An estimated $140 billion in Bitcoin is permanently inaccessible — locked in wallets whose owners have died or lost their keys, never to be recovered. Every year, billions more in cryptocurrency effectively vanishes because the people who held it didn't plan for what happens after they're gone.
Crypto is unlike any other asset class when it comes to estate planning. With a bank account, your family can walk into a branch with a death certificate. With crypto, especially self-custodied crypto, there is no branch, no customer service, and no reset button. If nobody knows your seed phrase, your assets are gone. Period.
Here's how to make sure that doesn't happen to your holdings.
Exchange-Held Crypto vs. Self-Custodied Crypto
The first critical distinction is where your crypto is stored.
Exchange-Held Crypto (Coinbase, Kraken, Gemini, etc.)
If your crypto sits on a centralized exchange, your family has a path forward. These exchanges have estate claim processes — they're slow and bureaucratic, but they work.
Your family will need: - A certified death certificate - Letters testamentary or letters of administration - Government-issued ID of the executor - The email address associated with the account
The process typically takes 4-8 weeks. For a detailed walkthrough of the Coinbase process specifically, see our Coinbase account after death guide.
The risk with exchanges: If your family doesn't know you had a Coinbase account, they can't file a claim for it. You need to document which exchanges you use.
Self-Custodied Crypto (Hardware Wallets, Software Wallets)
This is where things get serious. If you hold crypto in a hardware wallet (Ledger, Trezor, Coldcard) or a software wallet (MetaMask, Trust Wallet, Phantom), there is no company to contact. The blockchain doesn't know or care that you've died.
Access to self-custodied crypto requires one of the following: - The seed phrase (12 or 24 words) that was generated when the wallet was created - The private keys for each address - The device PIN plus the physical hardware wallet (for hardware wallets, though the seed phrase is still needed if the device is lost or damaged)
Without the seed phrase, the crypto is permanently inaccessible. No court order, no legal process, no amount of money can recover it.
The Seed Phrase Problem
Your seed phrase is simultaneously the most valuable and most dangerous piece of information in your crypto portfolio. Anyone who has it can take everything. But if nobody has it when you die, everything is lost.
This creates a genuine dilemma:
- **Write it on paper and put it in a safe deposit box?** Your family needs to know it exists and have access to the box. Safe deposit boxes also have their own estate access complications.
- **Give it to a family member?** Now you've created a security risk during your lifetime.
- **Split it using Shamir's Secret Sharing?** Technically sound, but complex and easy to mess up.
- **Store it in a password manager?** Better, but your family needs access to the password manager, which has its own access challenges.
The most practical approach is using an encrypted dead man's switch service like Passed Plan, which stores your seed phrase information with zero-knowledge encryption and only delivers it to your designated beneficiaries after verifiable inactivity — meaning no one, not even the service provider, can access it while you're alive.
DeFi Positions: The Hidden Complexity
If you're active in decentralized finance (DeFi), your estate complexity multiplies significantly. Your heirs may need to understand:
- **Liquidity pool positions** on platforms like Uniswap, Curve, or Aave
- **Staked tokens** that may be locked for specific periods
- **Yield farming positions** across multiple protocols
- **Governance tokens** and voting positions
- **Bridged assets** sitting on Layer 2 networks or alternative blockchains
- **Wrapped tokens** and synthetic assets
Each of these requires specific knowledge to unwind. Your executor doesn't just need your seed phrase — they need instructions on what positions exist and how to manage them.
At minimum, document: 1. Which blockchains you're active on (Ethereum, Solana, Avalanche, etc.) 2. Which DeFi protocols you use 3. What types of positions you hold 4. Approximate values 5. Any time-locked or vesting positions
NFTs and Digital Collectibles
NFTs are crypto assets too, and they require the same access considerations as any other token on the blockchain. But they come with unique complications:
- **Valuation is subjective** — unlike fungible tokens with clear market prices, NFTs may require appraisal for estate tax purposes
- **Royalty streams** from creator NFTs may continue generating income that needs to be accounted for
- **Platform-specific metadata** — some NFTs rely on centralized platforms for their display and metadata, which could affect long-term value
- **Collection management** — large NFT collections may span multiple wallets and marketplaces
Hardware Wallet Considerations
If you use a hardware wallet, your estate plan needs to address:
Device location and PIN: Your family needs to know where the device is and what the PIN is. But remember — the PIN alone is not enough if the device fails or is lost. The seed phrase is the ultimate backup.
Firmware and compatibility: Hardware wallets occasionally require firmware updates. If your device sits unused for years, it may need updating before it can be used. Document the device model and any relevant technical details.
Multiple devices: If you use multiple hardware wallets (some people use different devices for different purposes), document all of them.
Passphrase (25th word): Some users add an additional passphrase on top of the standard seed phrase. If you use this feature, your executor needs both the seed phrase AND the passphrase. Missing either one means the funds are inaccessible.
Tax Implications of Inherited Crypto
The good news for your heirs: inherited cryptocurrency qualifies for a step-up in basis. This means the cost basis resets to the fair market value at the date of death, potentially eliminating significant capital gains tax.
Example: You bought 5 ETH at $200 each ($1,000 total). At your death, ETH is trading at $4,000 each. Your heir's basis is $20,000, not $1,000. If they sell at $20,000, there's no capital gains tax on the $19,000 in appreciation.
For a complete explanation of step-up in basis, including how it applies to crypto specifically, read our step-up in basis guide.
Critical requirement: To claim the step-up, the executor must be able to document the fair market value of the crypto at the date of death. This requires knowing which crypto assets exist and their quantities. Without access to the wallets or exchange accounts, proper valuation is impossible.
The Crypto Estate Planning Checklist
Here's what you need to do today:
For Exchange Accounts - [ ] List every exchange where you hold crypto - [ ] Record the email address used for each exchange - [ ] Note whether you use 2FA and what type (authenticator app, hardware key, SMS) - [ ] Document approximate holdings on each exchange - [ ] Store this information securely in Passed Plan
For Self-Custodied Crypto - [ ] Document every wallet you use (hardware and software) - [ ] Securely store seed phrases where your executor can access them after death but not before - [ ] Note any additional passphrases (25th word) - [ ] Record hardware wallet locations and PINs - [ ] Document which blockchains and tokens each wallet holds
For DeFi Positions - [ ] List all DeFi protocols you use - [ ] Document the types of positions (staking, LP, lending, etc.) - [ ] Note any time-locked or vesting positions - [ ] Include approximate values
For Tax Purposes - [ ] Keep records of your original purchase prices (cost basis) - [ ] Document the date and amount of each acquisition - [ ] Save any tax forms received from exchanges (1099s)
Don't Let Your Crypto Die With You
The crypto community has a saying: "Not your keys, not your crypto." That's true — but it should come with a corollary: "Not your plan, not your family's crypto."
Self-sovereignty comes with self-responsibility. If you've taken control of your financial future by holding crypto, take the next step and make sure that wealth transfers to the people you care about.
Passed Plan was built with crypto holders in mind. Our zero-knowledge encrypted vault gives you a secure way to document your crypto holdings — seed phrases, exchange accounts, DeFi positions — with the confidence that it's only accessible to your designated beneficiaries, and only when needed. The dead man's switch ensures your information is delivered after verified inactivity, not a moment before.
Your crypto portfolio is too valuable to leave to chance. Plan today.
Document your accounts in Passed Plan
Zero-knowledge encrypted. 1,800+ platform guides. 30-day free trial.
Start free trial →