Every year, a meaningful amount of bitcoin becomes permanently inaccessible because its owner died or was incapacitated without leaving a way in. Banks have procedures for heirs; a self-custody wallet does not. Whoever has the recovery phrase controls the funds, and a court order cannot recreate a lost phrase. This guide shows how to build an inheritance plan that lets the right people recover your crypto later without making it easy for the wrong people to steal it now.
You can follow along with our free crypto inheritance checklist, which prints as a one-page plan and never asks for any secret.
The core problem: access vs security
A good plan balances two risks that pull in opposite directions:
Writing the seed phrase into your will solves the first and creates the second: wills are read by several people and in some countries can become accessible to others. Keeping everything in your head solves the second and guarantees the first. The goal is a setup where no single person, document or place is enough to move the funds, but a defined combination is.
Step 1: make an inventory (without secrets)
List what exists, by name and type:
Do not include seed phrases, passwords or PINs in the inventory. It is a map, not a vault. The portfolio tracker template has a “where held” column that doubles as a simple inventory.
Step 2: make the backups durable
Paper fades, burns and gets thrown out in a house clearance. For long-term plans, store recovery phrases on metal. Because the first four letters of every BIP39 word are unique, stamping four letters per word is enough — a 24-word phrase is 96 letters. The metal backup planner calculates plates, stamping time and storage locations, and prints a blank worksheet. Use the BIP39 word list to double-check a single word’s spelling — never type a whole phrase into any website.
Test every backup by restoring it once. An untested backup is a hope, not a plan.
Step 3: choose a structure
| Structure | How it works | Good for |
|---|---|---|
| Single seed, two copies in separate places | Either copy restores the wallet | Small to medium holdings, simple families |
| Seed + passphrase stored separately | Seed alone opens an empty wallet; both together open the real one | Adding protection against someone finding one backup |
| Multisig (e.g. 2-of-3) | Three keys, any two can spend | Larger holdings; one lost or stolen key is not fatal |
| Shamir backup (SLIP-39, e.g. 2-of-3 shares) | The secret is split mathematically into shares; any two restore it | Similar protection with one wallet; needs a SLIP-39-compatible wallet |
| Collaborative custody services | A company holds one key in a multisig and helps heirs | People who want professional help without giving full control |
Do not split a seed phrase in halves. It looks clever but creates two single points of failure, and a stolen half of a 12-word phrase leaves only about 62 bits of security — within reach of a determined attacker. Use multisig or SLIP-39 instead.
Step 4: write a letter of instruction
The letter is what your heirs will actually read. Write it for someone who has never used crypto:
Store the letter separately from the backups — with your lawyer, notary or will — and tell your executor it exists. Your will can mention that digital assets exist and refer to the letter without containing any secret.
Step 5: exchange accounts
Coins on exchanges are claimed through the platform’s procedures, usually with a death certificate, proof of inheritance and identity documents of the heir. Help your heirs by listing every platform and the e-mail used, and by storing 2FA recovery codes with the instructions. Consider moving long-term holdings into self-custody, where your plan — not a support queue — decides what happens. See how to move crypto from Binance to self-custody.
Step 6: rehearse and review
Taxes and legal points
Inherited crypto is treated like other inherited property in many countries — inheritance tax may apply, and the heir’s cost basis may be the value at the date of death or the deceased’s original cost, depending on the jurisdiction. Your records of purchases and holdings make the estate’s and the heirs’ tax work far easier. Ask a lawyer how to reference digital assets in a will in your country; this guide is not legal advice.
What heirs should do first
If you are the heir reading this:
If the funds need to be divided between several heirs, it may be easiest to convert to a stablecoin first and split the amount — for example with BTC to USDT — or to divide the coins directly to each heir’s wallet.
Common mistakes
A worked example
Maria holds about 1.5 BTC and some ETH. Her plan:
A burglar who finds the home safe gets a seed that opens an empty wallet without the passphrase. Her brother alone has a passphrase with no seed. Her heirs, with the letter, can gather the safe-deposit plate (through the estate process), the home plate and the passphrase. Each piece alone is useless; together they are enough.
Summary
A crypto inheritance plan is an inventory, durable tested backups, a structure that tolerates one loss or theft, and a plain-language letter stored separately. It takes an afternoon to set up and a few minutes a year to maintain. Start with the inheritance checklist, plan your metal backup, and make sure at least one trusted person knows the plan exists.