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Crypto Inheritance: How to Prepare Your Estate For When You Die

5 mins
Updated by Nicole Buckler
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In Brief

  • When death shows up unannounced, the family of a Bitcoin investor can be left without access to their relative’s riches.
  • There are ways to help people keep their crypto information safe for legacy purposes.
  • Some $75 billion worth of Bitcoin may be lost forever for various reasons, including death.
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Crypto inheritance: If the main attraction to Bitcoin (and cryptocurrency) is its relative privacy, you may not be especially keen to share your private keys with your loved ones. An attacker could sift through your papers, weaponize your keys and empty your savings.

Indeed, most privacy-focused Bitcoin investors are used to keeping their private keys a total secret. But when the Grim Reaper shows up unannounced, the family of a crypto millionaire can be left without access to their relative’s riches.

Bitcoin estate planning

In one of the most widely publicized examples, paranoid U.S. investor Matthew Mellon died in 2018, leaving few clues to a crypto fortune valued at $500 million. There are ways to help people keep their asset information safe, while allowing it to be used for legacy purposes.

“One way to solve inheritance with crypto wallets is through social recovery,” Lukas Schor, co-founder of Safe, told BeInCrypto. “[There are] solutions [that] can provide options to nominate a trusted family member or friends that can recover a wallet in case the owner passes away.”

Safe (previously known as Gnosis Safe) is a multi-signature wallet on Ethereum specializing in crypto custody. Users can customize how they manage their crypto assets, with the option to add multiple devices to confirm transactions.

A few other entities like Casa’s Covenant already offer similar services. With multi-signature wallets, private keys could be spread across different heirs to minimize the risk of accidental loss or intrusion. No single individual can confirm a transaction.

Imagine it is a six signature key, like in the case of Casa. Three signatures are required to sign off a transaction. These keys can be shared or divided between different parties: spouse, financial advisor or lawyer etc, who will all need to confirm a transaction in the event of your death.

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Double funeral

Cryptocurrency can be lost, particularly if the owner doesn’t share the private keys that allow access to the wallet by a third party by way of legacy management.

Around the world, there are several examples of Bitcoin investors who died without leaving their keys for their relatives. In such cases, families must deal with a kind of “double funeral.”

They must mourn the loss of a loved one. And at the same time come to terms with the loss of an irretrievable fortune that might have been theirs.

This underscores how Bitcoin’s main appeal – its safe remove from regulatory oversight and impenetrable privacy – can also become its fatal weakness.

Users may enjoy immunity from high bank fees and taxes. But they miss out on the good side of the old system, such as help with the administration of their estates.

That may be starting to change. “In the long run we even foresee institutions like banks, insurance, and notaries take on this role of recovering access to crypto wallets,” Lukas Schor, the Safe co-founder, told BeInCrypto.

Continuing, Schor said:

“Social and institutional recovery is possible through a new type of crypto wallet called ‘smart contract wallets’. There is an ecosystem-wide initiative underway called ‘account abstraction’. [It] establishes these smart contract wallets like Safe or Argent as the standard way to hold and transact with crypto-assets.”

3.7 million BTC lost forever

Trenton Kennedy is a communications manager at blockchain analytics company Chainalysis. He pointed to this 2020 blog post when asked by BeInCrypto to share data on the amount of Bitcoin that may have been lost forever for various reasons, including death.

According to the blog, 20% of all Bitcoin in circulation have been lost, may be forever. That’s the equivalent of 3.7 million BTC, valued at $75.45 billion at existing prices. There is no direct mention of death in the statistics. But it likely accounts for a good portion of those losses.

Chainalysis said around 18.6 million Bitcoin had been mined as of June 2020. One fifth of the total “has not moved from its current set of addresses in five years or longer. We consider this lost Bitcoin.”


The example of Matthew Mellon, in particular, may encourage investors to start thinking beyond their own lives. Mellon died in April 2018 at the age of 54. He passed away with up to $500 million in Ripple (XRP).

It was stashed away in cold storage wallets under fake names in banks across the U.S. The secretive millionaire took his fortune with him. He failed to name heirs to his wealth and did not provide information on how to access his crypto wallets.

Death is complicated enough in crypto when a private investor dies with the private keys to their fortune. But the pain is amplified exponentially should the deceased be the CEO of a digital currency exchange responsible for the safekeeping of millions of dollars.

In Dec. 2018, the death of Gerald Cotten, founder and CEO of crypto exchange QuadrigaCX, led to the loss of $145 million stored in the platform’s cold storage. Quadriga was the largest exchange in Canada by traded volume at the time.

Crypto inheritance: Laws of succession

Posthumous losses of cryptocurrency will likely become more of a problem in the years to come. There is reason to believe investors will remain inclined to value secrecy to safeguard their wallets.

While death is a concern, Bitcoin wealth can also be lost through theft, accidental deletion, security breaches, and the loss of passwords and hard drives.

This explains, in part, why crypto investors are secretive about their details. But there is a positive side. The introduction of new regulations could mean that players operating in this decentralized space will be able to claim greater protection if the need arises.

Regulators throughout the world have started to recognize Bitcoin in a formal way. It means that national laws of succession could apply to crypto assets, as with other investments in the estates of deceased individuals.

Nonetheless, it is still up to investors themselves to formally identify their heirs in their wills. That said, having a will does not mean that one’s Bitcoin wealth will automatically be passed down to loved ones.

Private keys are still needed to unlock crypto wallets. This is why individuals need to leave clear instructions on how their heirs can access their fortunes.

Simpler methods might include entrusting third parties with copies of private keys, either on paper or in digital format. But such options necessitate a level of trust.

Crypto inheritance: Investors worried about fate of their Bitcoin

According to a 2020 study by the Cremation Institute, only about one quarter of Bitcoin investors have a documented plan of how their crypto funds will be distributed once they die.

It said around 89% of crypto investors worry about what will happen to their assets after they die, but few plan appropriately. Younger investors were particularly culpable, barely thinking beyond their own lives.

Younger generations – those between the ages of 18 and 40 years – are 10 times more likely not to have a plan in comparison to older generations, the study found.

“While complacency is a large factor, the combined issues of lacking crypto estate services and government regulation are important reasons for overall planning disorganization,” the Cremation Institute said at the time.

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Jeffrey Gogo
Jeffrey Gogo is a Zimbabwean financial journalist with more than 18 years of experience covering local and global financial markets; economic and company news. A climate change enthusiast, Gogo first encountered bitcoin in 2014 and began covering crypto markets in 2017.