What Happens to Your Crypto When You Die: The Complete Guide

With crypto, you gain direct control of your financial assets and the ability to transact globally without intermediaries, but you also bear the responsibility of securing your private keys that unlock access to your funds. 

You may have already heard about why it’s important to protect these keys: they are the only way you can control those accounts. If you lose access to them, you have no way to access your crypto. That also goes for your family members if you die. If they can’t access your private keys, they will never gain access to your crypto. 

Between 2.3 and 4 million Bitcoin (11-18% of total supply) have already vanished permanently, with deaths without inheritance plans contributing significantly to that number. According to analyst insights based on a 2024 Bank of America report, experts project $6 trillion in crypto assets will transfer via inheritance by 2045.

So if you’ve ever wondered “What exactly happens to my Bitcoin when I’m gone?” – you’re at the right place.

Why Crypto Gets Lost (With No One To Inherit It)

Unlike banks with recovery mechanisms, blockchains are typically decentralized. That means there is no centralized body that can approve claims to funds of a user that dies. 

What Must Be Inherited: It’s Not the Crypto

Because decentralization is crypto’s core design principle, you can’t transfer an “account” like at a bank. Instead, you must transfer the thing that proves control. One of the biggest myths about crypto inheritance is that heirs need to inherit actual “coins” stored somewhere in the device or app that they hold access to. 

In reality, cryptocurrencies remain permanently recorded on their respective blockchains.

What must actually transfer is signing authority—the cryptographic proof that allows someone to authorize transactions, a.k.a your private keys.

Private keys serve as the sole mechanism for generating these signatures, and when someone dies holding the only copy, those assets become inaccessible. The blockchain has no concept of death certificates or legal succession. It simply waits for a signature that will never come.

Bitcoin uses cryptography so complex that guessing the right key is impossible even with all of Earth’s computing power running for billions of years.  

In practice, private keys are never handled directly, they’re stored as a 12- or 24-word seed phrase, the human-readable backup that can regenerate your keys on any device. At the very least, if you’re using a hardware wallet (signer), heirs need physical access to the device AND its PIN code; without both, the device is a brick. 

This means your inheritance plan must specify not just who gets what, but whether they receive seed phrases (written on paper or metal) or devices with PINs stored separately.

Why Your Seed Phrase Is Key

Most modern wallets use a seed phrase, a sequence of 12 or 24 words, that generates all your private keys through a standardized mathematical process. This means you don’t need to back up each individual private key; the seed phrase reconstructs them all.

When a crypto holder dies with the only copy of their seed phrase, the blockchain permanently freezes those assets. A Cremation Institute study found that nearly 90% of crypto holders worry about inheritance, yet only a small fraction create formal plans because they don’t know where to start.

Should they write down their seed phrase? Where should they store it? Who should know about it? Storing seed phrases where heirs can’t find them, or storing them where thieves can, could mean immediate and permanent loss.

How Crypto Loss Actually Happens          

Most crypto losses follow predictable patterns: owners falling for hacks or scams, seed phrases lost or destroyed by fire or water, owners passing away without documenting access, signers (hardware wallets) with unknown (or forgotten) PINs, or multisignature setups missing critical signers. 

These failures all stem from one fundamental difference: unlike traditional finance, crypto has no institutional safety net to fall back on. The protocol treats all signature requests identically; whether from the original owner, their designated heir, or a thief.

Let’s understand how these losses amplify when it comes to crypto or Bitcoin inheritance.

You use a centralized platform that limits access to your heir

Exchange accounts without designated beneficiaries can require months of legal battles and cannot be trusted as safe storage due to counterparty risk.

Your heir can’t access your signer

They never received the signer, or it’s locked in a safe they can’t open. Even if they have it, without the PIN code, often stored only in your head or a separate location, they’re locked out permanently after three wrong attempts on most devices.

Your heir doesn’t have access to your seed phrase

If your heirs cannot access the signer, or don’t have the PIN, they could still be able to reconstruct the crypto wallet using the seed phrase. But if they can’t access your seed phrase, they can’t access your funds. If you stored it in a safe deposit box but died suddenly, they need court orders to access the box, which can take months while crypto markets move and private keys remain frozen.

Your heir doesn’t know how to recover your accounts

Your executor finds a 24-word seed phrase but types it into a Google search bar, downloads the first “Bitcoin wallet” they see (a phishing site), and loses everything. Or they have two Ledger signers but don’t understand your 2-of-3 multisig requires both signatures—so they spend weeks trying to access funds with one seed phrase while the third key holder is unreachable. 

You wrote instructions, but they’re in a password manager they can’t access, or use technical terms like “BIP39 derivation path” that mean nothing to them. A 2-of-3 multisignature wallet becomes permanently locked when two signers are unavailable. Even strong physical security can backfire. Safe deposit boxes become inaccessible if executors don’t know which institution holds them. 

Your heir mishandles your recovery plan and/or gets scammed

You left perfect instructions, but your heir—eager to access funds—connects their wallet to a “support agent” who asks them to “verify ownership” by signing a transaction, which drains the account. Or they photograph the seed phrase and text it to a family member, not realizing screenshots auto-upload to cloud storage where hackers steal them. They have the right info but lack security instincts, turning your careful plan into a theft invitation.

Untrained family members may enter seed phrases into phishing sites, resulting in immediate theft.

Before you set up your inheritance plan, make sure your crypto is secure         

Before you write the instructions that will unlock your crypto for your heirs, make sure you’re not also writing a playbook for thieves. 

Inheritance planning is the art of sharing secrets, but every heir, guardian, or service you add becomes a potential point of failure (or a target). The security habits that “worked so far” for you alone will collapse when multiple people start handling seed phrases, devices, and PINs. A single compromised key risks your entire family’s inheritance.

The two non-negotiable pillars are simple: always use a non-custodial wallet, and always store private keys offline in hardware.

Always Choose a Non-custodial Wallet

Custodial wallets (like exchanges) don’t give you access to your own private keys, so you’re trusting a third party with complete control over your digital assets. When a custodian fails, your assets vanish, along with any inheritance plan.

Non-custodial wallets give you direct control of your private keys, embodying crypto’s core principle: “not your keys, not your coins.” Within non-custodial options, software wallets on phones or computers are convenient but store keys on internet-connected devices with screens that can be hacked or manipulated, making them vulnerable to malware and phishing attacks.

For crypto inheritance, this risk is unacceptable. 

This is why we focus on non-custodial hardware wallet setups that give you true ownership and control for the sections ahead.

Opt for Offline Private Key Storage

Hardware wallets (also known as signers) address the security-accessibility trade-off by keeping your keys offline and tamper-proof.

To explain, hardware wallets, such as Ledger signers, keep each key isolated from your internet-connected device. For Ledger signers specifically, your private keys are stored inside a Secure Element chip, the same ones used in biometric passports and banks. To sign any transaction, these types of wallets require physical approvals.

This keeps your crypto safe from online attacks. That’s why it’s imperative to use hardware wallets such as Ledger signers to protect your private keys—whether you opt for a single-signature set up or a multi-sig approach. 

Furthermore, with Ledger’s Clear Signing initiatives, you’ll get to see exactly which wallet, address, and action you’re signing in understandable, human-readable text.

Crypto Inheritance Strategies

Crypto inheritance requires balancing two opposing risks: locking information so tightly that heirs never find it, or making it so accessible that thieves can steal it while you’re alive. 

The solution is information separation – splitting what you own, where it’s stored, and how to access it across multiple people and locations so no single point of compromise destroys everything.

1. Hardware Wallet + Documented Inheritance Plan

Most individual holders who want strong security and full control use a secure hardware signer to secure their assets. You hold keys on a hardware signer that signs transactions offline, then document where the device is stored, how to unlock it (PIN), and where to find the seed phrase backup.

Choosing the Hardware wallet (signer) approach means one seed phrase has complete control over all of your accounts. Think of it like a solo bank account where only one signature is needed to move money, but if that one mnemonic is lost, everything is lost.

Every multisig key is still a private key.

If even one of them lives in a software wallet on a phone or laptop, the entire setup becomes easier to compromise. That matters even more during inheritance. Heirs are more vulnerable to phishing, fake recovery tools, and well-meaning but dangerous advice. Ledger’s on-device verification makes it extremely difficult to trick someone into signing the wrong transaction.

With this setup, heirs need your complete seed phrase (12 or 24 words generated when you first set up your wallet). If you’ve added a passphrase (sometimes called the “25th word”), they need that too, since without it, they won’t gain access to all of your accounts.

With a single-signature hardware wallet (signer) setup, heirs need both the physical signer and the PIN that unlocks it, or simply access to the signer’s seed phrase. Often, providing the heir with the seed phrase is the most fail-safe option, since giving them only the PIN Code will not help them if they mishandle or lose the signer itself. 

This means relying on passing on the device may not be the best option: if the device falls into the wrong hands and they try to brute force the PIN, or if you record the PIN incorrectly, your heir will not be able to access your crypto. 

• Security rating: High (when properly implemented)
• Inheritance complexity: Moderate-to-high (depends on heirs’ technical comfort)

2. Multisig for Bitcoin

A multisignature (multisig) wallet requires multiple private keys to authorize transactions, like requiring 2 out of 3 board members to sign a company check. Losing one key doesn’t lock you out, and no single person can move funds alone.

Instead of relying on one private key, a multisig wallet requires multiple approvals to move funds. The most common setup is a 2-of-3 wallet, where any two keys can authorize a transaction. This is especially powerful for inheritance. 

While you’re alive, you keep control and if something happens to you, your assets aren’t locked forever—and no single person can move them prematurely.

Ledger shines in multisig setups, providing offline, secure signing with advanced on-device verification and MuSig2 support for better privacy and lower fees. Ledger signers work seamlessly with services like Casa, Unchained, and Nunchuk. You hold 1-2 keys on separate Ledger signers; the service holds the third key and handles legal verification, beneficiary confirmation, and guiding non-technical heirs through recovery.

Simple Multisig for Bitcoin

Multisignature setups exist for one simple reason: no single mistake should cost you everything.

In a typical inheritance-focused setup, you hold one or two keys yourself, and a professional service like Casa, Unchained, or Nunchuk holds the remaining key. 

To recover funds, heirs must combine their key with the service’s key after legal verification, such as a death certificate and beneficiary confirmation.This means losing one key doesn’t destroy access, and stealing one key doesn’t enable theft. 

Your heirs aren’t left trying to solve a technical problem during an already stressful time.

Multisig with a trusted service makes sense if you hold meaningful long-term balances, want redundancy without giving up self-custody, and care about making inheritance realistic for people who may not be technically confident.

• Security rating: High
• Inheritance complexity: Moderate (requires service coordination)

MuSig2 for Bitcoin (for technical users)

Traditional multisig transactions leave visible fingerprints on the blockchain, revealing your security setup to anyone analyzing the network. MuSig2 solves this by using Schnorr signature aggregation to combine multiple signatures into one compact signature that looks identical to a standard single-person transaction. 

This formalized approach (BIP-327) is now supported in Ledger Bitcoin app version 2.4.0 and higher.

For inheritance planning, this technology delivers meaningful benefits. 

• Transaction fees drop by 30-40% because the blockchain processes less data, which matters when heirs eventually move large balances. 
• Privacy improves since blockchain analysts cannot detect your multisig setup, protecting your security model from public scrutiny.
• The user experience also becomes simple since heirs see standard-looking transactions rather than complex multisig operations.

Ledger Multisig for EVM/Treasury Management

Ledger Multisig requires multiple device approvals before executing transactions, adding an extra security layer for high-value holdings. For detailed setup instructions, including creating a Safe, adding signers, and setting approval thresholds, see Ledger’s guide to getting started with Ledger Multisig.

Note: Ledger Multisig is a separate service from Bitcoin multisig, designed for Ethereum and compatible networks. This service does not provide legal coordination or heir guidance; you must arrange separate legal support for inheritance planning.

How To Setup Musig2 with Your Ledger Signer

Ledger signers provide critical advantages for multisig setups: they’ve never been hacked, and carry with them a core security model that secures 20% of global crypto value with over 8 million+ signers sold. Each signer verifies transactions directly on their hardware device’s secure touchscreen, preventing blind signing attacks with Clear Signing integrations. 

Ledger Multisig requires multiple device approvals before executing transactions, adding an extra security layer for high-value holdings. For detailed setup instructions, including creating a Safe, adding signers, and setting approval thresholds, see Ledger’s guide to getting started with Ledger Multisig. 

3. Social Recovery (Guardians)

Social recovery treats inheritance as a trust equation: if you wouldn’t give one person complete control of your assets while you’re alive, why give one person complete knowledge of how to access them after you’re gone? 

This approach splits your recovery information into encrypted fragments and distributes them among people you trust: family, friends, professional advisors; so that no single guardian can betray you, but enough cooperating guardians can save your heirs. 

It’s the cryptographic version of “it takes a village,” where the village only gains power when you’re no longer there to hold it yourself.

Vault12: Guardian Inheritance Services

Vault12 implements a guardian network where you designate trusted individuals who collectively hold encrypted shares of your seed phrases using threshold cryptography—typically 3 of 5 guardians must participate to reconstruct access. 

When you die, beneficiaries contact your guardians who together unlock inheritance without any single guardian having access during your lifetime.

EIP-7702 Social Recovery (For Ethereum)

Ethereum enables programmable inheritance through smart contracts – code that automatically executes rules like “transfer assets if 3 of 5 guardians approve” or “activate backup keys after 12 months of inactivity.”

Platforms like Argent and Safe integrate with Ledger signers, combining hardware security with smart contract coordination. 

However, EIP-7702 account abstraction is highly experimental and exposes your entire wallet to smart contract code through “delegation” – temporarily giving a piece of code control over your entire wallet. 

If that code contains bugs or exploits, your entire balance becomes vulnerable. Moreover, Guardians must remain trustworthy, available, and technically capable for decades—losing contact with three guardians makes recovery impossible. And finally, gas costs significantly exceed simple transactions, adding ongoing expenses

For 99% of users, proven alternatives like Bitcoin multisig with Ledger or traditional Ethereum multisig (without EIP-7702 delegation) provide far better security without risking your entire wallet on experimental technology.

This is the middle ground between manual hardware custody and fully automated systems; your Ledger provides hardware security while smart contracts handle recovery coordination. This system is best for Ethereum-heavy portfolios where you want hardware security combined with programmable recovery.

4.Timelocked Inheritance

Timelocked inheritance, often called a “dead-man switch”, automates asset transfer when you fail to check-in for a preset period. Instead of relying on executors or death certificates, the blockchain itself becomes your executor, releasing encrypted data to heirs after periods of inactivity.

This sounds ideal in theory, but code doesn’t care about hospital stays, under-planning, or extended travel: misconfigurations or missed check-ins can permanently lock funds or trigger premature release with no reversal possible. 

Ethereum uses smart contract “dead-man switches” with decentralized custodians, while Bitcoin bakes timelocks directly into transactions. 

If you select a time-based inheritance model, you’re trading human judgment for code that cannot be reasoned with – a tradeoff that demands serious consideration.

Dead-man Switch Services

Sarcophagus 

Sarcophagus is a decentralized dead-man switch that releases encrypted data if you fail to check in after set periods.

Built on Ethereum and Arweave: you upload encrypted data (seed phrases, instructions) to permanent storage and establish check-in periods. If you fail to check in, the system automatically decrypts and releases data to your designated recipient through a network of incentivized “archaeologists” who store and decrypt at the appropriate time. 

Bitcoin’s OP_CHECKLOCKTIMEVERIFY (for technical users)

Bitcoin’s OP_CHECKLOCKTIMEVERIFY feature creates automatic inheritance paths that activate after prolonged inactivity, typically 6-12 months. 

Your wallet operates with two spending paths: your normal key works immediately for regular transactions, while a time-delayed path grants your heir’s key access only after the specified inactivity period expires.

This eliminates dependency on executors or legal processes. If you become incapacitated or pass away unexpectedly, the timelock automatically enables your backup plan. 

The critical challenge: every time you receive new Bitcoin, you must manually configure the timelock for those specific funds. Miss this step once, and those funds won’t have inheritance protection. 

Worse, implementation mistakes permanently freeze your assets with no way to recover them. Even correctly configured timelocks are problematic. Reasonable transaction fees today might be prohibitively expensive when your heirs need to access funds years from now. 

This isn’t a “set and forget” solution; it demands professional setup and ongoing technical maintenance. Only consider this if you need autonomous backup and can commit to regular system audits.

Risks and Considerations for Setup and Maintenance of Crypto Inheritance

Even the most carefully designed inheritance plan can fail. This is because the vast range of risks could be anything from technical, human, or logistical faults and sometimes, the risks are often invisible until it’s too late. 

A hardware wallet ( signer) that works perfectly today might have outdated firmware when your heirs need it. A guardian you trust implicitly might move countries and become unreachable. A safe deposit box key might be in your pocket when you’re halfway around the world. 

Beyond edge cases, this is the reality of planning across decades for an event whose timing you cannot control. Let’s understand some of the inheritance strategy steps to effectively manage your funds across different possibilities:

Multichain Holdings

If you hold assets across Bitcoin, Ethereum, Solana, and other networks, document each chain separately with chain-specific recovery procedures.

For heirs, use multichain services like Vault12 Guard that provide blockchain-agnostic backup across all chains in a unified interface. This means heirs work through one consistent process instead of navigating five different recovery procedures.

Simplifying to fewer chains dramatically reduces inheritance complexity, though portfolio diversification may justify multichain exposure.

Verify Your Setup Periodically 

Make sure that every 6 months you:

• Verify your devices power on and accept PIN
• Check for firmware updates (update all devices simultaneously)
• Confirm safe deposit box access (visit bank)
• Review inheritance guide for outdated instructions

Revisit Your Setup After Major Life Events

Life moves fast, and your static inheritance plan dies a little with every major change you don’t account for. Your inheritance plan is a living system that should be upkept with every major life event:

• Marriage/Divorce: Marriage or divorce reshapes your beneficiary list overnight. Update your multisig, revise legal directives, notify your custody service, and consider migrating to a fresh wallet descriptor, old inheritance guides may still reference former partners.

• Birth of Child: A newborn heir means decades of planning. Document their legal name and a timeline for key handoffs (e.g., first key at 18), and add them as a future beneficiary with your custody service now so verification is on file years ahead.

• Moving: Relocating breaks your geographic security backbone. You’re under new laws and regulations that might dictate terms for crypto inheritance, so it’s important to stay ahead. Move devices to local banks, update your attorney’s sealed envelope with new safe deposit details, and run a dry-run recovery to ensure your new multisig distribution actually works.

• Large Crypto Purchases: Doubling your crypto should double your confidence in the plan. After any major purchase, run a live test: have your executor practice the full recovery workflow, verify they can generate addresses, and confirm your custody service still recognizes their verification documents.

Make a Plan for If You Die While Travelling Internationally

Some countries can legally seize signers (hardware wallets) at the border. If all required keys are in your luggage and one is taken or you die abroad — your heirs may lose access instantly.

Before traveling, temporarily separate your multisig keys. For instance, you leave one Ledger signer in your home safe, place a second in a destination bank box or with a trusted local contact, and carry only one device.

Update your encrypted guide: note where each Ledger is stored, who controls home access, mention that foreign death certificates may require embassy verification, and which attorney or multisig service to contact.

For long trips, give one trusted family member temporary home-safe access and revoke it when you return.

Conclusion

The idea of planning crypto inheritance can sound intimidating, but it’s the same mental work people do for bank accounts, property, and insurance. 

The right approach makes your crypto an ordinary, well-documented part of your estate — safe, private, and accessible to the people you choose. 

We’ve discussed death scenarios, but the protection you choose while alive is everything that preserves inheritance in the first place.

Ledger signers are your best line of defense against all sorts of cyber threats. With a battle-tested security DNA and rigorous testing from Ledger’s white-hat hacker team Ledger Donjon, Clear signing initiatives, easy backup and recovery options, and featuring seamless multisig and new standards like MuSig2 make secure, recoverable setups easier.