What happens to your crypto when you die

The $140 billion problem nobody talks about

Chainalysis, the blockchain analytics firm, estimates that approximately 20% of all Bitcoin ever mined (roughly 3.7 million BTC) is permanently inaccessible. At current prices, that is well over $140 billion. A significant portion of those coins belonged to people who died without telling anyone their seed phrase. The coins are still on-chain, visible to anyone who runs a blockchain explorer, sitting in addresses that will never move again.

This is not an edge case or a rounding error. It is a structural feature of how self-custody cryptocurrency works. And unlike a bank account, a forgotten pension, or an unclaimed insurance policy, there is no institution to petition, no insured deposit scheme, no government registry of lost crypto. The funds do not go to a state unclaimed property fund. They do not get returned to circulation. They are simply frozen, permanently, in a wallet that no living person can unlock.

If you hold Bitcoin, Ethereum, or any other cryptocurrency in a self-custody wallet and have no inheritance plan, you are in the process of making a very large donation to the blockchain, not to your family.

What happens to your Coinbase, Binance, or Kraken account

Custodial exchanges hold your cryptocurrency on your behalf, similar to a bank. When you buy Bitcoin on Coinbase, you do not receive a seed phrase. Coinbase holds the private keys and credits your account balance. The same is true for Binance, Kraken, and every other major centralized exchange.

• In theory, this makes inheritance easier: there is an institution to contact, and that institution has records. In practice, the process is slow and requires documentation that heirs may struggle to provide:
• A certified death certificate
• Probate documents naming the heir as executor or beneficiary
• Proof of identity for the heir
• In some cases, court orders if the estate is contested

The process typically takes weeks to months. Exchanges incorporated in other jurisdictions may require filings under foreign law, which can add further delay and cost. Some smaller exchanges have been known to deny or ignore claims entirely, particularly if they have ceased operations or moved offshore.

More commonly, the obstacle is simpler: heirs don't know the account exists. If your family does not know you used Coinbase, does not know your registered email address, and does not know you held any crypto at all, the account will sit dormant until the exchange eventually closes or sweeps it. There is no system that automatically notifies family members. No one will come looking for you.

What happens to your Ledger, Trezor, or MetaMask wallet

Self-custody wallets are a categorically different problem, and the outcome without a plan is almost always permanent loss.

A Ledger or Trezor hardware wallet is a physical device that stores your private keys offline. It is protected by a PIN (typically 4 to 8 digits) and will wipe itself after three incorrect PIN attempts. If your heirs find the device, they have three guesses. Three wrong guesses and the device is wiped. Without the device, or with a wiped device, the only remaining option is the seed phrase.

Without the seed phrase, the funds are gone. Not locked temporarily. Gone permanently. Ledger cannot help. Trezor cannot help. There is no backdoor. The cryptography is designed specifically so that no company or government can recover a wallet without the seed phrase. That is the whole point of self-custody, and it is also the whole problem for inheritance.

A MetaMask wallet lives as a browser extension, encrypted with a password you set. When the person dies, that browser eventually gets reset, the laptop gets wiped, or the hard drive fails. The MetaMask extension and its local encrypted keystore disappear. Again, without the seed phrase that was generated when MetaMask was first installed, the funds are permanently inaccessible.

In all of these cases, the timeline is unforgiving. Your heirs do not have months to figure this out. The device might be wiped by a well-meaning relative who thought it was a USB drive. The laptop might be sold or given away. The MetaMask password might be on a sticky note that gets thrown out. The window to act is often measured in days, before the physical evidence is gone.

The legal position of inherited cryptocurrency

In most major jurisdictions (the United States, the United Kingdom, the European Union, Canada, Australia) cryptocurrency is treated as property for legal purposes. It can be inherited. It is subject to estate taxes where those apply. It can be the subject of a will or a trust.

• The legal framework is not the obstacle. The practical obstacles are:
• Heirs must know the crypto exists. A will can state that you held cryptocurrency, and this is a good starting point, but only if your heirs actually read the will promptly and take action.
• Heirs must know how to access it. Stating in a will that you 'held Bitcoin on a Ledger hardware wallet' is useless without the seed phrase. And here is where many well-intentioned plans fall apart: the seed phrase cannot safely go in the will, because wills become public at probate. A publicly filed document containing your seed phrase is an invitation to drain your wallet.
• Heirs must act before the evidence disappears. Physical devices get lost. Browser extensions vanish with reformatted computers. Paper seed phrases stored in a drawer can be destroyed by a house fire or water damage before anyone knows to look for them.

The legal right to inherit crypto is meaningless if the crypto is inaccessible. The law can transfer ownership; it cannot recover a lost private key.

The three things your heirs need

Stripped of all complexity, your heirs need exactly three things to inherit your cryptocurrency:

1. To know the crypto exists, and roughly how much. This is the most frequently missing piece. If your heirs do not know you held crypto, they will not look for it, will not contact exchanges, and will not search for a Ledger device in a drawer. A simple note like 'I hold Bitcoin and Ethereum, here is where' can prevent permanent loss.
2. To know where the wallet or exchange account is. The specific Ledger device, labeled and located. The specific exchanges, with the email address used to register. The specific MetaMask installation, or its backup location. Without this map, heirs are guessing.
3. To have the seed phrase or account credentials, encrypted, time-locked, and delivered safely. This is the hard part. The seed phrase must be accessible to your heirs after your death, but not before, not to a curious relative, not to a thief, not to anyone who happens to find a piece of paper at the wrong time.

All three requirements can be met with a single, well-structured inheritance plan. None of them require your heirs to be technically sophisticated. What they require is that you set it up correctly before it is too late.

The right tool: end-to-end encrypted, dead-man's switch delivery

The tension in crypto inheritance is always the same: the seed phrase must be reachable after your death but unreachable before it. Paper, email, and wills all fail this test in one direction or the other. Paper is reachable at the wrong time. Email may not be reachable at all. A will is publicly reachable at probate, which is the worst possible outcome for a seed phrase.

The correct solution combines two mechanisms: strong encryption and verification-gated delivery.

Final Capsule encrypts your seed phrase using AES-256-GCM before storing it. It is never kept in plaintext. The ciphertext stored on the server is mathematically unreadable without the key, not by Final Capsule, not by anyone with server access, not by any breach. The dead-man's switch checks in with you every 30 days. If you confirm you are alive, the capsule stays sealed. If you stop responding, the system escalates through alive checks and then SafeGuard verification before releasing the capsule to your named Confidant. The release happens only when needed and never prematurely.

This is the only approach that meets all three requirements simultaneously: your heirs know the crypto exists (you can tell them a capsule is waiting), they will receive the location and access details (in the capsule), and the seed phrase is delivered safely (encrypted, only after verification). No paper to lose. No will to be made public. No drawer for the wrong person to find.

If you hold any meaningful amount of cryptocurrency, whether on a Ledger, a Trezor, a MetaMask, or a Coinbase account your family does not know about, the time to set this up is now, not after something has happened. The window to plan is open; the window to act after the fact is not.