Bitcoin Inheritance Planning: How to Pass Your BTC to Your Heirs

Here's the uncomfortable truth about self-custody: if you die without a plan, your bitcoin dies with you.

There's an estimated 3 to 4 million bitcoin permanently lost — roughly 15–20% of the total supply — and a growing portion of that comes from holders who passed away without leaving their heirs a way to access their funds. No bank will help. No customer support line to call. No court order that can recover a lost private key.

"Be your own bank" is empowering until you realize banks have succession plans and you probably don't.

This guide walks you through practical inheritance strategies, from simple letter-based approaches to sophisticated multisig setups. The right solution depends on how much bitcoin you hold, how technical your heirs are, and how much complexity you're willing to manage.

This article covers general inheritance planning concepts. Estate law varies by jurisdiction. Consult a qualified estate attorney for advice specific to your situation.

Key Takeaways

• Without a plan, your bitcoin is permanently lost when you die — no bank or court can recover lost keys
• Multisig solutions like Unchained and Casa let you split key access without giving any single person full control
• A letter to heirs is the minimum viable inheritance plan everyone should have
• Shamir's Secret Sharing splits your seed phrase into pieces that must be combined
• Dead man's switches automate disclosure after a period of inactivity
• Legal documents (wills, trusts) should reference bitcoin but never contain keys or seed phrases
• Review your plan at least once a year and test it with a small amount

The Problem: Keys Die With You

When you store bitcoin in self-custody, your seed phrase (typically 12 or 24 words) is the only way to access your funds. Lose it, and the bitcoin is gone. This is the tradeoff of self-sovereignty: nobody can seize your bitcoin, but nobody can recover it for you either.

For inheritance, this creates a dilemma. You need your heirs to eventually access your keys, but you don't want them to access your bitcoin while you're alive. You also don't want a single point of failure, because if one person or document is compromised, you could lose everything.

The challenge is balancing three things:

1. Security while alive: Nobody can steal your bitcoin
2. Accessibility after death: Your heirs can access your bitcoin
3. Simplicity: Your heirs can actually follow the plan, even if they're not technical

Most inheritance plans fail on point three. A plan your family can't execute is no plan at all.

Option 1: The Letter to Heirs (Minimum Viable Plan)

If you do nothing else, do this. Write a letter that explains what bitcoin is, that you own some, and how to access it. Store it somewhere your heirs will find it after your death.

What the Letter Should Include

An explanation of what bitcoin is and why it matters. Your heirs may know nothing about bitcoin. Start from zero. Explain that it's digital money, that it's valuable, and that it requires specific information to access.

How much bitcoin you hold (approximately). They need to know the scale. "A few hundred dollars" requires different urgency than "your college fund." You don't need to be exact — a range is fine.

Where to find your seed phrase. Not the seed phrase itself, but where it's stored. "In the fireproof safe in the basement" or "In a safety deposit box at First National Bank, box #247."

Step-by-step recovery instructions. Write this for someone who's never used a wallet. Which wallet software to download. How to enter the seed phrase. How to verify the balance. How to send bitcoin to an exchange if they want to convert to cash.

Who to contact for help. Name a trusted friend or advisor who understands bitcoin and can help your heirs through the process. Ideally someone who doesn't have access to your seed phrase directly.

What NOT to do. Warn them about scams. "Never share your seed phrase with anyone who contacts you claiming to be support." "Never enter your seed phrase on a website." "If someone asks for your seed phrase, they're trying to steal the bitcoin."

Where to Store the Letter

• With your will or estate documents (but not the seed phrase itself)
• In a sealed envelope with your attorney
• In a fireproof safe your family knows about
• With a trusted family member who understands its importance

Critical rule: The letter should describe how to find the seed phrase. The letter and the seed phrase should never be in the same location. If someone finds both, they can take your bitcoin while you're alive.

Option 2: Multisig Inheritance (The Professional Approach)

Multisig (multi-signature) wallets require multiple keys to authorize a transaction. A 2-of-3 multisig means three keys exist, and any two are needed to move funds. This is the gold standard for bitcoin inheritance planning because it eliminates single points of failure while keeping your bitcoin secure during your lifetime.

How Multisig Solves Inheritance

In a 2-of-3 setup, you distribute the three keys:

• Key 1: You hold this key (at home or in a personal safe)
• Key 2: A trusted third party holds this key (inheritance service, attorney, or family member)
• Key 3: Stored in a separate secure location (bank vault, safety deposit box)

While alive, you use Key 1 plus Key 3 to transact. Nobody else can move your funds alone. After your death, your heirs access Key 1 (from your letter/estate plan) and coordinate with the Key 2 holder to recover the bitcoin.

No single party ever has enough keys to steal your bitcoin. That's the beauty of multisig for inheritance.

Unchained

Unchained is the leading collaborative custody provider for bitcoin inheritance planning. Their model is purpose-built for this scenario:

• You hold 2 keys on your own hardware wallets (giving you full control while alive)
• Unchained holds 1 key (they can assist your heirs, but can never access funds alone)

For inheritance, Unchained's process works as follows:

1. You designate beneficiaries through Unchained's inheritance protocol
2. After your death (verified through their documentation process, typically requiring a death certificate), Unchained contacts your designated heir
3. Your heir provides one of your two keys (which you've documented in your letter to heirs) and coordinates with Unchained, who provides their key
4. Together, that's 2-of-3 — enough to move the funds

Unchained also offers inheritance-specific vaults that include pre-configured beneficiary documentation, key location guides, and step-by-step recovery instructions for non-technical heirs.

Pros: Professional support with dedicated inheritance team, clear legal framework, your heirs get human help throughout the process, concierge onboarding available, transparent fee structure. If Unchained ceases to exist, you still hold 2 of 3 keys and can recover independently.

Cons: Annual fees (plans start around $250/year for vault services), requires trust in Unchained as an ongoing entity (mitigated by you holding majority keys), requires compatible hardware wallets.

Best for: Anyone holding a meaningful amount of bitcoin (generally 0.5+ BTC) who wants professional support and a proven inheritance framework.

Casa

Casa offers a premium self-custody and inheritance solution with a polished, mobile-first approach. Their multi-key vault system includes inheritance as a core feature on premium plans.

Casa's inheritance protocol includes several important safeguards:

1. Beneficiary designation: You name an heir and configure the inheritance process through Casa's app
2. Waiting period: After an heir initiates the inheritance claim, there's a mandatory waiting period (typically 6 months). During this time, if you're actually alive, you can cancel the request — protecting against premature or fraudulent claims
3. Key coordination: Once the waiting period passes, Casa coordinates the key signing with your heir

Casa uses a 3-of-5 multisig model on its premium plans, with keys distributed across your mobile device, hardware wallet, Casa's server, a recovery key, and an inheritance key. This provides more redundancy than 2-of-3 setups.

Pros: Polished mobile app, built-in safety delays that prevent premature claims, 3-of-5 offers more redundancy, excellent user experience, health check reminders to verify key access.

Cons: Higher cost than Unchained (premium plans with inheritance start around $250/year), the 6-month waiting period means heirs don't get immediate access, less transparent about internal key management processes.

Best for: Bitcoin holders who value ease of use and want multiple layers of protection, including fraud prevention.

Unchained vs. Casa: Quick Comparison

DIY Multisig

You can build your own multisig inheritance plan using free, open-source tools like Sparrow Wallet. This gives you maximum control and zero ongoing fees, but requires more technical knowledge and careful documentation.

A typical DIY 2-of-3 setup:

• Key 1: Hardware wallet you use daily (Foundation Passport, Coldcard, BitBox02, etc.)
• Key 2: Hardware wallet stored with a trusted family member
• Key 3: Hardware wallet in a bank safety deposit box

Your letter to heirs would explain the multisig setup and where each key is located. Your heirs need any two of the three keys plus the wallet descriptor file (also called the wallet configuration file), which contains the public keys and multisig parameters needed to reconstruct the wallet.

Warning: DIY multisig inheritance only works if your documentation is flawless. Your heirs need to understand that they need two keys plus the wallet descriptor file, and they need clear instructions on which software to use. Test this with a small amount first. Have a non-technical family member actually attempt the recovery process while you're available to help.

Best for: Technical users comfortable with bitcoin wallet software who want maximum control and zero ongoing costs.

Option 3: Shamir's Secret Sharing

Shamir's Secret Sharing (SSS) splits a secret (your seed phrase) into multiple pieces called "shares." You configure it so that a minimum number of shares are required to reconstruct the secret.

For example, a 3-of-5 Shamir split creates 5 shares, and any 3 of them can reconstruct your seed phrase. Losing one or two shares doesn't matter, and stealing one or two shares isn't enough to access your funds.

How to Use Shamir for Inheritance

The Trezor Model T, Trezor Safe 3, and Trezor Safe 5 support Shamir backup natively using the SLIP-39 standard. During setup, you create shares instead of a standard seed phrase.

You'd distribute the shares to different trusted locations or people:

• Share 1: Your personal safe
• Share 2: Your attorney
• Share 3: A trusted family member
• Share 4: A bank safety deposit box
• Share 5: A second family member or trusted friend

After your death, your heirs need to gather three shares from any combination of these locations. Your letter to heirs would explain the Shamir setup, where each share is, and how to use them to recover the wallet.

Advantages over standard seed phrases: No single location holds the complete secret. You can lose up to two shares and still recover. Distribution across multiple people and locations adds resilience.

Disadvantages: Fewer wallets and hardware devices support SLIP-39 natively — it's mostly limited to Trezor devices. When shares are recombined, the full seed exists briefly in one place (even if only in device memory). Multisig never requires the full key to exist in a single location. Shares also look unusual, which may confuse non-technical heirs.

Best for: Users who want geographic distribution of their backup without the complexity of managing multiple hardware wallets.

Option 4: Dead Man's Switch

A dead man's switch is a mechanism that triggers automatically if you stop responding for a set period. In the bitcoin context, it means: if you don't check in by a certain date, information is released to your heirs.

How It Works

You set up a service or system that periodically asks you to confirm you're alive (click a link, enter a code, log in). If you miss enough check-ins, the system assumes you're dead or incapacitated and releases pre-loaded information (your letter to heirs, seed phrase location, instructions) to your designated contacts.

Options

Google Inactive Account Manager. Google lets you set a timeout period (3, 6, 12, or 18 months of inactivity). After the timeout, it can share specific Google data with chosen contacts and optionally send them a message you've pre-written. You could store your inheritance instructions in a Google Doc and set it to share upon inactivity. This is free and requires no special technical knowledge.

Dedicated services. Several services specialize in digital dead man's switches. Research carefully before trusting any service with sensitive information. Never store your actual seed phrase with any third-party service — only store instructions on how to find it.

Self-hosted. If you're technical, you can build your own using a scheduled email or encrypted file release. This is the most private option but requires maintenance and introduces its own single points of failure.

Important caveat: Dead man's switches have failure modes. Services shut down. Emails go to spam. Your check-in reminder might arrive while you're on a remote vacation with no connectivity. Build in generous timeframes (6+ months) and multiple notification methods. A dead man's switch should complement your inheritance plan, not be the entire plan.

Legal Considerations

Bitcoin creates unique challenges for estate planning. Here's what you should know.

Include Bitcoin in Your Will

Mention that you hold digital assets and that instructions for accessing them exist separately. Never put seed phrases, private keys, or passwords in the will itself — wills become public record during probate. Anyone who reads the probate filing could access your bitcoin.

Consider a Trust

A revocable living trust avoids probate (keeping your bitcoin holdings private) and can include specific instructions for digital asset management. Some estate attorneys now specialize in cryptocurrency trusts. A trust also lets you set conditions on how and when heirs receive the bitcoin (for example, age requirements or staged distributions).

Power of Attorney

If you're incapacitated but alive, someone needs authority to manage your bitcoin. A financial power of attorney should explicitly mention digital assets and cryptocurrency. A generic POA may not give your agent clear authority to manage bitcoin.

State Laws Vary

Most US states have adopted some version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which gives fiduciaries limited access to digital assets. However, RUFADAA covers access to digital accounts, not necessarily the authority to manage bearer instruments like bitcoin private keys. Check your state's specific provisions.

Tax Implications for Heirs

Inherited bitcoin receives a stepped-up cost basis equal to the fair market value on the date of death. This can eliminate substantial capital gains tax. For example, if you bought 1 BTC at $5,000 and it's worth $80,000 when you pass away, your heir's cost basis becomes $80,000 — not $5,000. See our bitcoin tax guide for more details on how this works.

The federal estate tax exemption is $13.99 million per individual in 2025. Most bitcoin holders won't face estate tax, but large holdings may trigger it. State estate taxes have lower thresholds in some jurisdictions.

International Complications

If you have heirs in different countries, inheritance laws and tax obligations can conflict. A cross-border estate plan for bitcoin is complex enough to justify professional legal help. Some countries don't recognize digital assets in inheritance law, which can create legal limbo.

Get a Crypto-Literate Attorney

Most estate attorneys don't understand bitcoin custody. Find one who does, or be prepared to educate yours thoroughly. At minimum, they should understand that bitcoin keys are bearer instruments: whoever has the keys has the bitcoin, regardless of what any legal document says. The Bitcoin Policy Institute and Chamber of Digital Commerce maintain directories of crypto-literate legal professionals.

Letter to Heirs Template

Here's a starting template. Customize it with your specific details:

To my family,

I own bitcoin, a form of digital money stored on a global network called the Bitcoin blockchain. As of [date], my holdings are approximately [amount or range]. At current prices, this is worth roughly [USD value].

This bitcoin is valuable and recoverable, but only if you follow these instructions carefully.

Step 1: Find my seed phrase. My seed phrase is a set of [12/24] words that unlocks access to my bitcoin. It is stored at: [location]. Do not share these words with anyone except the people listed below.

Step 2: Download wallet software. On a clean computer (ideally one not used for everyday browsing), download [Sparrow Wallet / BlueWallet / specific wallet name] from [official URL]. Verify you're on the official website — check the URL carefully.

Step 3: Recover the wallet. In the wallet software, choose "Import" or "Restore" and enter the seed phrase words in order. If my wallet uses a passphrase (sometimes called a "25th word"), it is stored at [separate location].

Step 4: Verify the balance. The wallet will display my bitcoin balance. If the balance shows zero, contact [trusted person] before doing anything else — you may have the wrong wallet type selected.

Step 5: Decide what to do. You can hold the bitcoin or sell it on a reputable exchange like [exchange name]. To sell, create an account, complete identity verification, send the bitcoin to the exchange, and sell for your local currency.

Trusted contacts who can help:

• [Name, relationship, phone/email]: Understands bitcoin and can guide you
• [Name, relationship, phone/email]: Backup contact

Warning: Never share the seed phrase with anyone who contacts you claiming to offer help. Never enter it on a website. Never give it to "customer support." Anyone who asks for your seed phrase is trying to steal the bitcoin. If someone says they can "recover" your bitcoin for a fee, it's a scam.

With love, [Your name]

Common Mistakes

Hiding it too well. If your heirs can't find your inheritance plan, it doesn't exist. Make sure at least two trusted people know a plan exists, even if they don't know the details.

No testing. Set up a small test wallet (even $50 worth), give your heir the instructions, and see if they can recover it. Most plans fail because the instructions assume too much technical knowledge. If your heir can't follow the steps without your help, simplify the plan.

Single point of failure. One seed phrase in one location is a single point of failure. One trusted person who might move, die, or become estranged is a single point of failure. Build redundancy into every layer.

Outdated information. Review your inheritance plan at least once a year. Update wallet software recommendations, contact information, and approximate balances. Technology changes fast — a wallet recommendation from 2023 might not be the best option in 2026.

Over-complicating it. The best inheritance plan is one your heirs can actually execute. If your family isn't technical, a simple letter plus seed phrase in a safe is better than an elaborate multisig setup nobody can navigate. Match the complexity to your heirs' capabilities.

Ignoring the passphrase. If you use a BIP39 passphrase (25th word) in addition to your seed phrase, your heirs need both. A seed phrase without the passphrase will recover a different (empty) wallet. Document this clearly and store the passphrase separately from the seed phrase.

Frequently Asked Questions

How much bitcoin should I have before I need an inheritance plan?

Any amount worth more than you'd be comfortable losing permanently. There's no minimum. A simple letter to heirs takes 30 minutes and costs nothing. Professional multisig solutions like Unchained or Casa become worth the cost when your holdings exceed roughly $5,000 to $10,000, but the exact threshold depends on your personal situation.

What happens to my bitcoin if I die without a plan?

It's likely lost forever. Unlike a bank account, there's no institution that can grant access to bitcoin without the private keys. Courts can order exchanges to release funds held in exchange accounts, but bitcoin in self-custody is only accessible with the seed phrase or private keys. If nobody knows those exist or where to find them, the bitcoin stays locked on the blockchain permanently.

Can I include bitcoin in my will?

Yes, and you should — but never put your seed phrase, private keys, or passwords in the will itself. Wills become public record during probate. Instead, reference that you hold digital assets and indicate that separate, private instructions exist for accessing them.

Are multisig services like Unchained and Casa safe long-term?

Both companies have been operating since the late 2010s and are specifically built around bitcoin custody. The key safety feature is that you always hold the majority of keys — so even if either company shuts down, you can recover your bitcoin independently. That said, check in annually to confirm the service is still operating and your contact information is current.

Do my heirs have to pay taxes on inherited bitcoin?

In the US, inherited bitcoin receives a stepped-up cost basis equal to the fair market value on the date of death. This means your heirs only owe capital gains tax on appreciation after they inherit — not on gains during your lifetime. Estate taxes may apply if the total estate (including bitcoin) exceeds $13.99 million (2025 exemption). See our bitcoin tax guide for details.

What if my heirs know nothing about bitcoin?

This is exactly why the letter to heirs matters. Write it for someone who has never used a computer wallet. Include the name and contact information of at least one trusted person who understands bitcoin and can walk your heirs through the recovery process. Consider Unchained or Casa, which provide dedicated support to help non-technical heirs.

How often should I update my inheritance plan?

At least once a year. Review contact information, wallet software recommendations, approximate balances, and the physical security of your seed phrase storage. Life events (marriage, divorce, birth of children, moving) should trigger an immediate review. Set a calendar reminder.

Can I set up inheritance for bitcoin held on an exchange?

Exchange-held bitcoin follows the exchange's own succession process, which typically involves submitting a death certificate and legal documentation. This is simpler than self-custody inheritance but comes with the risk that the exchange could be hacked, go bankrupt, or freeze accounts. For significant holdings, self-custody with a proper inheritance plan provides more control and security.

What's Next?

1. Write your letter to heirs today. Even a rough draft is infinitely better than nothing. Use the template above and customize it for your situation.
2. Evaluate whether multisig makes sense for your holdings. Read our multisig explainer to understand how multi-key setups work. For significant amounts, Unchained's collaborative custody is worth exploring.
3. Tell someone the plan exists. Your inheritance plan is useless if nobody knows about it. Tell at least one trusted person that you have a plan for your digital assets, where to find the instructions, and who to contact.
4. Understand the [tax implications](/learn/bitcoin-tax-guide/) of inherited bitcoin — the stepped-up cost basis can be a significant benefit for your heirs.
5. Set a yearly reminder to review and update your plan. Your bitcoin inheritance plan is a living document, not a set-and-forget exercise.

Your bitcoin is only as permanent as your plan to pass it on. Take an hour this week and make sure your family isn't left with an expensive mystery.

Disclaimer: This article is for educational purposes only and does not constitute legal, tax, or financial advice. Estate planning laws vary by jurisdiction. Consult qualified legal and tax professionals for advice specific to your situation.