Twenty percent of all Bitcoin in existence is estimated to be permanently lost. Not stolen. Not spent. Lost — because the people who owned it died or lost access, and nobody else knew how to recover it.
At current prices, that is roughly $140 billion in value that is gone forever. Sitting on blockchains, visible to everyone, accessible to no one.
And it is not just early adopters who lost their passwords in 2011. This is happening right now, to regular people with regular families, every single day. A father with a Coinbase account and no documented recovery plan. A grandmother who bought Bitcoin as an investment and stored the seed phrase in a notebook nobody knows about. A business owner whose Ledger device sits in a drawer after they pass away, protected by a PIN that died with them.
Cryptocurrency is the most unforgiving asset class when it comes to inheritance. With a bank account, your family can eventually gain access through probate. With a house, the deed transfers. With stocks, the brokerage has a process. But with self-custody crypto, if the keys are lost, the money is gone. Permanently. Irreversibly. No customer service can help.
Why Crypto Is Different From Every Other Asset
Traditional financial assets have institutions behind them. Banks, brokerages, and insurance companies all have processes — sometimes slow and frustrating ones — for transferring assets to heirs after death.
Cryptocurrency, particularly self-custodied crypto, has no such safety net.
There are three ways people hold crypto, and each has different inheritance implications.
Exchange Accounts (Coinbase, Kraken, Binance)
This is the most common and the easiest for inheritance. The crypto sits on the exchange's servers. Your family needs the login credentials, may need to pass two-factor authentication, and then needs to go through the exchange's estate process.
Most major exchanges have bereavement or estate processes. Coinbase, for example, requires a death certificate, proof of executor status, and other legal documentation. It is slow but possible.
The risk here is access. If your family does not know the account exists, or cannot get past two-factor authentication, they may never know the crypto was there.
Hardware Wallets (Ledger, Trezor)
This is where things get dangerous. A hardware wallet is a physical device that stores your private keys offline. It is secured by a PIN and backed by a seed phrase — twelve or twenty-four words that can regenerate the entire wallet.
If your family has the device and the PIN, they can access the crypto. If they have the seed phrase, they can recover everything even without the device. But if they have neither, the crypto is gone.
The device itself is useless without the PIN. After a certain number of wrong attempts, it wipes itself. And unlike a phone or computer, there is no "forgot password" option.
Software Wallets (MetaMask, Trust Wallet)
Software wallets live on your phone or computer. They are protected by the device's security (PIN, biometrics) and the wallet's own password. Like hardware wallets, they are ultimately backed by a seed phrase.
If your phone is locked and nobody has the PIN, and the seed phrase is not written down somewhere accessible, the crypto is inaccessible.
The Seed Phrase Problem
The seed phrase is the master key. Twelve or twenty-four words, in a specific order, that can regenerate your entire crypto wallet from scratch. Whoever has the seed phrase has the crypto. No exceptions.
This creates a security paradox for estate planning. You need to keep the seed phrase secret to prevent theft while you are alive, but accessible enough that your family can find it when you are gone.
The worst places to store a seed phrase for estate purposes include your will (wills become public documents during probate — anyone can read them), email or cloud storage (if hacked, your crypto is stolen), or only in your head (it dies with you).
Better approaches include a steel plate or fireproof paper in a home safe or bank safe deposit box, split storage where half the phrase is in one location and the other half in another, or a sealed envelope with your attorney with specific instructions.
The key principle: your family needs to know the seed phrase exists and where to find it, without the phrase being so accessible that it could be stolen.
Step-by-Step Crypto Estate Plan
If you own cryptocurrency of any meaningful value, here is what to do.
Document What You Own
Write down every crypto holding: which cryptocurrency, where it is held (exchange name or wallet type), and approximate value. This does not need to be in a secure location — it is just an inventory. No keys, no passwords, just a list of what exists.
Document How to Access It
For each holding, separately document how your family would access it. For exchange accounts: the login email, the two-factor authentication method, and where the recovery codes are stored. For hardware wallets: where the device is physically located, the PIN, and where the seed phrase is stored. For software wallets: which device has the wallet, how to unlock that device, and where the seed phrase is stored.
This information should be stored securely — in a password manager with emergency access, or in a sealed document in a safe.
Write Instructions for a Non-Crypto Person
This is the step most people skip, and it is arguably the most important. Your family may have zero experience with cryptocurrency. They do not know what a seed phrase is. They do not know how to open a Ledger. They do not know the difference between Bitcoin and Ethereum.
Write a simple, step-by-step guide. Number the steps. Assume the reader knows nothing. Something like: "1. Open the top drawer in my office. The small black USB-like device is my Ledger. 2. Connect it to a computer with a USB cable. 3. Turn it on by pressing both buttons. 4. Enter the PIN: it is written on the card inside the envelope in the safe. 5. Go to ledger.com/start on the computer and follow the prompts."
This five-minute investment in clear instructions could be the difference between your family inheriting your crypto or losing it forever.
Tell Your Digital Executor
Designate someone — ideally tech-savvy — as your digital executor. Tell them: "I own cryptocurrency. If something happens to me, the instructions are in the safe. Here is how to get to the safe." They do not need the details now. They just need to know the plan exists and where to find it.
Tax and Legal Considerations
Cryptocurrency is treated as property for estate tax purposes in the United States. This means it is subject to the same estate tax rules as stocks or real estate. Depending on the size of the estate, there may be significant tax implications.
Inherited crypto typically receives a step-up in cost basis to the fair market value at the date of death. This can be a major tax advantage — if someone bought Bitcoin at $100 and it is worth $80,000 at death, the heir's cost basis is $80,000, not $100.
However, determining the fair market value of crypto on a specific date requires documentation. Exchange records, blockchain transaction histories, and price data all become relevant.
This is an area where working with an accountant who understands cryptocurrency is essential. The tax rules are complex and change frequently.
What About NFTs and DeFi?
Non-fungible tokens and decentralized finance positions add additional complexity. NFTs may have significant value but can be difficult to value for estate purposes. DeFi positions — staking, lending, liquidity pools — may generate ongoing income but require active management.
If you hold NFTs or have DeFi positions, document them the same way: what they are, where they are, how to access them, and what to do with them. For DeFi specifically, note whether positions need to be actively managed or if they can sit indefinitely.
The $140 Billion Warning
That $140 billion in lost Bitcoin is not coming back. Ever. It is a permanent monument to what happens when people hold valuable assets without an access plan.
Your crypto does not need to become part of that statistic. A few hours of documentation — an inventory, access instructions, and a simple guide for your family — is all it takes.
The Digital Vault tool at mylo.family helps you create exactly this: a structured document that lists your crypto holdings, where access credentials are stored, and step-by-step instructions for your family. No passwords are stored on the site — you fill in the details in a downloaded Word document and keep it safe.
Your family should not have to guess whether you owned crypto, where to find it, or how to access it. And they definitely should not have to watch $50,000 or $500,000 sit permanently locked on a blockchain because nobody wrote down twelve words.
Frequently Asked Questions
Can cryptocurrency be inherited?
Yes. Cryptocurrency can be inherited like any other asset. The challenge is not legal — it is practical. If heirs cannot access the private keys or seed phrases, the crypto is effectively lost forever, regardless of legal ownership.
Should I put my seed phrase in my will?
No. Wills become public documents during the probate process. Anyone can read them. A seed phrase in a will is visible to anyone who looks. Store it in a physically secure, private location and reference that location in your estate documents.
What happens to crypto on Coinbase when someone dies?
Coinbase has an estate process that requires a death certificate, proof of executor or administrator status, and other legal documentation. The process can take several weeks. Having the account credentials documented separately can speed things up significantly.
Do I need a special lawyer for crypto estate planning?
Not necessarily, but your attorney should understand that crypto exists and that access requires specific credentials. The main thing is ensuring your estate plan references your digital assets and that access instructions are documented separately in a secure location.
What if I do not know my seed phrase anymore?
If your crypto is on an exchange, you can still access it through your exchange login. If it is in a self-custody wallet and you have lost the seed phrase, you should immediately create a new wallet, transfer the crypto while you still have device access, and properly document the new seed phrase.
