Crypto and Inheritance: What Actually Happens

When somebody dies, a bank account gets found. Executors write to banks, banks check records, and the balance eventually arrives where it should. The whole apparatus assumes an institution holds the asset and can be asked about it.

Crypto in your own wallet has no such institution. There is no register to search, no department to ring, and no override anybody can apply. If nobody knows it exists, it does not exist. Educational guide only, and specifically not legal or estate advice: wills and probate differ by country and a qualified professional where you live is the right person for the actual arrangements.

The case everyone cites

Gerald Cotten, who ran the Canadian exchange QuadrigaCX, died in India on 9 December 2018 at thirty. He had sole access to the laptop holding the keys to the exchange's cold wallets, and roughly 180 million Canadian dollars belonging to about 115,000 customers became unreachable overnight.

The case gets retold loosely, so be precise about what it proves. Regulators later concluded that most of the shortfall came from Cotten's own misuse of client funds rather than from keys merely being lost, so it is a fraud story as much as a custody story. What it does illustrate cleanly is the structural point: when one person is the only route to the keys, that person's death is an unrecoverable event, and no amount of legal process fixes it afterwards.

Two different situations

Crypto held on a platform. This behaves much more like a bank account. Established exchanges have bereavement processes, and an executor typically supplies a death certificate, grant of probate or the local equivalent, and identification, after which the assets are transferred or sold according to the estate. Expect it to take weeks rather than days: probate alone commonly runs to 3 months or more before an executor even has the authority to ask. It is slow and paperwork-heavy, but a human being is on the other end and the account can be found by looking through the deceased's email and statements.

Crypto held in your own wallet. There is no process at all, because there is nobody to run one. Whoever holds the seed phrase controls the coins, full stop. The blockchain has no concept of an executor and will never acquire one.

The two failures, which pull against each other

The first is silence. The holdings are never found because nobody knew to look, and there is no annual statement arriving to prompt anyone. Coins sit at an address indefinitely, visible to the world and reachable by no one. Analysts have long estimated that somewhere between 3 and 4 million of the 21 million bitcoin that will ever exist are already lost this way, and death is one of the routes.

The second is the opposite, and people rushing to fix the first often walk straight into it. A document that says where the seed phrase is kept, alongside the seed phrase, in a place a relative can access, is a theft manual with a sentimental cover. Anyone who reads it while you are alive can empty the wallet that afternoon, and you would have no way of knowing.

Good arrangements sit between the two: your executor learns that crypto exists and roughly where, without anybody being handed the keys while you are still using them.

What people actually do

• An inventory, separate from the keys. Which platforms, which wallets, roughly what is there, who to contact, and it names what exists without granting access to any of it, so it can safely live with your other papers.

• Splitting the secret. Multi-signature setups and split backups mean no single person holds enough to move anything alone, which removes the theft risk without recreating the silence problem.

• A wallet with recovery built in. Smart accounts that support social recovery let nominated people collectively restore access, which maps onto how families actually work far better than a paper phrase does.

• Telling somebody. Unglamorous, and the most commonly skipped step, but an executor who knows to look for a hardware wallet will find one, and an executor who does not will donate it to a charity shop.

• Professional advice for the legal half. How crypto is treated in a will, and what an executor may do with it, varies by country. Get that from a qualified professional rather than from an article.

Test it, because untested is the same as absent

The failure most people never discover is the one where the plan exists and does not work. The instructions are locked in a strongbox nobody has the combination to, the backup was written down wrong, the hardware wallet is there but the passphrase, which the deceased added later and mentioned to no one, is not.

Walk it through while you are alive. Have the person who would actually do this follow your instructions with a small test amount and see whether they get there. If they cannot, you have learned it now rather than posthumously, which is the only time the information is any use.