What happens to
your Bitcoin when you die?
If nobody can access your Bitcoin after you're gone, it's gone forever. Self-custody means there's no bank to call, no password reset, no customer service. Planning for this is not optional.
If you die without a plan, your Bitcoin dies with you. A hardware wallet without a documented seed phraseseed phraseThink of it as the combination to a bank vault that exists only in your head: 12 or 24 specific words in a specific order. Anyone who copies the combination opens the vault. The bank has no copy. There is no locksmith, no reset, no customer service. Lose the words, lose the Bitcoin.Full definition is a $0 inheritance. The minimum: a seed phrase in a fireproof safe, a letter of instructions your executor can follow, and a trusted person who knows the safe exists.
- If nobody has your seed phrase, nobody gets your Bitcoin. There is no "forgot password" for self-custody.
- The minimum plan: metal seed backup in a fireproof safe + a letter of instructions + a trusted person who knows where to look.
- Multisig (2-of-3) lets you distribute key responsibility: one key with you, one with a trusted family member, one with a lawyer or vault.
- Estate exemption (2026): $13.99M per person ($27.98M married). Below that, no federal estate tax. Bitcoin valued at date of death.
- A Roth IRAIndividual Retirement Account (IRA)A personal retirement savings account with tax advantages. Two main types: Traditional (tax now, pay later) and Roth (pay now, tax-free forever).Full definition holding Bitcoin ETFExchange-Traded Fund (ETF)A basket of investments (stocks, bonds, or Bitcoin) that trades on a stock exchange like a single share. avoids both estate tax complexity and forces the stepped-up basisstepped-up basisA tax break for heirs. When you inherit a stock, house, or Bitcoin, the IRS pretends you bought it at its market value on the date the previous owner died. All the growth that happened during their lifetime escapes tax forever.Full definition issue into a simpler wrapper.
Your heirs need three things: knowledge that Bitcoin exists, instructions on how to access it, and the ability to actually do so. The best setups separate these elements so no single person (or document) can steal the funds, but your family can recover them together.
The wrong way
Anyone who finds it owns your Bitcoin. Cleaners, guests, burglars, estate attorneys. Zero protection.
Slightly better, but the bank can be compelled to open it, and heirs may not even know it exists. Single point of failure.
An estimated 3-4 million BTCBitcoin (BTC)The ticker symbol for Bitcoin, used on exchanges and in price quotes.Full definition are already permanently lost.[1] Don't add yours to the pile.
The right way
Leave a letter (with your will or trusted person) that explains: what Bitcoin is, that you own some, and where to find the recovery instructions. Do not include the seed phrase in the letter.
Use Shamir's Secret Sharing (supported by Trezor via SLIP-39)[2] to split your seed into multiple shares. Example: 3 shares created, any 2 required to recover. Give one to a spouse, one to a lawyer, one to a sibling. No single share is useful alone.
A 2-of-3 multisig wallet where you hold 2 keys and a trusted service (Unchained Capital, Casa) holds 1. If you die, your heirs work with the service to recover funds using their key + the service's key. Professional, auditable, no single point of failure. For a full walkthrough of the key distribution, PSBT signing flow, and recovery testing, see the Multisig Deep Dive.
Recommended tools
Offers tiered multisig plans (Standard, Premium, Gold) with inheritance protocol built in. Your heir contacts Casa with a death certificate, completes a waiting period, and recovers funds. The most turnkey inheritance solution available.[3] .
Collaborative custody with 2-of-3 multisig. You hold 2 keys, Unchained holds 1. Inheritance planning is part of their service, and they help your heirs access funds through a documented legal process. Pricing is a setup fee plus an annual vault fee.[4] .
Open-source, step-by-step guide for high-security cold storagecold storageStoring Bitcoin on a device that's never connected to the internet, protecting it from online attacks.Full definition with inheritance provisions (glacierprotocol.org).[5] Free, thorough, and fully self-sovereign. Best for technically inclined users willing to do the work themselves. .
The best inheritance plan is one that works even if your heirs know nothing about Bitcoin today. They need: a letter telling them Bitcoin exists, a trusted contact who can help, and a recovery mechanism that doesn't depend on a single piece of paper. Set this up now, not later.
A revocable living trust can hold Bitcoin the same way it holds brokerage accounts, a house, or a business interest. The trust document names the trustee and successor trustees, and the trust owns the assets on paper. At death, the successor trustee takes over without probateprobateThe court-supervised process of validating a will, paying debts, and distributing assets after death. Slow, costly, and public.Full definition, which is the point.
The coordination problem is what makes Bitcoin different. Funding a trust with a brokerage account is a retitling exercise. Funding a trust with self-custody Bitcoin means the successor trustee needs two things: legal authority under the trust instrument, and physical or technical access to the seed phrase or hardware wallet. Either one alone is useless. A trust document that says "the trustee has authority over the Bitcoin wallet at xpub.." does nothing if nobody can find the seed. A seed phrase in a drawer without a trust gives whoever finds it full control, regardless of what your will says.
Practical patterns: multisig where one key is held by the attorney who drafted the trust; a collaborative-custody service (Casa, Unchained) that recognizes the trust and has its own key; or Shamir shares distributed across trustee and successor trustees with a sealed letter of instruction kept with the trust. See Wills and Trusts for the trust mechanics themselves (revocable vs. irrevocable, funding, successor trustee selection, state-specific considerations), Power of Attorney for the incapacity-before-death case, and Beneficiary Designations for the non-trust parts of the estate (IRAs, 401(k)s, life insurance) that pass outside the trust entirely.
- Chainalysis and Glassnode estimates of permanently lost Bitcoin; Chainalysis, "Bitcoin Investor Study" - chainalysis.com
- SLIP-39: Shamir's Secret-Sharing for Mnemonic Codes - SLIP-39 spec
- Casa pricing and plans - keys.casa/pricing
- Unchained Capital vault pricing - unchained.com/pricing
- Glacier Protocol - glacierprotocol.org
- Jameson Lopp, "Bitcoin Inheritance Planning" - blog.lopp.net
- Pamela Morgan, "Cryptoasset Inheritance Planning" (book, 2018)
Related
Last updated 2026-04-14. Not financial advice. Do your own research.