What happens to your crypto when you die?

When you die, your crypto becomes part of your estate like any other property, but whether your heirs can actually reach it depends on how you held it. Bitcoin or other coins on an exchange can usually be claimed through a legal process. Coins in a wallet only you control may be lost for good if no one can find the private keys or seed phrase.

What happens to an exchange account after death?

A crypto exchange holds your coins for you, so it can hand them over to your heirs. Coinbase, for example, says ownership of a deceased user's account follows estate planning documents or state inheritance law. The people named in those documents must submit a death certificate, probate papers such as Letters Testamentary or a Small Estate Affidavit, a government photo ID and a signed letter saying where to send the assets. Coinbase also says it does not currently let individual account holders name a beneficiary.

Other exchanges have their own processes, so the details vary. Our guide to custodial vs non-custodial wallets explains why exchange accounts work differently.

What happens to bitcoin when you die in a self-custody wallet?

In a self-custody wallet, nobody else holds a copy of your access. The coins are controlled by a private key, usually backed up as a seed phrase. Coinbase's own planning guide notes that if these are lost or unknown, the assets may be lost forever. The chief executive of wallet company Casa told Fortune there is no way to get lost keys back.

How do you plan for seed phrase inheritance?

Estate lawyers quoted by Fortune in 2024 advised against naming specific crypto holdings in a will, because wills filed in probate become public records that scammers can search. Suggested alternatives included keeping a written seed phrase in a safe or bank safe deposit box and using a multisig wallet, which needs more than one key to move funds, so access is split among several people. Another approach is to keep a separate passphrase with an attorney and the seed phrase with heirs.

In the US, many states have adopted a uniform law known as RUFADAA. It lets executors and other fiduciaries manage a person's digital assets, but access often depends on what the person authorized in a will or through a company's online tools. See what happens if you lose your seed phrase for the risks of a single backup.

How is inherited crypto taxed?

In the US, the IRS says receiving an inheritance is not itself taxable income. If an heir later sells the property, the gain is measured from its basis, which is generally its fair market value on the date of death. This is often called a step-up in basis. An alternate valuation date may apply when the executor files an estate tax return.

Rules differ by country and change often. Check the tax authority or a qualified professional for your own situation.