What Happens to Your Crypto When You Die?

It’s a morbid subject, we know, but it’s important to plan for all eventualities when investing in crypto.

AccessTimeIconApr 12, 2022 at 5:20 p.m. UTC
Updated Apr 10, 2024 at 2:41 a.m. UTC

If you hold any amount of cryptocurrency, you’ve probably given some thought to its security. After all, what good is investing your money in assets if other people can easily steal them?

But there’s another aspect of crypto security that’s equally as important and often overlooked by both novice and experienced users: What will happen to your crypto after you die?

This might seem like an obvious consideration, but according to Glassnode data from late 2020 it’s estimated that over 10% of bitcoin’s circulating supply is lost forever. Of course, it’s impossible to know exactly how those coins were lost, but we can assume that at least some were because of people not having adequate measures in place for after they passed.

So what do you need to do to ensure your loved ones receive your crypto should the worst happen?

The security trade-off and importance of choosing the right person

Before we look at the steps you’ll need to take to properly secure your assets, it’s important to first understand the significant security trade-off that comes with telling another person or people about where and how to access your crypto-based wealth.

Choosing the right person to give your crypto assets to is a lot more complex than it sounds. It’s not exclusively about trust, but about how technologically savvy is that particular person or group of people.

For example, Bob has five bitcoin (BTC) that he wants to leave to his wife Alice in the event he dies. However, Alice has no idea how to use a hardware wallet or an exchange. This means she must either find or employ another person to help her access the funds – which can present a significant security risk – or try and learn how to use these platforms and devices. Again, this also presents a security risk given how easy it is to send crypto to the wrong address, get locked out of devices or withdraw assets using the wrong token standards.

Tether (USDT) is an example of a crypto asset that has three different token variations – OMNI, ERC-20 and TRC-20 – depending on what blockchain the tokens are issued. Sending any one of these to another would result in the coins being permanently lost. So, for instance, OMNI-based USDT coins sent to an ERC-20 wallet address would not be recoverable.

Another big question is, how much information should you divulge? Obviously you’ll need to disclose enough about your crypto holdings for someone to be able to access them, but do you entrust that information to one person or is it worth dividing the instructions among several trusted individuals?

Only you will know what is the best course of action, but it’s certainly something to consider.

Hedging your bets across a group of people has its pros and cons. Namely, it prevents any single person from being able to steal your crypto funds while you’re still alive, but the main drawback of enlisting multiple trustees is the whole system collapses if one person mislays his or her piece of the instructions.

What steps all crypto users should take

Once you’ve decided on whom you’re going to elect as the beneficiary of your crypto funds, the next step is to outline the procedure for locating and claiming them.

Location of your funds

The first piece of information you’ll want to include in your instructions is where to find your assets. This includes the physical location of any hardware wallet(s) you own as well as in what hot wallets you have crypto stored.

If your assets are located in multiple places – such as decentralized finance (DeFi) liquidity pools, centralized exchanges and non-fungible token (NFT) marketplaces – it might be a good idea to consolidate them into crypto wallets that support multiple asset types. MetaMask is one example of a service that lets you store fungible and non-fungible tokens in a single, easy-to-access wallet.

Passwords, private keys and backup codes

Second, you’ll need to carefully list all the passwords, private keys and seed phrases for the crypto wallets, email accounts and exchange accounts needed to access your funds.

If you have two-factor authentication (2FA) switched on, you’ll also need to provide either the location and password for the device where the app is stored or a list of 2FA one-time backup codes.

If your accounts are set up to receive SMS security messages, you’ll also need to include details pertaining to the location and password of your current mobile device (updated periodically as you change handsets).

Technical advice

You may wish to include steps on how your beneficiary should handle or liquidate your assets. This might include instructing on which exchange is best to use or outlining a brief walkthrough guide on how to set up his or her own wallet and transfer the funds across.

You’ll also need to be mindful that certain platforms come and go over time, not to mention some experience security breaches that may force you to transfer funds over to new wallets. This means you’ll likely need to update your instructions over time.

How to copy down your sensitive crypto information

Making copies of your private crypto information doesn’t mean writing your seed phrases on a post-it note and sticking it to the fridge or sending the information via email.

These details should be copied down on paper and copied several times. Each copy should then ideally be stored in different locations to remove any single point of failure. For example, if you kept only a single paper copy in a bedside table and the house caught fire, your beneficiary would never be able to access the funds – that might sound a bit wild, but it can happen.

To maximize the level of security, there are companies that provide kits for storing seed phrases and passwords on metal plates. These provide additional protection against things like house fires, water damage and most other things that could damage a paper copy. Leading providers include:

In addition, British law firm Farrer & Co points out that when you do get around to creating a list, you should not include it in your will. That’s because any information in the will, including your crypto passwords, will become legally available to the public after you’re gone.

This article was originally published on Apr 12, 2022 at 5:20 p.m. UTC


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Benedict George is a freelance writer for CoinDesk. He has worked as a reporter on European oil markets since 2019 at Argus Media and his work has appeared in BreakerMag, MoneyWeek and The Sunday Times. He does not hold any cryptocurrency.

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