unlocked more than £745m for social and environmental initiatives, from over £1.35bn in dormant bank and building society accounts”? Legal harmonisation may narrow gaps, custodial platforms may offer bridges and smart contracts may automate transfers, but the irreducible challenge remains. How to align a self-sovereign system with the collective needs of society? How can we protect a decentralised product from being lost forever? And, is there an insurance product that can be developed to bring confidence to these assets? Digital inheritance is thus more than a private planning concern — it is a stress test for the entire digital economy. If billions in tokenised wealth disappear each year into inaccessible wallets, confidence in blockchain as an infrastructure for intergenerational wealth will erode. Conversely, if frameworks for secure transfer mature, blockchain technology could underpin not just the circulation of value in life, but the preservation of legacies across generations. Which raises the central question: can digital finance evolve fast enough to ensure that the wealth we create in code survives us in the world of flesh and blood? Reid Winthrop is an attorney at Winthrop Law Group, PC in Newport Beach, California, where he advises clients on business and technology matters, including digital asset regulation and insurance issues. This article is for informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship. The views expressed are those of the author and not legal advice. Readers should consult qualified counsel regarding their own circumstances. Lost keys, lost fortunes: the inheritance crisis of digital assets was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this storyWritten by Reid A. Winthrop, Managing Partner, Winthrop Law Group, PC Digital assets have moved from the fringes of speculation into the mainstream of finance. According to CoinDesk, stablecoins alone now account for more than $288 billion in circulation, with nearly 99% pegged to the US dollar. Tokenised bonds, real estate and even art are being traded daily across distributed ledgers and these real world assets that have been tokenised are projected to be worth $24 billion by the end of 2025 and up to $30 trillion by 2034. Yet beneath the promise of borderless liquidity and programmable money lies a vulnerability often overlooked until it is too late. What happens to digital wealth when its owner dies? 5% of Ethereum tokens and 20% of Bitcoins potentially lost forever Source: X/Coinbureau The central problem is one of irretrievability. In traditional finance, executors can locate bank accounts, contact custodians and obtain court orders to access frozen funds. On the blockchain, there is no such recourse — lose the private keys, and the assets are gone forever. Chainalysis estimates that as much as 3.7million Bitcoins worth approximately 20% of all Bitcoin has been lost and 5% of Ethereum tokens are lost due to inaccessible wallets, some forever locked behind forgotten seed phrases. The BBC reported the case of James Howells, who inadvertently threw away a hard drive containing 8,000 BTC, now worth close to a billion and the local council will not allow him to go search for his computer in the refuse tip where he believes the Bitcoins are stored. Unlike a misplaced stock certificate, blockchain-powered digital assets can vanish without a trace once authentication fails. Lawmakers are only beginning to grapple with this new frontier of inheritance. In the United States, adoption of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has given executors conditional rights to access accounts, provided explicit authorisation exists in wills or trusts. The Uniform Law Commission notes, however, that implementation varies widely across states, leaving estates vulnerable to patchwork enforcement. In the United Kingdom, the proposed Property (Digital Assets) Bill aims to classify crypto holdings as property, making them formally inheritable. Yet even here, the General Data Protection Regulation in Europe complicates matters, sometimes preventing executors from accessing personal digital data without explicit pre-death consent. In emerging markets, where tokenisation is accelerating fastest, probate systems often do not recognise digital assets at all, leaving heirs with no enforceable claim. The legal uncertainty is compounded by technical barriers. Many exchanges and platforms employ strict two-factor authentication systems that are tied to personal devices. If a phone is lost or a SIM card deactivated, heirs can find themselves permanently locked out. Terms of service often bar third-party access, even for executors with court approval. Big technology firms have tried to provide workarounds: Apple has introduced its “Legacy Contact” program, allowing users to designate successors to iCloud data and Google offers an “Inactive Account Manager” that transfers access after prolonged inactivity. Yet these remain fragmented solutions in a world where most blockchain-native platforms lack similar mechanisms. At the heart of the issue lies a deeper philosophical tension between self-custody and traditional custody services. Advocates of self-sovereignty argue that control of private keys embodies the very ethos of blockchain — financial independence from institutions. Yet this autonomy creates a profound estate planning risk if owners fail to pass on keys securely. According to Fidelity, fewer than 15% of holders of digital assets in 2024 had included these assets in their estate plans. By contrast, custodial models, where banks, platforms or exchanges manage client assets, allow smoother inheritance procedures but often blur the line between ownership and custodianship. When FTX and Celsius collapsed, users discovered that “their” crypto was legally part of the bankruptcy estate, leaving heirs with nothing more than creditor claims, as Reuters has detailed. Solutions are emerging, but none are yet universal. Some estate planners recommend maintaining a secure digital asset inventory, i.e. an encrypted record of wallets, platforms and authentication instructions kept offline or in a safety deposit box. Blockchain developers are experimenting with inheritance modules in smart contracts where ownership can automatically shift to heirs upon verification of a death certificate through trusted oracles. Multi-signature wallets, where heirs, executors and the original owner each hold a share of the signing authority, provide another safeguard, although they require technical literacy and trust. The notion of a “digital executor” is also gaining ground: a professional specifically tasked with navigating the technical and legal dimensions of digital estate transfer. But without global standards, such roles remain vulnerable to conflict across jurisdictions. Beyond the legal and technical hurdles lies a human reality — inheriting wealth is already a time of emotional complexity and therefore adding layers of cryptographic processes can deepen the burden. For heirs unfamiliar with digital finance, a stablecoin wallet or tokenised property dashboard may feel alien, even intimidating; the risk is that assets are sold prematurely, transferred incorrectly, or abandoned entirely. Clear communication in life, explaining what digital assets exist, how they fit into an investment strategy and why they were chosen may be as important as estate planning when it comes to digital assets. In the end, inheritance is not just about transmitting value, but about transmitting meaning. The next decade is likely to bring significant convergence between law, technology and financial practice. Regulators are beginning to recognise that tokenisation is not a niche but a structural shift. The European Union’s plan for a unified digital identity wallet could eventually integrate inheritance rights across borders. Platforms issuing tokenised assets may embed succession planning into their protocols, allowing owners to set heirs, contingent beneficiaries, and even conditional allocations directly into smart contracts. This could reduce disputes and ensure that assets remain productive rather than frozen in limbo. Yet technology cannot erase the paradox at the heart of the issue. The same features that make blockchain valuable (immutability, decentralisation and autonomy) make it resistant to human contingencies such as death. Will we see digital assets that have not been claimed or moved for 15 years being subject to the UK’s Dormant Assets Scheme, which, already, according the UK government, “has unlocked more than £745m for social and environmental initiatives, from over £1.35bn in dormant bank and building society accounts”? Legal harmonisation may narrow gaps, custodial platforms may offer bridges and smart contracts may automate transfers, but the irreducible challenge remains. How to align a self-sovereign system with the collective needs of society? How can we protect a decentralised product from being lost forever? And, is there an insurance product that can be developed to bring confidence to these assets? Digital inheritance is thus more than a private planning concern — it is a stress test for the entire digital economy. If billions in tokenised wealth disappear each year into inaccessible wallets, confidence in blockchain as an infrastructure for intergenerational wealth will erode. Conversely, if frameworks for secure transfer mature, blockchain technology could underpin not just the circulation of value in life, but the preservation of legacies across generations. Which raises the central question: can digital finance evolve fast enough to ensure that the wealth we create in code survives us in the world of flesh and blood? Reid Winthrop is an attorney at Winthrop Law Group, PC in Newport Beach, California, where he advises clients on business and technology matters, including digital asset regulation and insurance issues. This article is for informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship. The views expressed are those of the author and not legal advice. Readers should consult qualified counsel regarding their own circumstances. Lost keys, lost fortunes: the inheritance crisis of digital assets was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story