My father passed away unexpectedly. He always bragged about his Bitcoin fortune. We found his Ledger, but no PIN and no seed phrase. We hired lawyers, locksmiths, and hackers. They all said the same thing: “Without the code, the money is gone.” It was $2 million, locked in a piece of plastic we couldn’t open.
Key Takeaways
- Probate Cannot Touch Crypto: A court order can force a bank to release funds. A court order cannot force a blockchain to unlock a wallet. Mathematics ignores laws.
- “Dead Man’s Switch” Services: These are automated protocols (like Sarcophagus or Shadow) that release encryption keys to heirs if the owner fails to “check in” for a set period.
- Legal Custody Services: Companies like Casa offer an “Inheritance Plan” where they hold one key, you hold one, and a lawyer holds one. Upon death, the lawyer and Casa combine keys to restore funds for heirs.
- The Tax Trap: The IRS expects estate tax on the fair market value at death, even if you cannot access the coins. You could owe taxes on money you can’t touch.
The “Why” (The Trap)
The trap is “Single Point of Failure.”
Most crypto users are paranoid about security, so they hide their keys too well. If the “bus factor” (you get hit by a bus) is 1, your wealth dies with you. Insurance doesn’t pay for “unclaimed assets.”
The Investigation (I Reviewed Plans)
I looked at how to insure accessibility for heirs.
Casa (Inheritance Plan)
- Cost: ~$1,000+/year.
- Mechanism: 3-of-5 Multi-sig. They guide the heirs through the recovery process. It is a service, not an insurance policy, but it insures against loss of access.
DIY Paper Wallets
- Risk: Heirs often throw them away thinking they are trash.
- Story: I spoke to a junk removal guy who found a seed phrase paper in a cleanout. He didn’t know what it was and shredded it.
Comparison Table
| Method | Security | Heir Accessibility | Cost |
| Seed Phrase in Safe | Medium | Low (If they can’t find/use it) | Free |
| Dead Man’s Switch | High | High (Automated) | Gas Fees |
| Collaborative Custody (Casa) | Best | Guaranteed | High Annual Fee |
| Exchange Custody | Low (Hack risk) | Medium (Probate process) | Free |
Step-by-Step Action Plan
- Write a “Letter of Instruction”: Not the seed phrase, but instructions on how to access it. “Go to the bank box, look inside the blue book.”
- Onboard Your Executor: Show your spouse or executor how to use a hardware wallet now. Don’t assume they can figure it out later.
- Use a “Beneficiary” on Exchanges: If you use Coinbase, set up a designated beneficiary. This allows transfer upon death certificate presentation, bypassing complex probate.
- [IMAGE: Screenshot of Coinbase ‘Beneficiary’ settings page]
FAQ
Does Life Insurance cover lost crypto?
No. Life insurance pays a death benefit. It doesn’t reimburse assets lost due to lack of keys.
Can I put my seed phrase in my Will?
NEVER. Wills become public record upon probate. Anyone can read your seed phrase and steal the funds.