How to Create a Crypto Inheritance Plan
(So Your Bitcoin Doesn't Die With You)

An estimated $140 billion in Bitcoin is permanently inaccessible — locked in wallets whose owners died, lost their seed phrases, or simply forgot their passwords. That's roughly 20% of all Bitcoin ever mined, gone forever.

Unlike a bank account that follows inheritance law, cryptocurrency is designed to be unstoppable and permissionless. That's its greatest feature — and its biggest vulnerability when it comes to estate planning.

If you hold crypto and die without a plan, your assets are burned. Not stolen. Not seized. Just... gone. As if they never existed.

Why Crypto Is Different From Traditional Assets

When someone dies with money in a bank, the family contacts the bank with a death certificate and court order. The bank cooperates because it's legally required to. The money is transferred to the heir's account. It's slow and bureaucratic, but it works.

Cryptocurrency doesn't work this way.

• No customer support. There's no company to call. Bitcoin has no CEO, no office, no helpline.
• No password reset. If you lose your seed phrase, no one can generate a new one.
• Immutable by design. The entire point of blockchain is that transactions can't be reversed and access can't be overridden.
• Global and borderless. Your crypto exists on a worldwide network, outside any single jurisdiction's control.

For centralized exchanges (Coinbase, Binance), there is a process similar to banks — but it's slow (often 6+ months) and limited to exchange-held assets. For self-custody wallets (MetaMask, Ledger, Trezor), there is literally no recovery mechanism without the seed phrase.

Real-World Horror Stories

The $250 Million Bitcoin Mishap

Gerald Cotten, the founder of Canadian crypto exchange QuadrigaCX, died in 2018 with the only access to $250 million in customer funds. The funds were stored in cold wallets that only he could access. Despite international investigations, the money has never been recovered.

The Lost Hard Drive

James Howells accidentally threw away a hard drive containing 7,500 Bitcoin (worth over $500 million today). Even after years of legal battles and proposals to excavate a landfill, the Bitcoin remains inaccessible.

The Forgotten Wallet

Stefan Thomas lost the password to an IronKey USB drive containing 7,002 Bitcoin (over $450 million). The drive allows only 10 password attempts before permanently encrypting its contents. He has used 8.

These aren't edge cases — they're cautionary tales. The question isn't if this will happen to your crypto; it's whether your family will be able to recover it.

3 Approaches That Don't Work

❌ Writing the seed phrase on paper and putting it in a safe

This creates a single point of failure. If the paper is lost, damaged, or stolen, the crypto is gone. Worse, anyone who finds the paper has full access to your funds — while you're still alive.

❌ Sharing your seed phrase with someone you trust

The moment you share your complete seed phrase with anyone, you've given them unconditional access to all your funds. Trust is not a security strategy. Even well-meaning people can be hacked, coerced, or simply make mistakes.

❌ Storing it in a regular password manager

If your family can't access your password manager (which requires its own master password + 2FA), your seed phrase is just as trapped as if you'd never recorded it. And if they can access it easily, your security is compromised while you're alive.

Shamir Secret Sharing: The Cryptographer's Solution

Shamir's Secret Sharing is an elegant cryptographic technique invented by Adi Shamir (the "S" in RSA encryption) that solves this problem perfectly.

Here's how it works:

1. Your seed phrase is split into N shares (e.g., 5 shares)
2. Any K of those shares can reconstruct it (e.g., 3 out of 5)
3. Fewer than K shares reveal absolutely nothing — not even a single character

So you could create a 3-of-5 scheme:

• Share 1 → Your spouse
• Share 2 → Your attorney
• Share 3 → Your safe deposit box
• Share 4 → Your trusted friend
• Share 5 → Stored in your encrypted vault

Any 3 of these 5 people/locations can recover your crypto. But your spouse alone can't steal it. Your attorney alone can't access it. Even if two shares are lost or compromised, the remaining three can still reconstruct the secret.

This is the gold standard for crypto inheritance.

Step-by-Step Crypto Inheritance Plan

Step 1: Inventory Your Crypto Holdings

Create a complete list: which coins, which wallets (hardware/software/exchange), approximate values, and where the access credentials are stored. Don't include actual passwords — just inventory.

Step 2: Separate Hot and Cold Storage

Keep only trading amounts on exchanges (hot). Move long-term holdings to hardware wallets (cold). This minimizes what's at risk of exchange hacks while ensuring your main assets have clear custody.

Step 3: Set Up Shamir Secret Sharing

Split your hardware wallet seed phrases using a 3-of-5 or 2-of-3 Shamir scheme. Distribute shares to trusted parties who don't know each other well enough to collude.

Step 4: Write Clear Instructions

Your heirs probably aren't crypto experts. Write step-by-step instructions: "This is a Ledger Nano X. Here's how to plug it in. Here's how to use the shares to reconstruct the seed phrase. Here's how to transfer the funds to a new wallet."

Step 5: Set Up a Dead Man's Switch

The final piece: an automated system that delivers this information to your heirs when you can no longer do it yourself. Without this, your family has to somehow discover your plan exists, find the shares, and know what to do — all during the worst time of their lives.

Automated Delivery with a Dead Man's Switch

A Dead Man's Switch solves the "last mile" problem: getting the right information to the right people at the right time, automatically.

Here's the ideal setup:

1. Store your crypto instructions, wallet inventory, and Shamir shares in an encrypted vault
2. Designate your heirs with priority levels — who gets what, in what order
3. Configure the switch — how long before it activates, what verification steps to use
4. Live your life — the switch checks in periodically, and as long as you respond, everything stays sealed
5. If the worst happens — the switch escalates through multiple levels (email → SMS → phone call), and eventually delivers your vault contents to your designated heirs

The Bottom Line

Crypto was designed for sovereignty — you are your own bank. But that sovereignty comes with responsibility. If a bank loses your money, you can sue them. If you lose your crypto, there's no one to blame and no one to help.

Creating a crypto inheritance plan isn't just good practice — it's the only responsible thing to do if you care about the people who will outlive you.

Your Bitcoin. Your Ethereum. Your NFTs. Your DeFi positions. Don't let them die with you.