Options for passing on crypto

These are the main ways to structure access after death, with their trade-offs. There is no single right answer: the right choice depends on your situation, your assets and who you trust. Whatever mechanism you choose, it must be documented, understood and tested.

Sealed envelope

Recovery material in a sealed envelope can be part of an estate plan. First establish which material your wallet needs. If the wallet uses, besides recovery words, an extra passphrase or another separate access element, safe and findable instructions must also exist for that. The recovery words alone are not enough then.

The seed phrase in a sealed envelope in a safe or safe-deposit box, its location documented in a non-secret inventory. Simple; cheap; a single point of loss; if the envelope is opened early, the secret is exposed. Works best when one or two people are the only ones who ever need access.

If you use this approach, record the seed phrase accurately on a suitable durable medium, sign and number the seals, and keep no photographs of it anywhere. Choose deliberately how many copies you keep and at which separate secure locations, since each copy adds exposure risk alongside protection against loss. Record only the envelope’s location in the non-secret estate inventory, not its contents. Decide who is told the envelope exists, and check yearly that the envelope is dry, intact and findable and that the seals are unbroken. Do not routinely open a sealed backup to check its contents.

Trusted person

A trusted person can hold part of the recovery plan. Make clear which part is held and which other elements are needed. Do not automatically give all secrets to one person. Anyone holding this material can get technical access with it: store it as securely as the original and do not hand it to just anyone without reason. Convenient; depends entirely on that person’s reliability and judgement, and on their survival. A plan that relies on one person is as strong as that person’s security habits.

Make the arrangement explicit: agree in writing when the copy may be used, and name who should receive it if that person dies or becomes incapacitated first. A second copy with someone else lowers the risk that a single accident removes the only backup, but it also increases the number of places where the full wallet could be compromised; weigh that trade-off per situation instead of recommending a second copy without qualification. Confirm once a year that the people involved still have the copy, still understand it and are still willing to hold it.

Multisig

Several independent keys with a threshold (e.g. 2-of-3). With properly separated m-of-n multisig, compromising one individual signer or key does not necessarily suffice to move the funds; the benefit disappears when enough keys or signing authority can be compromised together. Heirs must find the keys and understand the quorum, and the wallet’s descriptors and derivation information matter, not just the keys. More moving parts to document, but a well-designed and separated multisig setup can greatly reduce the risk of a single key failure.

A possible arrangement is 2-of-3 with one key held by a notary or lawyer, but only when that professional explicitly offers it and can carry it legally and operationally; key custody is not a standard service of notaries or lawyers, check this in advance. Another arrangement is 2-of-3 where two heirs each keep a separate key. Whichever split you choose, document the wallet policy and descriptors in suitable technical documentation, after checking that they contain no private keys, xprvs or other secret key material (public descriptors and xpubs are also privacy-sensitive), not just the keys themselves, and rehearse a real spending transaction once while you are alive. The multisig guide explains how these wallets work and what the heirs need.

Timelocks and inheritance keys

Bitcoin mechanisms that release or allow recovery after a delay. Powerful; technical; the estate must understand and document them correctly, and a wrong assumption about how they behave is hard to undo.

Weigh the lock duration against the estate’s likely timeline: a delay of many years can outlast the settlement itself, and some exchanges and custodians do not honour these mechanisms at all. Test with a nominal amount, and record in the general non-secret inventory that technical wallet-policy or descriptor information exists and where it is stored securely; only include a full descriptor in suitable technical documentation after checking that it contains no private keys, xprvs or other secret key material. Public descriptors and xpubs can also be privacy-sensitive and need not be shared more widely than necessary.

Which key or signing paths exist, whether the timelock is absolute or relative, and which block-height, time or sequence conditions apply: keep those details in the secure technical documentation, needed to reconstruct the policy correctly later. Do not reduce a timelock to a calendar date alone; these details are needed long after the lock is set.

Provider features

Some hardware wallets and custody providers offer inheritance features. Read the terms carefully: they are product claims, and marketing statements like “bypass probate” are not legal advice. Check what the provider actually controls, what happens if the provider changes its terms, and whether the feature survives the provider itself.

Registering a beneficiary with a provider usually requires that person’s personal data. A beneficiary registered with a wallet, exchange or other service is not automatically an heir or legatee; these terms have their own legal meaning. The legal effect of a beneficiary or inheritance feature also differs by provider and jurisdiction. Therefore check both the provider’s current terms and how the arrangement connects to your will and the applicable inheritance law. Keep the confirmation of the chosen arrangement with your estate documentation.

How to choose

Whatever you choose: it must be findable (documented in a non-secret inventory), understandable (someone can act on it without you), and tested (rehearse it once while you are alive). Then review it periodically, yearly or after major changes. The best structure is the one a competent person could follow without you present.

These factors can be a reason to explore simpler or more layered structures. The right solution depends among other things on technical knowledge, risks, the number of people involved, the jurisdiction, availability and desired redundancy. Once a structure is in place, ask a lawyer or notary to review it once, so the practical arrangement and the legal reality of your country line up.