Crypto Estate Planning: What Happens to Bitcoin and Cryptocurrency When You Die

Why Crypto Is Different From Every Other Asset

When someone dies holding stock or a bank account, the executor contacts the institution, presents Letters Testamentary and a death certificate, and eventually gains access. The process is slow but predictable.

Cryptocurrency does not work this way. Self-custodied crypto (held in hardware wallets, software wallets, or paper wallets) has no institution to contact. If the private key or seed phrase is lost, the assets are permanently inaccessible. No court order, no lawsuit, no forensic specialist can recover Bitcoin secured by a lost private key.

Exchange-held crypto (Coinbase, Kraken, Binance) is more recoverable, but the claims process is long and documentation-heavy.

Exchange-Held Crypto: The Claims Process

Each major exchange has its own estate claims procedure:

Coinbase requires executors to submit a claim through its Executor Services Form. You'll need a certified death certificate, estate documents accepted by Coinbase (such as Letters Testamentary or a Small Estate Affidavit), your government-issued photo ID, and a signed letter of instruction directing the transfer. Coinbase does not support beneficiary designations; transfer follows the estate documents or, if there are none, state intestacy law.

Kraken routes claims through their compliance team. They require a high-resolution color copy of the official death certificate (funeral home certificates are rejected), court-issued letters of administration, your photo ID, and a signed letter of instruction. Like Coinbase, Kraken offers no beneficiary nominations.

Binance requires you to contact customer support directly with a certified death certificate and probate documentation showing your authority.

Each exchange reviews a separate document packet, and Coinbase may request additional information. Confirm timing with the provider instead of planning around a fixed deadline.

Self-Custody Crypto: The Hard Problem

For Bitcoin or other crypto held in hardware wallets (Ledger, Trezor) or software wallets, recovery depends entirely on whether the seed phrase exists and can be found.

The seed phrase is commonly a 12-, 18-, or 24-word recovery phrase generated when the wallet was first set up. It's one way to restore access to the wallet's contents. Common hiding places: fireproof safes, safe deposit boxes, written on paper in a desk drawer, stamped into metal plates, or stored in a password manager.

If the seed phrase cannot be found:

• Hardware wallets allow a limited number of PIN attempts before wiping. Do not guess.
• Software wallets on a phone or computer may be accessible if the device itself is unlocked, but transferring the crypto requires the wallet's password.
• No recovery service can bypass a missing private key. Anyone online claiming otherwise is running a scam. Real exchanges and wallet providers will never ask for a seed phrase.

Tax Implications

Cryptocurrency is treated as property for US tax purposes and is valued at fair market value on the date of death for federal estate-tax purposes. For 2026, the federal estate tax exemption is $15 million per individual ($30 million for married couples).

The cost basis resets at death (stepped-up basis), which means beneficiaries who sell inherited crypto owe capital gains tax only on appreciation after the date of death, not from the original purchase price. This can be a significant tax benefit for crypto purchased years ago at low prices.

State-level inheritance taxes have lower thresholds and vary widely. An accountant familiar with both crypto and estate tax should handle material holdings or estates near applicable federal or state tax thresholds.

Planning Ahead

If you hold cryptocurrency and want your family to actually inherit it:

1. Document every exchange account in your digital asset inventory
2. Store seed phrases for self-custody wallets in a fireproof safe or safe deposit box, separate from the hardware wallet itself
3. Name your executor in your will with explicit authorization to access and transfer digital assets
4. Do not store seed phrases digitally — not in email, not in a cloud document, not in a notes app

The Digital Estate Toolkit includes a structured crypto triage workflow that walks executors through exchange claims, hardware wallet recovery, and the exact documentation each platform requires.