What Happens to Crypto When Someone Passes Away?
Self-custody means nobody can seize your crypto. It also means nobody can recover it. A quiet subject the industry avoids, and what the people who think about it do differently.
Key takeaways
- Self-custody crypto has no password reset and no next of kin process. If the seed phrase is lost with its owner, the funds stay on-chain but nobody can ever reach them.
- The QuadrigaCX case is the cautionary tale: roughly $190 million became unrecoverable after founder Gerald Cotten passed away in 2018 holding the only keys.
- Never write a seed phrase into a will. Probate documents can become public record, and anyone who reads it can drain the wallet.
- The practical setup is a sealed physical backup, a separate plain-language instruction letter, and one trusted person who knows the backup exists.
- Review it once a year, and after any wallet change, or the plan quietly goes stale.
Custodial platforms have a process for when an account holder passes away. Self-custody does not. That is the trade you accepted when you took your own keys: nobody can freeze or seize your crypto, and nobody, including the people closest to you, can reach it without the seed phrase. Most families are never told the phrase exists at all. It is worth sitting with that for a minute.
It is a subject the industry tends to avoid, and news this week involving the passing of investor Harry Yeh brought it back into conversation. The circumstances there remain under investigation and this article makes no claim about them. It is simply a good moment to check whether your own keys have a plan.
The $190 million lesson
In 2018, QuadrigaCX founder Gerald Cotten passed away while the exchange's cold wallet keys existed nowhere else. Roughly $190 million in customer funds became unreachable and, in practical terms, stayed that way. The technical cause was mundane: one person, one set of keys, no succession plan. The same failure works at any size, including a personal wallet.
Why a will is the wrong place for a seed phrase
This is the single most common mistake. Wills often pass through probate, and probate filings can become part of the public record, viewable by people you never chose. A seed phrase in that document is a seed phrase handed to strangers. Worse, a will can sit unexecuted for months while anyone who saw it has instant, irreversible access.
What people who plan ahead actually do
- Back the seed phrase up physically, on paper or steel, and store it somewhere secure such as a home safe or a bank deposit box. Never store it as a photo, a note app entry or a cloud document.
- Write a separate instruction letter in plain language: which wallets and apps exist, roughly what is in them, where the backup is stored, and how to use it. This letter contains no seed phrase and no passwords.
- Tell at least one trusted person that the backup exists and where the instruction letter is. Knowing the location is not the same as having access to the funds.
- Reference the plan in your will without quoting any secret: point to the existence and location of the instructions, not to the phrase itself.
- For larger amounts, consider a multisignature setup so that no single key, and no single person, is a point of failure.
The things that quietly break a plan
- A photo of the seed phrase in cloud storage or a chat thread. Convenient today, a breach vector for years.
- Splitting a phrase across relatives without written instructions. Reassembly usually fails at the worst possible moment.
- Never testing it. If the person you chose cannot follow the letter with the actual backup, the plan does not exist.
- Letting it go stale. A new wallet, device or app means the instructions need updating.
Where this leaves self-custody
None of this is an argument for handing your money to a custodian. Platforms shut down, freeze withdrawals and get delisted, and this year has supplied plenty of examples. It is an argument for treating self-custody like the responsibility it is. With Fizen your USDT sits in a wallet you control and spends by Visa card and QR, which means the same rule applies: back up the phrase, write the letter, tell someone it exists. Sovereignty and succession planning are the same job.
Frequently asked questions
What happens to crypto when the owner passes away?
If it is held in self-custody, whoever has the seed phrase can access it. If nobody does, the funds remain on-chain but become permanently unreachable. Custodial platforms usually have a deceased-account process instead, but that means they held the assets all along.
Can I put my seed phrase in my will?
You should not. Wills can pass through probate and become part of the public record, exposing the phrase. Reference the location of a sealed backup and a separate instruction letter instead.
How do I leave crypto to my family safely?
Store the seed phrase on a physical backup in a secure place, write a separate plain-language instruction letter that contains no secrets, tell one trusted person the backup exists, and reference the arrangement in your will without quoting anything.
What was the QuadrigaCX case?
Exchange founder Gerald Cotten passed away in 2018 while holding the only keys to the cold wallets. Roughly $190 million in customer funds became unrecoverable, making it the best known example of crypto lost to a missing succession plan.
Does a multisig wallet help with inheritance?
It can. Requiring several keys to move funds means no single lost key is fatal and no single person has unilateral access. It adds setup complexity, so it suits larger holdings.
Your keys, your responsibility
Fizen keeps your USDT in a self-custody wallet you control, spendable by Visa card and QR in 150+ countries. Backed by an investment from Tether.
This is general information, not legal or financial advice; inheritance rules vary by country, so consult a local professional. Fizen is a self-custody app, backed by an investment from Tether.
