Inheritance Planning
Inheritance planning for Bitcoin is the process of arranging for your heirs to access your bitcoin after your death, without compromising security while you're alive. It requires balancing immediate security against future accessibility, often using multisig, time-locked transactions, or trusted third parties.
How It Works
The fundamental challenge is that the same secrecy that protects your bitcoin from thieves also prevents your heirs from accessing it. A simple approach is a sealed letter in a safe deposit box containing your seed phrase and recovery instructions — but this creates a single point of compromise if the box is breached. More robust approaches use Bitcoin's native features to distribute trust.
Multisig is the most powerful tool for inheritance planning. A 2-of-3 multisig setup can place one key with you, one in a bank safe deposit box with instructions for your heir, and one with a collaborative custody provider or trusted family member. While alive, you use two keys for normal operations. After death, your heir uses the safe deposit box key plus the third party's key. No single party can steal the funds, and your heir doesn't need your personal key at all.
Documentation is as critical as the technical setup. Write clear, step-by-step instructions that a non-technical person can follow. Explain what hardware they need, what software to use, and where each key and backup is located. Include wallet descriptors, derivation paths, and the extended fingerprints of each key. Name a Bitcoin-savvy advisor — a friend, lawyer, or service provider — who can help your heir navigate the technical process. Store instructions separately from keys. Test the entire recovery process with a small amount before relying on it. Update the plan whenever your custody setup changes, and review it at least annually.
Key Points
- Without a plan, your bitcoin is permanently lost when you die — the network cannot reverse this
- Multisig enables distributing access so heirs can recover funds without compromising your security while alive
- Write detailed, non-technical recovery instructions including wallet descriptors and derivation paths
- Name a Bitcoin-knowledgeable advisor your heir can consult during the recovery process
- Test the recovery process and review the plan annually or whenever your custody setup changes