Cryptocurrency inheritence (what happens to your Bitcoin after you die)

“Your own bank” is a slogan, that’s commonly referred to cryptocurrencies, but while inheriting funds/assets, that are held in a traditional bank is a fairly straightforward process, inheriting cryptocurrencies, in comparison, is highly dependent on the actions of their initial owner. Oftentimes heirs are unaware of the existence of deceased person’s cryptocurrency porfolio or are unable to access these funds, because they haven’t gotten any instructions on how to do it. This can result in “lost” coins and, most likely, they won’t be ever used again.

In this post I’ll give you some suggestions on how to set-up your cryptocurrency inheritence plan and just to make it less complicated I’ll use Bitcoin as a primary example, but most suggestions & tips can be applied to other cryptocurrencies and cryptoassets.

As Christmas is approaching, this article will be a good reflection material on how to deal in the case of an accident and possibly a motivation to educate your relatives on how to use cryptourrencies.

Information for relatives of the recently deceased

If you were close to someone who has recently passed, first of all, my condolences, secondly, in this article I do not intend to explain how to access their coins. Unless that person has given you a hardware wallet, data carrier or written instructions with a private key or guidance on how to access their coins, most likely no one will be able to help you. Of course there are some exceptions, but I won’t be explaining them here, because they are too complex and, on most occasions, have to be approached individually.

Previous paragraph does not discourage you from reading the following article, because I could potentially write about something that your loved one might have done prior his/her death, which you’ve noticed and/or have forgotten and those actions could give you a clearer image of the availability of said person’s funds. If you have any questions you can contact me on social networks or in the comments section below.

1. Preface

This article is no more than a suggestion on how to handle cryptocurrency inheritance and it is your own free choice on how to take care of your will. You can make things clear for your heirs, be indifferent for now and ignore the inevitable death/incapacitation or deliberately separate yourself from any external approach to your private keys by keeping them inaccessible forever.

I’d also recommend thinking about inheritance plan for those who hold a smaller sized crypto portfolio as it’s no secret that the value of the cryptocurrencies tend to fluctuate rapidly. Because of the probable rapid growth, those smaller holding today can be a significant amount after several years.

2. Security & Privacy

In the cryptoasset sector it is a common knowledge that handling private keys and access to funds should be handled with extreme caution. I.e. we do not share private keys or do not know them ourselves and they are available only with specific devices or in special circumstances. In such circumstances a question arises – how to create a situation that allows private keys, that are difficult to access, to get into the hands of the heirs securely?

There are several methods on how to do it and they are seemingly simple, but all of them have their own challenges, pros and cons. One should also keep in mind that getting access to private keys doesn’t mean that the job is done, as the heirs themselves must also be taught on how to safely access these keys and how to make a transaction to another wallet.

Besides being very cautious about security, it’s also suggested to keep quiet about the amount of available assets. While some may prefer lavish lifestyle and ignore this step, be aware, that the greater the amount of assets you control, the more likely someone will want to acquire (i.e. steal) them. So keep that in mind and warn your heirs, that disclosure of available assets may negatively affect the safety of all parties involved.

Flawless security is something that no one can guarantee, however, after combining two or more of the following methods and educating your heirs on all the required actions, you’ll be able to sleep peacefully and remain certain, that your funds are secure and, in the case of an accident, your relatives won’t be left empty-handed.

3. Methods

3.1. Dead Man’s Switch (or passing information to third-party)

By “passing information to a third party”, I do not mean sharing the private keys themselves to a third party, but a method of accessing those private keys stored in an encrypted file, storage device or location accessible only to the heir.


  • Text with instructions on how to access private keys held in a bank locker, that can be accessed after the death of the locker’s owner;
  • App or e-mail, which, if not used within aspecific timeframe, sends an automated message to the heir with steps on how to access private keys;
  • Giving encrypted wallet to the heir, but keeping that encryption key in the will which is only accessible to the lawyer.

This method cannot be considered as secure as it requires some form of trust in a third party and their confidentiality.

3.2. Multi-signature wallets

Multisig wallets are Bitcoin wallets that are created with multiple private keys (seeds) and can be only accessed with a specific set of those keys.

Example: Bob creates a multisig wallet with 7 private keys and to access the content of this wallet at least 3 of those 7 keys have to be used. Bob then keeps 3 keys, to maintain control over his wallet and then shares the rest of those keys with his mom, dad, best friend and lawyer with instructions on how to combine those keys in the case of his passing.

Multisignature wallets are relatively secure method, because the keys are distributed among multiple participants. Obviously, the downside is that these participants can be pressured to give up their keys or collaborate to steal the coins held in that wallet.

Known Bitcoin wallets, that support multisig transactions: Armory, Electrum, GreenAddress

3.3. nLockTime transactions

Transactions, that use nLockTime are transactions that are signaled to Bitcoin network with a conditional value which explicitly states, that such transaction should not be included into blockchain until specific amount of blocks are created. Transaction issuer can choose how many blocks said transactions can be delayed, meaning that said transaction can be delayed for months or even years.

Such transactions can be “overwritten” at any moment by transacting the same funds used in initial nLockTime transaction to another public key (wallet). This means, that the owner of private key(s) used in such timelocked transactions can maintain control over his/her coins until it’s not necessary.

Using this method, the owner only has to teach the heirs to use any Bitcoin wallet and ask them for a public key, to which the time-locked transaction will be sent. Periodically the owner can transfer all the funds to another wallet and create a new nLockTime transaction, thus maintaining control over his funds until it is no longer necessary.

This is one of the safest, but also one of the most complicated methods to ensure that your funds can be inherited. As I intend to create a tutorial on how to create this type of transaction and due to my laziness of not bothering to do a google search for you, I will not post any references to other tutorials. If you’re unable to do a simple google search, then the steps to create timelocked transactions will simply be too complex and you probably should use another method for now.

3.4. Sharing private keys directly

I left the simplest and the most insecure method as the last one. That is, giving full access to the private keys to the heirs directly (written text, data storage device, Brainwallet phrase, etc.). In this case the heir(s) will immediately gain access to the funds and use them as they please. The heir also becomes a link in the security chain and can, through his activities, deliberately/unconsciously give access to that Bitcoin wallet to other parties.

There are cases where the use of this method can be justified, but generally this is a bad practice and one should avoid this method.

4. Legal uncertainties

I wanted to publish this article before Christmas, so I didn’t do enough research on this section. Sorry about that and I’ll try harder in the future.

In Latvia, inheritance is governed by the Civil Law and the will of deceased. Respectively, even if you control the assets of the deceased, it does not mean that they are yours as other heirs may also be eligible to apply for them.

About inheritance, wills, taxes, etc. I suggest you to consult your lawyer and/or read here (in Latvian).

Keep in mind, that cryptocurrency regulation is still in its infancy and rules, taxes, etc. are changing every year. If inheritance amount is substantial, then followregulatory changes and in the case of uncertainty consult professionals.

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