A crypto balance can be worth a fortune and still be out of a family's reach. A bank can hand an account to an executor; a self-custody wallet has no such desk, because whoever holds the keys controls the coins. This guide covers how heirs claim coins from a platform, what they need for a wallet the owner ran alone, how to record access without exposing a seed phrase, and how estate tax and basis rules treat inherited crypto. The crypto hub covers the asset itself.
Who can get to crypto after the owner dies?
That depends on where the coins sit: an exchange answers to the executor appointed by a court, while a self-custody wallet answers only to whoever holds its keys.
| Where the crypto is held | Who controls access | What heirs need | Usual failure |
|---|---|---|---|
| Exchange or broker account | The platform, under its terms and state law | Death certificate, letters of appointment, sometimes a court order | Slow paperwork, or a platform that collapses |
| Spot bitcoin ETF in a brokerage account | The brokerage | The same estate papers as any securities account | Rare; it transfers like a stock fund |
| Software or hardware wallet | Whoever has the recovery phrase | The phrase, any passphrase and the wallet details | Phrase lost, never found or stolen |
| Multisig wallet | The key holders, by threshold | Enough keys to meet the threshold, plus the wallet setup file | Too few keys survive, or the setup file is lost |
The fund route trades some of crypto's features for an ordinary estate process, as bitcoin ETFs vs owning bitcoin explains. For the wider trade-off between a platform holding the keys and holding them yourself, see custodial vs non-custodial wallets.
How do heirs claim crypto held on an exchange?
The executor contacts the platform's estate team, sends a certified death certificate and proof of appointment, and then moves the coins as the court and the will direct.
Most states give that process a legal frame through the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), a 2015 model law that nearly every state has adopted in some form. Massachusetts is one exception: the Uniform Law Commission's 2026 tracking report shows its bill had passed the state Senate and was still awaiting a final House vote.
Under the act, an executor who sends a written request, a certified death certificate and a certified letter of appointment (or a small-estate affidavit or court order) is entitled by default to a deceased user's digital assets, other than the content of private messages, unless the owner said otherwise. The platform may also ask for the account number or username, evidence linking the account to the person, or a court finding that the account existed. Once it has what it needs, it has 60 days to comply.
The act also ranks the owner's wishes. A direction left in a platform's own online tool comes first; a will, trust, power of attorney or other record comes next; the platform's terms of service fill any gap. Platforms layer their own forms on top, so an executor should ask each one for its requirements in writing and keep copies of everything sent. If the platform itself fails, the estate may end up as one more creditor, a risk covered in whether crypto is safe on an exchange.
What do heirs need to open a self-custody wallet?
They need the recovery phrase, any extra passphrase, and enough instructions to know which wallet software, which networks and which accounts hold the coins.
No company can reset a self-custody wallet, and a hardware device's PIN only opens that one device; the 12 or 24 recovery words are what restore the funds anywhere. If the owner added an optional passphrase, the same words without it open a different, usually empty wallet, which can leave heirs convinced the coins are gone when they are not. One phrase can also control coins on several networks, so a note listing the bitcoin and Ethereum accounts in use saves guesswork.
Heirs should restore on a new, trusted device, check balances on a public block explorer before moving anything, and send a small test amount first. They should never type the words into a website, a support chat or a recovery service's form. How to store crypto safely covers making and storing the backups themselves; this page is about who gets told and how.
How can you leave instructions without exposing your seed phrase?
Separate the map from the key: write down what you own and how to recover it, and store the secret so no single person can use it alone.
| Method | How it works | What heirs need | Main weakness |
|---|---|---|---|
| Letter of instruction | Lists platforms, wallets, networks and contacts, but never the phrase | The letter plus the separately stored backup | Goes out of date unless revised |
| Sealed backup with an attorney or in a safe deposit box | One copy of the phrase held by a third party | Access to the box, or the attorney's cooperation | One copy can be lost or misused; opening a box may itself need court papers |
| 2-of-3 multisig with a trusted party | Three keys exist and any two can move the coins | Two keys plus the wallet setup file | More complex, and the setup file must be saved |
| Shamir backup shares (SLIP-39) | The secret is split into shares, such as any 2 of 3 | Enough shares and a wallet that supports SLIP-39 | Shares held by people who may lose them |
| Clause in a will or trust | Names who inherits the crypto and points to the letter | Probate or the trustee | A will becomes public, so it must never hold the phrase |
The two threshold methods solve the same problem differently. A multisig wallet needs several keys to sign each payment, so it works continuously, not just at death. Shamir shares rebuild a single wallet's secret; under the SLIP-39 standard, holding fewer shares than the threshold reveals nothing about it, and only wallets that support the standard can combine the shares. Some services hold one multisig key for a fee, and wallets that split keys with multi-party computation are another route; this comparison of seed-phrase and MPC wallets sets out the trade-offs.
Worked example: A 2-of-3 multisig plan for $240,000 in bitcoin
Key 1 sits on a hardware wallet at home. Key 2 sits on a second hardware wallet in a safe deposit box. Key 3 is held by the family's estate attorney, who never sees keys 1 or 2.
While the owner is alive: keys 1 and 2 approve any payment. A burglar who takes key 1 gets nothing, because one signature moves no coins.
After death: the executor opens the box with letters of appointment, retrieves key 2, and the attorney signs with key 3. Two of three keys move the $240,000 to the heirs, and the setup file stored with the letter of instruction tells the wallet software where to look.
Worked example: A 2-of-3 Shamir backup for a single wallet
The owner sets up a wallet with a 2-of-3 SLIP-39 backup, which produces three 20-word shares: one goes in a home safe, one to a sister in another state and one to the attorney.
Any 2 of the 3 shares rebuild the wallet. A thief who finds the share in the home safe learns nothing, and the loss of any one share, say in a house fire, still leaves 2 of 3 for the heirs.
Does inherited crypto face estate tax?
Only large estates owe it: for deaths in 2026, the federal exemption is $15,000,000 per person, and crypto counts at its market value on the date of death.
Taxable gifts made during life are added back before the exemption applies, and the top rate on the excess is 40%. Property left to a surviving spouse who is a US citizen generally passes free of estate tax, and an executor can carry the deceased spouse's unused exemption over to the survivor by filing a timely estate return, even when no tax is due. The return, Form 706, is due nine months after death; a six-month extension is available if it is requested before the deadline and the estimated tax is paid. Some states charge their own estate or inheritance taxes, often from much lower thresholds.
Crypto's price swings matter here. The executor may elect to value the whole estate six months after death instead, but only if that lowers both the estate's value and its tax. Coins sold or distributed within those six months are valued on that date, and the election, once made, cannot be undone.
Worked example: Estate tax on an estate holding $3 million in crypto
A single person dies in 2026 with a $16.2 million estate, including $3 million in crypto, and no earlier taxable gifts. The $1.2 million above the exemption is taxed at 40%: $480,000.
Six months later the crypto is worth 30% less, or $2.1 million, and the other assets are unchanged, so the estate totals $15.3 million. Electing the later date cuts the taxable excess to $0.3 million and the tax to $120,000, a $360,000 saving. The cost is that the heirs' basis in the coins becomes $2.1 million instead of $3 million.
How does the step-up in basis work for inherited crypto?
An heir's cost basis generally resets to the coins' fair market value on the date of death, so gains built up during the owner's life are never taxed.
That rule, in section 1014 of the tax code, cuts both ways: if the coins fell below what the owner paid, the basis steps down and the loss disappears. Inherited property also counts as held for more than a year, so any sale is long-term, however soon it happens. In the nine community property states, the surviving spouse's half of community property steps up too, as long as at least half its value is included in the estate. Two exceptions catch planners: coins given to a dying person within a year of death that come back to the giver or the giver's spouse keep their old basis; and when an estate must file a federal estate tax return, the executor reports values to heirs on Form 8971, which heirs must use for property that raised the estate tax.
Heirs should save a dated record of the price at death from more than one source and keep it with the estate papers. After that, selling part of an inheritance raises the usual questions about which units are sold; crypto cost basis methods covers them, and crypto tax 101 explains the capital gains rates.
Worked example: Step-up versus a gift the day before death
An owner bought 2 BTC in 2016 for $8,000. At death, bitcoin is $90,000, so the coins are worth $180,000, and that becomes the heir's basis. Three months later the heir sells for $186,000: the gain is $6,000, taxed as long-term. At a 15% rate, the tax is $900.
Had the owner given the coins away the day before death, the recipient would have kept the $8,000 basis. The same sale would show a $178,000 gain and, at 15%, $26,700 of tax. Gifts during life follow the rules in crypto gifts and donations tax.
What should a crypto inheritance plan include?
A workable plan covers an inventory, documents naming who inherits, a recovery method with no single point of failure, instructions heirs can follow and a review schedule.
Crypto inheritance checklist
- List every exchange, broker account, wallet and network that holds crypto, with rough amounts, and update the list when holdings change.
- Name an executor or trustee who understands the basics, or authorize them in writing to hire a specialist.
- Add a digital assets clause to the will, trust and durable power of attorney so your state's version of the uniform act applies.
- If a platform offers an online tool for naming who may access the account after death, use it, because the act ranks that choice first.
- Pick a recovery method, such as multisig, Shamir shares or a sealed backup, so no single person can move the coins alone.
- Write a letter of instruction that says where each backup is and which wallet software to use, without the phrase itself.
- Keep purchase records and exchange exports; the estate needs them, and coins you give away during life keep your original basis.
- Test the plan once by having a trusted person restore a small wallet from the instructions alone.
- Review everything each year and after a move, marriage, divorce, new device or large purchase.
What are the risks in a crypto inheritance plan?
The main risks are coins nobody can reach, secrets that leak before death and a platform that fails, and any one can wipe out an inheritance.
- No access. A self-custody wallet without its phrase, passphrase or enough multisig keys cannot be opened by anyone, and paid wallet-cracking offers are a common lure in crypto scams aimed at grieving families.
- Early leaks. Every extra copy of a secret adds a person or place that could misuse it. Threshold schemes cut that risk, but only if shares and keys sit with people who do not know one another's locations.
- Platform failure. When QuadrigaCX's chief executive died in December 2018, about 76,000 clients were owed C$215 million. A review by staff of Ontario's securities regulator later concluded that clients lost at least C$169 million, mostly through his fraud rather than lost keys, a reminder that an exchange account is only as safe as the exchange. Crypto held on a platform lacks the FDIC or SIPC protection described in FDIC vs SIPC.
- Market swings. Crypto is volatile and can lose most or all of its value, including in the months an estate takes to settle. An executor holding the bitcoin of several heirs has to decide whether to sell or distribute, and that decision is worth putting in writing.
- Changing rules. Exemptions, state estate taxes and digital-asset laws change, and this page describes general rules rather than advice for a particular estate. An estate attorney or tax professional can apply them to your state and holdings.