Multi-Signature Solutions for Estate Planning

Multi-signature (multisig) wallets are one of the most powerful tools for Bitcoin estate planning. A multisig wallet requires multiple private keys to authorize a transaction — for example, 2 out of 3 keys, or 3 out of 5. This architecture naturally lends itself to inheritance planning because it distributes control without giving any single party full access.

How Multisig Works for Inheritance

Consider a 2-of-3 multisig setup. You create a wallet that requires any 2 of 3 keys to move funds:

• Key 1: Held by you (the owner) — stored on your hardware wallet.
• Key 2: Held by a trusted family member or heir — stored on their hardware wallet.
• Key 3: Held by a lawyer, trusted advisor, or inheritance service provider.

While you're alive, you use Key 1 + Key 2 (or Key 1 + Key 3) to manage your funds normally. If you pass away, your heir uses Key 2 + Key 3 to access the funds. No single party can steal the Bitcoin, and the loss of one key doesn't mean the funds are lost.

Advantages of Multisig for Estates

• No single point of failure: Losing one key doesn't lose the funds.
• No single point of trust: No one person can steal the funds alone.
• Flexible configurations: You can design the key distribution to match your family situation (e.g., 3-of-5 with keys distributed among family members).
• Transparent to heirs: Heirs know they have a key and understand the process in advance.

Practical Setup with Casa or Unchained

Services like Casa and Unchained Capital offer managed multisig solutions designed for inheritance:

• Casa: Offers a 3-of-5 multisig vault with an explicit inheritance protocol. One key is held by Casa, which can be activated by your heir after identity verification.
• Unchained: Provides collaborative custody where you hold 2 of 3 keys and Unchained holds 1. Their inheritance product ensures your heirs can work with Unchained to recover funds.

Both services charge annual fees but provide a structured, tested process for inheritance — far better than leaving a seed phrase in a drawer.

DIY Multisig for Estate Planning

For those who prefer full sovereignty, you can set up multisig yourself using tools like Sparrow Wallet, Electrum, or Caravan (by Unchained). The steps are:

1. Decide on your configuration (e.g., 2-of-3 or 3-of-5).
2. Generate keys on separate hardware wallets (e.g., Trezor, Ledger, ColdCard).
3. Create the multisig wallet using your chosen software.
4. Distribute keys to trusted parties with clear written instructions.
5. Store the wallet descriptor (the configuration file that defines which keys form the multisig) in multiple locations — without this, even having all keys won't allow reconstruction.

For Sri Lankan Bitcoiners, a DIY 2-of-3 multisig with one key held personally, one with a trusted family member, and one stored in a bank safety deposit box provides a practical, low-cost inheritance solution.