Crypto and incapacity: plan ahead

Incapacity (illness, accident, cognitive decline) can arrive before death. A will does not help then: while you are alive but unable to act, the relevant legal instruments are powers of attorney and similar arrangements, and they rarely mention crypto. A little planning closes the gap.

The problem

• Would you like to arrange for someone to act on your behalf during your lifetime if you can no longer do so yourself? Have a notary advise which arrangement fits your situation. Without a valid power of attorney or a court-appointed measure, in principle nobody can act on your behalf; a family member or lawyer is not automatically authorised.
• Banks and exchanges may freeze or restrict accounts when notified of incapacity proceedings.
• Support may exist for self-custody crypto, but there is usually no central party that can simply restore access for you. What is possible depends on the wallet used and the configured recovery method.

The legal instruments

A durable power of attorney (or the local equivalent, such as an enduring power of attorney or a notarial mandate) can give a person authority to handle certain matters on your behalf during your lifetime. When that authority can be used and under which conditions depends on what is set out in the power; have it recorded whether the power operates immediately or only under an agreed condition, for example once incapacity is established. A living will or advance directive concerns medical treatment and is not a financial authority.

The scope of the power is yours to define: personal matters only, finances only, or also digital and crypto matters. Where no such document exists, a court may appoint a guardian or administrator. Which actions a court-appointed guardian or administrator may take independently depends on the applicable arrangement, decision and circumstances; check the current powers with the relevant official body or a competent professional before important or irreversible crypto actions.

Either way, this gives legal authority but still no technical access. After a death, do not automatically assume that an earlier power of attorney or other authority can still be used; for each concrete action, check what the applicable law and the document concerned provide, via an official source or a competent local professional.

Crucially: legal authority gives no automatic technical access. The authorised person has the power, but without the right passwords, keys or device access they still cannot use the wallet. The technical side must be prepared separately, while you can still decide.

What the plan must contain

1. A trusted person with legal authority. Discuss with the notary whether and how digital assets and crypto should be included in the chosen arrangement. Rules differ by country, have it reviewed locally.
2. A map, not the keys. Documents that say what exists, where, and how access material is stored, never the seed phrases or passwords themselves. The map goes where the trusted person can reach it; the secrets stay in their safe place.
3. A continuity plan for self-custody. Hardware wallets, multisig setups and password managers need a handover mechanism that works before death, for example a sealed, separately stored copy, or a trustee arrangement.
4. Named fallbacks. If the first person cannot act, who else? Update the plan when relationships or assets change.

The three layers, again

Incapacity planning uses the same structure as inheritance planning:

1. Inventory, what may exist and where an authorised person can find it;
2. access instructions, how to approach a wallet or platform within the lawful framework;
3. secrets, seed phrases, private keys, passwords and PINs, kept separate and secured, with agreed rules on who may use them and when.

Lay down the first two layers and agree who may use the third under which conditions. Preferably do not place full secrets in a power of attorney, will, email, cloud document or form; only a pre-agreed, secure custody or recovery arrangement can be an exception.

What to avoid

• Writing the secrets down in the plan. A document that contains seed phrases is a theft target, not a plan.
• A single point of failure. One password, one device, one person who “knows everything”.
• Doing nothing because it feels morbid. The plan is for your benefit: it is how you stay in control of your own assets for as long as you need.

After the plan

Incapacity planning and inheritance planning overlap. The map you build here is the same map your executor needs later, see crypto inheritance planning and crypto in a will.

Rules and deadlines can change, and this page may not yet reflect the latest position, have the current rules confirmed by a local lawyer, notary or tax adviser before acting. Spotted something that no longer matches? Contact us and we will correct it.