The learning path
Self custodied crypto has no beneficiary form and no account recovery, so if nobody can reach the keys the value is gone permanently. None of the three major US exchanges let you name a beneficiary. Here is what actually works, what breaks each approach, and a checklist you can finish in an afternoon.
The problem, stated plainly
There is no beneficiary form for a self custodied wallet and no account recovery. If nobody can reach the keys, the value is not frozen or delayed. It is gone, permanently, and no court can order otherwise.
Estimates of how much bitcoin is already unrecoverable run from roughly 1.5 million to 4 million coins depending on method. Treat all of them as inferences from wallet inactivity rather than counts: analysts flag addresses untouched for years and apply loss probabilities by age band. Chainalysis, whose 2017 work is the most cited, named its own weak points, including that its estimate assumes Satoshi's holdings are gone.
What happens at a US exchange when someone dies
We checked the published procedures. As of September 2026:
| Exchange | Name a beneficiary in advance? | What the estate must supply |
|---|---|---|
| Coinbase | No. "Coinbase does not currently support naming a beneficiary for individual accounts." | Death certificate, probate or letters testamentary, photo ID of the named representative, and a signed letter directing the transfer. Submitted through an executor services form. |
| Kraken | No. "Kraken does not currently offer the option to add a beneficiary to an account." | Death certificate, document confirming appointment as legal representative, photo ID, and a signed dated letter. |
| Gemini | No. "At this time, we do not offer the ability to designate beneficiaries." | No published procedure that we could find. Its user agreement has no clause on death or estates, and does provide for dormant accounts being reported as unclaimed property. |
None of them publishes a timeline. An estate attorney writing from experience reports around two months from submission to access in one case, and three to four months for small estates generally, with six months or more where formal administration is required.
The law, and what it does not do
The Revised Uniform Fiduciary Access to Digital Assets Act, adopted in most states, extends a fiduciary's traditional power over property to digital assets. It gives an executor the right to access digital assets not held by a custodian, and makes them an authorized user for computer fraud purposes, which is what makes it lawful to pick up the deceased's hardware wallet and try to open it.
What it cannot do is produce a key. It removes the legal obstacle. It creates no technical remedy. If the seed phrase is gone, that authority is worth nothing.
One detail commonly reported backward: where a platform offers its own legacy contact or inactive account tool, a direction given through that tool overrides a contrary instruction in your will. Set those up, and make sure they agree with your estate documents.
Why a seed phrase in a will fails
A will is filed with the court and becomes a public record in most states. California, for example, requires the custodian of a will to deliver it to the clerk of the superior court within 30 days, and courts state plainly that probate records are public and copyable unless sealed.
So a seed phrase in a will is a seed phrase in a public file, sitting there for months while the estate is administered, available to anyone who looks, with no chargeback when it is swept.
There is a second, quieter trap. A generic clause leaving "all my personal effects" to one person can hand the hardware wallet to somebody other than the person inheriting the crypto.
What actually works, and what breaks each one
| Approach | How it works | What breaks it |
|---|---|---|
| Sealed letter of instruction | The will grants authority. A separate unfiled letter says where everything is and how to reach it. | It goes stale. And the safe deposit box is a trap: many states seal a box on death, so your heirs need a court order to get the thing they need to start. |
| Revocable living trust | Avoids probate, stays private, gives a successor trustee clear authority without a court appointment. | It conveys ownership, not access. Must be paired with a real access plan. Also, consumer exchange accounts generally cannot be retitled to a trust. |
| Multisig with distributed keys | Two of three, say, so no one person can move funds and no single loss is fatal. | The seeds alone are not enough. Recovery also needs the wallet descriptor, and without it heirs holding every key still cannot rebuild the wallet easily. |
| Shamir backup | Splits the secret into shares with a threshold. Give one each to three people; any two reconstruct. | Fall below the threshold and it is over. A passphrase is a separate secret not contained in the shares. And the shares cannot be restored on wallets that only speak BIP39. |
| A dead man switch service | A recipient requests access and, if you do not respond, it unlocks after a waiting period, commonly six months. | The company has to still exist and still work on an unknown future date. A hospital stay or a lost phone can trip it early; an inattentive recipient can let their key go stale. |
| Exchange custody | You get a support desk and a documented claims process. | No beneficiary form at any of the three major US exchanges, so it still goes through probate, plus counterparty risk and a two to six month claims process. |
Two cases, told accurately
QuadrigaCX. Usually cited as the man who died with the only passwords. That is not what the regulator found. Ernst and Young located cold wallets that had been empty since April 2018, eight months before Gerald Cotten died, and in June 2020 the Ontario Securities Commission concluded Quadriga was a fraud and a Ponzi scheme. Use it as a counterparty risk story, not a lost keys story.
Matthew Mellon. Died in April 2018 holding an estimated $500m of XRP, with keys in cold storage in other people's names around the country. The estate did recover the assets. The damage came from illiquidity and timing: XRP was about 97% of a roughly $197m estate, a sale agreement capped daily selling, and by late 2019 the estate had lost more than half its value while still owing $60m in federal estate tax. Estate tax is assessed on the value at the date of death and due nine months later, in dollars.
The tax position
Stepped up basis applies. Crypto is property, and inherited property generally takes a basis equal to fair market value at the date of death. Gains accrued during the deceased's lifetime disappear. Worth noting that IRS Publication 551 does not mention digital assets at all: this follows from general property rules rather than crypto specific guidance, but the professional consensus is settled.
The exception is an IRA. Crypto in an IRA is income in respect of a decedent and gets no step up.
Federal estate tax will not touch most people. The 2026 exclusion is $15,000,000 per person, made permanent, $30m for a married couple with portability. The tax that actually bites for normal estates is capital gains, which the step up largely erases.
State death taxes are where the real exposure is. Twelve states and DC levy an estate tax and five levy an inheritance tax, several with thresholds far below the federal one. Oregon starts at $1m, Massachusetts and Rhode Island around $2m, Minnesota and Washington at $3m.
An afternoon's work
Inventory everything, with the access type
Every exchange account, hardware wallet, software wallet, staking position, NFT wallet, IRA and ETF. For each, note what kind of access it needs: password and two factor, seed phrase, or seed plus passphrase.
Consolidate
Three wallets your heirs have to find are three chances to fail. Sweep the small ones. Close what you do not use.
Fill in the beneficiary forms you already have
If you hold a bitcoin ETF or a crypto IRA, log in and check the designation is present and current. They do not carry across accounts.
Set up any legacy contact tools your platforms offer
Remember these override your will, so make sure they say the same thing.
Write the letter of instruction
The inventory, where each backup physically is, whether a passphrase exists and where it is kept separately, which wallet software can restore each backup, the multisig descriptor if you use multisig, and a step by step walkthrough written for someone who has never done this. Date it.
Store it where your executor can reach it without a court order
Not solely in a safe deposit box. Two sealed copies, two locations, two trusted people is the usual answer.
Never put the seed phrase in the will itself
It becomes a public court record.
Add the legal language, with a lawyer
Explicit fiduciary authorization over digital assets, and a specific reference to cryptocurrency. Generic personal property clauses are often not enough.
Do a dry run, and this is the step that matters
Hand your person the instructions and have them recover a wallet holding $20 while you watch and say nothing. Every failure mode in this guide surfaces in that twenty minutes. Repeat yearly and after any wallet change.
Common questions
What happens to my crypto if I die without a plan?
Can I name a beneficiary on my Coinbase or Kraken account?
Can I just put my seed phrase in my will?
Is a safe deposit box a good place for my recovery words?
Does my crypto get a stepped up basis when I die?
Will my estate owe federal estate tax on crypto?
What is the single most useful thing I can do this week?
Where to go next
Stuck on this one?
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