Cryptocurrency Inheritance Planning
Putting your Bitcoin seed phrase in your will means anyone who reads the will during probate can steal your crypto. Leaving no plan means your crypto is lost forever. Here is how to structure crypto inheritance so your heirs actually receive it — and thieves do not.
Crypto inheritance is harder than traditional inheritance because there is no bank or brokerage to call. If your heirs do not have your private keys, the crypto is gone forever. An estimated 20% of all Bitcoin (over 3 million BTC) is already lost to forgotten passwords, lost seed phrases, and deceased owners with no recovery plan. Yet putting your seed phrase in a will is dangerous — wills become public records during probate, and anyone can read them. You need a structured approach that balances accessibility for your heirs with security during your lifetime. The right solution depends on the size of your holdings, your technical comfort level, and whether you want to involve professionals. Multi-sig wallets: the foundation of crypto inheritance →
The Three Approaches to Crypto Inheritance
Approach 1: Single hardware wallet with documented instructions (for holdings under $10,000). Store your seed phrase on a metal plate in a fireproof safe. Write clear instructions for your heirs: what wallet you use, where the seed phrase is located, how to restore it on a new device, and which exchanges to use to sell if they want to cash out. Keep the instructions separate from the seed phrase itself — in a letter with your will or with your estate planning attorney. The instructions should not contain the seed phrase, just directions to where it is stored. Risk: if someone finds both the instructions and the seed phrase location, they can steal everything. Only use this method for small amounts.
Approach 2: Multi-sig wallet with key distribution (for holdings $10,000 to $500,000). Set up a 2-of-3 multi-sig wallet. Hold two keys yourself. Give the third key to a trusted family member, your attorney, or a crypto inheritance service. Leave instructions in your will explaining: the wallet is multi-sig, which third party holds the additional key, the blockchain and wallet software used, and how to restore access. Since one key alone is useless, a will reader cannot steal your funds, but your heirs can combine their inherited key with the key from the third party to recover access. This is the most balanced approach for most crypto holders. How to set up a 2-of-3 multi-sig wallet →
Approach 3: Professional crypto inheritance service (for holdings over $500,000). Companies like Casa (Bitcoin-only) and Unchained Capital (Bitcoin-only) offer multi-sig vaults with professional inheritance services. You hold 2 keys, they hold 1 key. Upon your death, your heirs contact the service, verify the death certificate, and receive the key. Some services offer time-locked recovery — if you do not check in for 6-12 months, keys are released to designated beneficiaries. For Ethereum and DeFi assets, there is no equivalent service yet — you will need to use a smart contract-based inheritance solution.
What to Document for Your Heirs
Create a "crypto asset inventory" document that does NOT contain private keys but tells your heirs everything else they need: a list of all cryptocurrencies and approximate amounts, the blockchain networks they are on (Bitcoin, Ethereum, Solana, etc.), the wallet type (hardware wallet model, software wallet, exchange), the wallet software needed to restore (Electrum, MetaMask, Phantom, Ledger Live), the derivation path if non-standard, any staking or DeFi positions that need to be unwound, owed taxes on staking rewards or DeFi income, and who to contact for help (the attorney, the third-party key holder, the crypto inheritance service). Store this inventory with your will and update it annually. Without this document, your heirs may have the seed phrase but still be unable to access funds because they do not know which wallet software to use or which blockchain the assets are on.
What NOT to Do
- Do not put your seed phrase in your will. Wills become public during probate. Anyone can walk into the courthouse and read it. Your seed phrase would be visible to anyone — including the probate clerk, your estranged relatives, and identity thieves.
- Do not put your seed phrase in a safe deposit box. In many jurisdictions, safe deposit boxes are sealed upon the owner's death until a court order is obtained. Your heirs may wait months or years to access it.
- Do not rely on a single person as your "crypto executor" without a backup. If that person dies or becomes incapacitated before you, your plan fails. Always have a backup.
- Do not assume your heirs know anything about crypto. Write instructions as if explaining to someone who has never used crypto. Include screenshots. Name a specific person they can call for help.
- Do not forget about small amounts on exchanges. Many people leave small amounts on exchanges that their heirs never find. Document every exchange account, even if the balance is small.
Tax Implications for Heirs
Crypto inherited at death receives a step-up in basis in some jurisdictions but not others. In the US, the IRS has not issued definitive guidance on whether crypto receives a step-up in basis at death. Most tax professionals believe it should (crypto is property, and inherited property generally gets a step-up), but the lack of clear guidance creates uncertainty. The conservative approach: heirs should sell inherited crypto promptly if they want to minimize tax risk, using the date-of-death value as the estimated cost basis. For estates large enough to owe federal estate tax ($13.61M+ in 2026), crypto is included in the estate at its fair market value on the date of death. Heirs should consult a crypto-savvy CPA. In many other countries (UK, Canada, Australia), crypto is treated as an asset and may be subject to inheritance tax or capital gains tax on deemed disposition at death. Local rules vary significantly. Crypto tax rules explained →