In this lesson
- understand why crypto without instructions often disappears along with its owner
- prepare a letter for your loved ones that reveals nothing to thieves
- find out how exchanges handle inheritance and what does not belong in a will
The best backup in the world is useless if nobody knows about it. Crypto has no bank that would transfer an account to the heirs when the owner dies. If nobody knows what you own, where it is and how to reach it, the money stays on the blockchain forever – visible but unreachable.
A warning from real life#
When the founder of the Canadian exchange QuadrigaCX died in 2018, the exchange claimed that only he knew the keys to the customers' wallets. Customers lost hundreds of millions of Canadian dollars. Investigations later showed that much of the money had already been missing. Two lessons follow for you: everything must not hang on one person – and an exchange is not a safe vault.
A letter for your loved ones#
Write instructions for someone you trust. They should understand what you own and how to reach it – without the letter alone being enough for a thief.
What belongs in the letter:
- What you own – on which exchanges (and under which email the account is), which wallets, and roughly how much.
- Where the backups are – the place, not the words. "The metal plate is in the bank safe deposit box at …"
- How to proceed – that they need a hardware wallet from the manufacturer, the seed phrase and possibly a passphrase.
- Whom to contact – a trusted person who understands crypto.
- A warning – never give the seed phrase to anyone, not even a "helper" who gets in touch on their own. Scammers target the bereaved too.
The seed phrase itself and the passphrase do not belong in the letter. They stay in the backups – the letter only says where to find them.
Split it so nothing depends on one thing#
- The letter in one place, the backups in another. Whoever finds one does not have the other.
- The passphrase separately, possibly with a different person.
- A 2-of-3 split backup from the previous lesson suits inheritance well: one share at home, one with family, one with a notary or in a bank safe deposit box.
Exchanges and the will#
- Exchanges have a procedure for heirs: with a death certificate and probate documents they transfer or pay out the account. But the heirs must know the account exists.
- A will is read by several people – a notary, a court, other heirs. The seed phrase does not belong in it. The will should only say that crypto exists and that the instructions are kept elsewhere.
Crypto is part of an estate like any other property. Ask a notary or lawyer how to include it properly in probate.
Update it once a year
Exchanges change and so do wallets. Once a year, go through the letter: is everything still true? An outdated letter with a defunct exchange and an old wallet may confuse your heirs more than help.
Common myths#
- "My family will find it somehow." Without instructions they will not – or they will find it and not know what to do with it.
- "I will put the seed phrase in my will, it is safe there." A will is read by several people. Only a pointer to the instructions belongs there.
- "I am young, I do not need to deal with this." Accidents and illness do not wait for age.
Summary
- Without instructions for loved ones, crypto often remains unreachable after the owner dies.
- The letter should say what, where and how – but not contain the seed phrase or passphrase.
- Split the letter, the backups and the passphrase so nothing depends on one place or person.
- A seed phrase does not belong in a will; update the letter yearly and consult a notary on the legal side.