Cryptocurrency presents unique inheritance challenges that no other asset class creates. Unlike a bank account or brokerage, there is no institution that can reset your password, no customer service to call, and no form to fill out. If the private keys or recovery phrases are lost, the funds are gone permanently.
Understanding crypto custody models
Where your cryptocurrency is stored determines how it can be inherited. There are three primary custody models, each with different implications for estate planning.
Exchange custody (Coinbase, Binance, Kraken)
When crypto is held on an exchange, the exchange controls the private keys. This is the easiest model for inheritance because exchanges generally have processes for handling deceased account holders, though they require legal documentation like death certificates and probate letters.
Hardware wallets (Ledger, Trezor)
Hardware wallets store private keys on a physical device. Access requires both the device and a PIN. If the device is lost or damaged, the wallet can be recovered using the 24-word recovery phrase. This recovery phrase is the single most critical piece of information for crypto inheritance.
Software wallets (MetaMask, Trust Wallet)
Software wallets run on a phone or computer. Like hardware wallets, they can be recovered using a seed phrase. The risk here is that the seed phrase may only exist on the device itself, making it vulnerable to device failure or account lockout.
Steps to protect your crypto inheritance
- Document every wallet and exchange account you hold crypto on
- Record the type of wallet (exchange, hardware, software) for each
- Store recovery phrases securely - never in plain text on a connected device
- Specify what should happen to each holding (transfer to beneficiary, liquidate, hold)
- Include step-by-step recovery instructions specific to each wallet type
- Consider using a digital executor service that encrypts and stores access details
- Review and update your plan quarterly as holdings change
Never store recovery phrases in email, cloud notes, or screenshots. These are the first places attackers check.
Time sensitivity in crypto inheritance
Unlike stocks or real estate, cryptocurrency values can change dramatically in hours. A well-structured inheritance plan should account for urgency, particularly if the intent is to liquidate holdings. Some DeFi positions may also have ongoing costs (gas fees, impermanent loss) that make timing critical.
Working with a service that understands these time constraints, and that can provide verified instructions to an executor quickly, can mean the difference between preserving value and losing it to market volatility or protocol changes.