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Guide · Self-custody

Crypto inheritance: passing on wallets and seed phrases

Self-custodied crypto has no institution behind it. That is the point of it, and it is also the problem your family inherits. Here is what actually has to be in place.

Why crypto is different from every other asset

A bank account survives you. Your executor produces a death certificate and grant of probate, and the bank — an institution with a legal obligation and a compliance department — transfers the balance.

Self-custodied crypto has no equivalent. Possession of the seed phrase is ownership. There is no registry, no override, no ombudsman. A wallet whose recovery phrase died with its owner is not frozen or disputed; it is simply unreachable, permanently.

This creates a problem with a sharp edge on both sides. Make recovery too easy and you have built a theft risk. Make it too hard and you have built a loss risk. Most people solve one and quietly create the other.

What your heirs actually need — it is more than the seed phrase

The seed phrase is necessary and nowhere near sufficient. Someone who has never touched crypto, handed twelve words on a card, will not get far.

• What exists at all. Which coins, roughly how much, on which chains. Without this nobody knows to look.
• Where it is held. Hardware wallet, software wallet, exchange account, or spread across all three.
• Where the hardware physically is. A Ledger in a drawer is invisible to someone who does not know what it is.
• The seed phrase, and its format. 12 or 24 words, and whether a passphrase (a "25th word") is in use — this catches people out constantly.
• The PIN, if the device has one.
• Exchange access — which exchange, which email, and how two-factor is set up.
• What to actually do. Plain instructions, written for someone who has never installed a wallet.
• Who to trust for help. Naming a knowledgeable person is worth more than any tutorial, because your heirs will be targets for scams the moment they start asking questions publicly.

The approaches, honestly compared

Approach	Good for	The real risk
Seed on paper or metal, in a safe	Simple, durable, no technology to fail	Anyone who opens the safe has full control. Fire, flood, house move, or a helpful relative tidying up
Split shares (Shamir / SLIP-39)	No single person can steal it	Shares get lost, or nobody remembers the threshold. Complexity is itself a failure mode
Multisig with a co-signer	Strong security, genuine redundancy	Real setup and maintenance effort; heirs must understand a scheme they did not design
Custodial exchange	There is a company with a legal process	You have given up self-custody, and exchange inheritance processes are slow and inconsistent
Encrypted vault plus written instructions	Keeps the seed, the context and the instructions together and current	The master password becomes the single thing that must survive you — it has to be recorded physically

There is no option without a downside. Anyone selling you one is selling something.

The trade-off nobody escapes

Every scheme sits somewhere on a line between too easy to steal and too easy to lose. Moving away from one end moves you toward the other.

The honest way to choose is to ask which failure you would actually regret more, given your real circumstances — how much is at stake, who lives in your house, how competent your heirs are, and how likely you are to maintain a complicated scheme five years from now.

A scheme you will not maintain is worse than a simpler one you will.

Where software vaults fit — and where they do not

An encrypted vault on your own computer is good at the part hardware is bad at: context. A metal plate holds twenty-four words. It cannot hold the sentence "the passphrase is the name of my first dog, and the hardware wallet is in the study safe," or the note explaining which exchange holds the rest.

It is not a replacement for a metal backup of the seed itself. Metal survives fire and water; a laptop does not. Many people sensibly do both: the seed stamped in steel, and the surrounding instructions in an encrypted vault with an encrypted backup.

Whatever you choose, the same rule applies as everywhere else in this field — the encryption has no back door. If the master password is lost, so is the vault.

A reasonable starting point

1. Write down what exists — chains, rough amounts, where held. Nothing secret yet.
2. Back the seed phrase up physically, ideally in metal, somewhere fire and flood will not reach.
3. Record the context: passphrase in use or not, PIN, where the hardware is, which exchanges.
4. Write instructions for someone who knows nothing, and name a person who could help them.
5. Decide who learns of the arrangement's existence now, and who learns the details later.
6. Re-read it once a year. Wallets move, exchanges fail, plans go stale.