Key takeaways
- Coinbase and Kraken do not let account holders name a beneficiary, so heirs must send a death certificate, probate papers, ID and a signed letter to claim the account.
- A seed phrase written into a will becomes public once the will is admitted to probate, so keys belong in a private letter of instruction kept outside the will.
- Under IRS Publication 551, heirs generally take inherited crypto at its fair market value on the date of death, which can wipe out gains built up during the owner's life.
- The federal estate tax basic exclusion is $15,000,000 for 2026, set by the Working Families Tax Cuts Bill signed into law on 4 July 2025.
- A spot bitcoin ETF in a brokerage account can carry a transfer on death beneficiary, which FINRA says generally lets those holdings avoid probate.
Crypto inheritance is the plan that lets your heirs find and legally claim your coins after you die, and without one the coins can stay locked forever. You can leave crypto through an exchange account settled in probate, an ETF in a brokerage account with a named beneficiary, a self-custody wallet backed by written instructions, or a wallet that needs more than one key. The real choice is how much access you hand over while you are alive.
Bitcoin (BTC), the largest cryptocurrency by market value, traded at $80,184.60 at 09:18 UTC on 26 October 2026, according to CoinGecko. At that price a 0.5 BTC holding is worth $40,092.30.
What Happens to Crypto When You Die?
It depends on where the coins sit. Exchange balances wait for someone with legal authority to claim them, while coins in a self-custody wallet belong in practice to whoever holds the recovery seed, the list of words that rebuilds the wallet on any device.
Coinbase and Kraken both say on their help pages that they do not let you name a beneficiary. Each asks for a death certificate, probate papers, the representative's photo ID and a signed letter. Probate is the court process that confirms a will and appoints someone to settle the estate.
IRS Publication 559 defines that personal representative as "an executor, administrator, or anyone who is in charge of the decedent's property." On an exchange the job is paperwork. With self-custody it is technical, and no court order can recover a seed phrase nobody wrote down, so crypto inheritance starts with access.
Before You Plan: What You Need
You need an accurate list of what you hold and a decision about who gets it. Crypto estate planning builds on both.
- An asset inventory: exchanges, account emails, wallet types and networks, with no passwords or seed words on the page.
- A named executor: someone able to follow technical instructions.
- A will or trust from a lawyer: a revocable living trust holds assets for your beneficiaries, and the Consumer Financial Protection Bureau notes that "Probate is a public process, and it can be expensive and lengthy." A qualified estate lawyer should draft it.
- A letter of instruction: a private document, kept outside the will, that explains where things are and how to reach them.
- Safe places for secrets: a home safe, a safe-deposit box, a lawyer's file or a split backup, so nobody holds everything.
Four Ways to Set Up Crypto Inheritance, Compared
The four routes trade convenience for control.
Exchange account plus a will
- Who holds the keys: the exchange, such as Coinbase or Kraken.
- What heirs need: death certificate, probate documents, ID and a signed letter.
- Probate: yes.
- Cost: nothing beyond the lawyer.
- Drawback: no beneficiary option, and the exchange can freeze the account or fail.
Spot bitcoin ETF with a TOD beneficiary
- Who holds the keys: the fund's custodian; you own shares of an exchange-traded fund (ETF).
- What heirs need: a death certificate and the broker's claim form.
- Probate: generally no.
- Cost: BlackRock's iShares Bitcoin Trust charges a 0.25% sponsor fee, according to its 30 September 2026 fact sheet.
- Drawback: you never hold bitcoin itself, and the fee runs every year.
Self-custody wallet plus a letter of instruction
- Who holds the keys: you, on a hardware wallet kept in cold storage.
- What heirs need: the seed phrase or the device and PIN, plus your written steps.
- Probate: yes, for legal title.
- Cost: the device and a safe place.
- Drawback: one lost or stolen backup ends the plan.
Multisig or time-locked wallet
- Who holds the keys: several people; multisig needs more than one key to approve a payment, such as two of three.
- What heirs need: enough keys to meet the threshold, or the time lock to expire.
- Probate: yes, for legal title.
- Cost: extra devices and setup time.
- Drawback: easy to break if one keyholder loses track.
Only the ETF route has a built-in beneficiary. A transfer on death (TOD) registration names who receives a brokerage account, and FINRA explains that it "generally allows you to avoid probate with respect to your account holdings." On the $40,092.30 holding, a 0.25% fee costs $100.23 a year.
How to Build a Crypto Inheritance Plan, Step by Step
A plan works when legal ownership and technical access reach the same person.
- List every holding. Note each account and wallet with its network, but no secrets.
- Add a beneficiary where allowed. FINRA notes that a TOD registration supersedes a will or trust.
- Update the will or trust. Have a lawyer name the executor and state that digital assets are included, without listing keys.
- Write the letter of instruction. Say which device is which, where each backup lives, the order to follow and who to call.
- Split the secrets. Keep the seed phrase, PIN and device in different places, or use multisig so no single item moves funds.
- Test it with your executor. Recover a small wallet together and fix any confusing step.
- Review it every year. Update after a move, a new wallet, a marriage or a divorce.
What Never Goes in a Will
A seed phrase, private key, PIN or password never belongs in a will, because a probated will is public. The New York courts' law library says that once a will is admitted to probate or a small estate, "it becomes a public document that anyone can see and read."
For crypto inheritance, the will names the executor and covers your digital assets. Your private key, the secret number that signs transactions, stays out of every court filing.
A platform setting can also beat a will. The Revised Uniform Fiduciary Access to Digital Assets Act, a 2015 Uniform Law Commission model law, says in Section 4: "If the online tool allows the user to modify or delete a direction at all times, a direction regarding disclosure using an online tool overrides a contrary direction by the user in a will." Ask a lawyer how your state's version treats passing on digital assets held online.
How Is Inherited Crypto Taxed in the US?
Inherited crypto is taxed as property, and heirs usually get a fresh cost basis. The IRS digital assets page, updated 2 September 2026, states: "For U.S. tax purposes, digital assets are considered property, not currency." Publication 551 sets the basis of inherited property at generally "the FMV of the property at the date of the individual's death," meaning fair market value.
Take the 0.5 BTC example. The owner paid $10,000 in 2020 and died when bitcoin traded at $80,184.60. Selling that day, the owner would have owed tax on $40,092.30 minus $10,000, or $30,092.30. The heir's basis is $40,092.30, so a same-day sale shows no gain.
Federal estate tax starts only above a high threshold. According to the IRS, the Working Families Tax Cuts Bill, signed on 4 July 2025, set the basic exclusion amount at $15,000,000 for 2026, or about 187 BTC at $80,184.60. The 2026 annual gift exclusion is $19,000 per recipient, roughly 0.237 BTC. Gifts keep the old basis: Publication 551 says that in most cases "your basis is the donor's adjusted basis at the time you received the gift," so inheriting crypto and receiving it as a gift can bring different tax bills.
What a Crypto Will Cannot Protect You From
A crypto will settles who owns the coins, and it does nothing about who can reach them. The weak points of crypto inheritance sit on that access side, and the first is the single point of failure. A seed phrase stored beside the hardware wallet hands everything to a burglar, and one stored nowhere hands nothing to your heirs. Multisig spreads that risk and adds another: if two of three keyholders lose their keys, the coins are gone.
Time locks fail more quietly. Bitcoin's BIP 65, a protocol proposal, lets a transaction output "be made unspendable until some point in the future," much like a safe with a timer on the door. Set the date too far out and your family waits years. Set it too close and the coins become movable while you are still alive.
Treat anyone who offers an heir to "recover" a wallet for an upfront fee or the seed phrase as a likely scammer, and say so in your letter. Plans also go stale when a wallet app is replaced or an executor moves abroad.
Which Setup Fits Which Holder
A holder with a few thousand dollars on Coinbase or Kraken needs a current will naming an executor, plus a note with the account email. Someone who only wants price exposure can hold a spot bitcoin ETF, a product the SEC approved on 10 January 2024, with a TOD beneficiary on the brokerage account.
For larger self-custody sums, crypto inheritance works best with a hardware wallet backed by a letter of instruction, with the secrets kept apart. Multisig suits holders with a technical heir and enough at stake to justify extra devices. A time lock suits almost nobody without professional help.
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This article is not financial or tax advice, and rules differ outside the United States.
Frequently asked questions
Can you name a beneficiary on a crypto wallet?
A self-custody wallet has no beneficiary field, because whoever holds the seed phrase controls the coins. Coinbase and Kraken both say on their help pages that they do not support naming a beneficiary on individual accounts. The closest built-in option is a spot bitcoin ETF in a brokerage account, which can carry a transfer on death registration that FINRA says generally avoids probate.
How long does it take to claim a dead relative's Coinbase account?
Coinbase's help page on claiming a decedent's account gives no processing time. The claim starts only after the estate has probate documents, such as letters testamentary or a small estate affidavit, along with a death certificate, photo ID and a signed transfer letter. In practice the court timetable in the relative's state sets the pace, so heirs should start the probate filing early.
Do you need a lawyer for crypto inheritance?
A qualified estate lawyer is the safest route, because wills, trusts and probate rules are set state by state. States also adopt their own versions of the Revised Uniform Fiduciary Access to Digital Assets Act, the 2015 model law on executor access to online accounts. A lawyer can draft the will or trust, while you write the private letter of instruction that explains how to reach the coins.
Is it better to give crypto to children before you die?
Giving crypto during your life uses the 2026 annual gift exclusion of $19,000 per recipient, according to the IRS. The trade-off is basis: IRS Publication 551 says a gift recipient generally takes the donor's adjusted basis, while an heir takes the value on the date of death. On coins with large gains, inheriting can leave the family a smaller tax bill than gifting.
What happens to bitcoin if nobody has the seed phrase?
The coins stay recorded on the Bitcoin blockchain, but nobody can move them without the private key the seed phrase rebuilds. No company, court or developer can reset a self-custody wallet, so a probate order gives heirs legal title to coins they cannot spend. A hardware wallet with a known PIN can still be opened, which is why the PIN belongs in the letter of instruction.
