Bitcoin Inheritance Planning — Don't Let Your Sats Die With You

Bitcoin Inheritance Planning

This is the topic nobody wants to think about, but everyone needs to. An estimated 3-4 million Bitcoin are permanently lost — many because holders died without sharing access. Don't let your sats join them.

The Unique Challenge

Bitcoin inheritance is harder than traditional assets because:

• No recovery mechanism: There's no "forgot password" for Bitcoin
• Security vs accessibility trade-off: Making Bitcoin accessible to heirs also makes it accessible to attackers
• No institutions: Banks handle traditional inheritance. Bitcoin has no equivalent
• Technical knowledge gap: Your heirs may not understand Bitcoin

Strategy 1: The Letter Method (Simple)

Write a detailed letter explaining:

• What Bitcoin is and that it has value
• Where the hardware wallet and seed phrase backup are located
• Step-by-step instructions for accessing funds
• Contact information for a trusted Bitcoin-knowledgeable person who can help

Store this letter with your will or in a safety deposit box. Do NOT include the seed phrase in the letter — reference its location separately.

Strategy 2: Multisig Inheritance (Recommended)

Use a 2-of-3 multisig where:

• Key 1: Your primary key (you control)
• Key 2: Held by your spouse/heir
• Key 3: Held by a trusted family member, lawyer, or collaborative custody provider

While alive, you use Key 1 + Key 2 for normal transactions. After your death, your heir uses Key 2 + Key 3. No single party can steal funds.

Strategy 3: Timelock-Based Inheritance

Using Taproot, you can create a UTXO with two spending paths:

• Key path: Your key (normal spending, no timelock)
• Script path: Your heir's key, but only after a 1-year timelock

If you're alive, you periodically move your Bitcoin to refresh the timelock. If you die and stop refreshing, after 1 year your heir can claim the funds. This is called a "dead man's switch" approach.

Strategy 4: Shamir's Secret Sharing

Split your seed into multiple shares using SLIP 39 (Shamir's Secret Sharing for BIP 39 seeds). Example: create 5 shares where any 3 are needed to reconstruct the seed. Distribute shares to:

• Your spouse
• Your lawyer
• Your safety deposit box
• A trusted friend
• A sealed envelope with your will

No single person can access the funds. Three must cooperate.

Strategy 5: Collaborative Custody Services

Services like Unchained Capital and Casa offer inheritance-aware multisig. They hold one key in a multisig setup and have inheritance protocols. If you die, your heirs work with the service to access funds. This adds a trusted third party but simplifies the process enormously.

For Sri Lankan Families

In Sri Lanka, where extended family structures are strong, a 2-of-3 multisig distributed across trusted family members makes particular sense. Consider the family dynamics carefully — choose keyholders who are trustworthy, technically capable (or willing to learn), and geographically distributed.

What NOT to Do

• Don't just write down the seed and put it in a safe: Without instructions, your family won't know what to do with 24 random words
• Don't share your seed with anyone while alive: The moment someone else has your seed, they can take your Bitcoin
• Don't ignore this: "I'll do it later" has cost families millions in lost Bitcoin

Planning for your death isn't morbid — it's responsible. If you believe Bitcoin will be worth significantly more in the future, then planning your inheritance isn't just about today's value. It's about your family's future.

Inheritance planning templates and guides at our learning center.