What happens to cryptocurrency when you die — and how to plan for it

Why cryptocurrency is not like a bank account

When someone passes with money in a bank account, the executor presents a death certificate and letters testamentary, and the institution facilitates the transfer. The bank is a custodian: it holds the asset and can act on legitimate authority. Cryptocurrency held in self-custody — in a hardware wallet, a software wallet, or protected by a seed phrase — has no custodian. There is no institution to call, no account recovery team, and no regulator who can compel the network to return funds. If the private key or seed phrase is lost, the assets are lost permanently.

Exchange-held cryptocurrency is different

Cryptocurrency held on a centralized exchange — where the exchange holds the private keys on your behalf — behaves more like a traditional financial account in the context of an estate. Most major exchanges have a bereavement process: you present a death certificate and legal authority, and they will transfer the balance or close the account. The account information, account numbers, and the name of the exchange are all that a family needs to begin.

The risk with exchange-held assets is different: access to the account login and two-factor authentication device may be needed to start the process, and some smaller exchanges may not have robust bereavement procedures. Record the exchange name and the email address used to register — that is enough for the executor to begin.

What your estate documents need to say

Your will can instruct that cryptocurrency holdings be transferred to a named beneficiary, but the instruction is only useful if the executor can actually access and transfer the asset. That requires separate planning.

• A list of your holdings — which assets you hold and, for each, whether they are on an exchange (and which one) or self-custodied.
• For exchange accounts: the exchange name, the email address registered, and ideally the two-factor method used.
• For self-custodied assets: a clear path to the seed phrase, private key, or hardware device. The seed phrase must be stored separately from the device and in a form your executor or beneficiary can find.
• Who you intend to receive the assets — a named beneficiary with specific instructions, not just a general bequest.

How to store the seed phrase

This is the most sensitive part of the plan. A seed phrase written on paper and kept in the same location as a hardware wallet, or stored digitally in a place that could be compromised, undermines the security of the asset during your lifetime. The goal is to store the phrase in a way that is secure now and accessible to the right person afterward.

• A fireproof, waterproof safe — with clear instructions left separately about its location and contents.
• A bank safe-deposit box used only for this purpose — but see our separate guide on the risks of using a safe-deposit box, particularly for the primary original of a will.
• A multi-location split, where parts of the phrase are held in two or more secure places — each useless without the other. This adds security at the cost of complexity.
• A secure digital vault, where the phrase is encrypted at rest and released only to the person you designate, after verification, when the time comes.

Whichever method you choose, the critical instruction is this: do not store the seed phrase only in your head. Entire holdings have been permanently lost because the one person who knew the phrase was the one who passed.

Naming a beneficiary and educating them

Leaving cryptocurrency to someone who has never held it before can itself create problems. A beneficiary who does not know how to use a hardware wallet, claim assets from an exchange, or avoid common security mistakes may accidentally lose the assets anyway. Consider naming someone who is technically prepared to receive them, or including written guidance alongside the access information.

A complete digital estate plan covers this

Cryptocurrency sits within the broader challenge of digital estate planning. If you already have a digital estate plan — a record of your accounts, your wishes, and your access instructions — cryptocurrency belongs in it. Legatus Vault lets you store access instructions, account details, and sensitive guidance in an encrypted vault, released to the people you name only after a verified confirmation. For assets as irreversible as self-custodied crypto, that kind of deliberate, controlled hand-off is the only reliable plan.