Crypto inheritance and family access, UK

With a bank account, your executors can show a death certificate and the bank does the rest. With crypto you hold yourself, nobody can do that for them. Whoever has the recovery phrase has the crypto, and whoever doesn't, doesn't.

That creates two risks that pull in opposite directions:

• Too hidden, and your family may never find it, or may not know what it is when they do.
• Too obvious, and someone else may find it first, while you are still alive.

Most of the work in crypto inheritance is finding the right balance between the two, for your family and your circumstances.

• A list of what you hold and where, without any secrets in it: which devices, which wallet apps, which exchanges, which coins.
• The location of each backup, and of any passphrase, recorded somewhere your executor will look.
• Plain-English instructions that someone non-technical could follow, step by step, without you there to explain.
• The right people knowing the right amount: who knows the plan exists, who can get to the backups, and who would need help to use them.
• A plan for getting help, so your family knows who to trust, and who not to.
• A regular check, because holdings, devices and families change.

• Never put your recovery phrase in your will. In England and Wales, a will becomes a public document once probate is granted, and anyone can order a copy. Your will, or a separate letter of wishes, can say that you hold crypto and where instructions are kept, without the words themselves.
• Tell your solicitor you hold crypto. Executors need to know it exists to include it in the estate, and crypto can count towards inheritance tax like any other asset.
• Exchange accounts are different. Crypto held on an exchange is handled through the exchange's own process for bereaved families, more like a bank account. Your executor still needs to know the account exists.

KeyCompass does not give legal or tax advice. For wills, trusts and inheritance tax, use a solicitor or tax adviser; KeyCompass covers the technical side they usually can't.

There is no single right answer, and the best setup depends on how much you hold and who you trust.

• Sealed instructions. Your backup stays where it is, and a sealed letter tells your executor where to find it and what to do. Simple, and fine for many people, but it relies on the letter and the backup both staying safe.
• Separating the pieces. If you use a passphrase, the recovery phrase and the passphrase are kept in different places, or with different people, so no single discovery is enough.
• Multisig. Several keys, held in different places or by different people, with a set number needed to move funds. More resilient and harder to steal, but more complex to set up and to pass on.

Whichever you choose, test it: would the person you are relying on actually be able to follow your instructions?

Every security review includes succession as one of its four areas. It checks whether your family could find and use your backup if something happened to you, whether anyone could who shouldn't, and what to change. You get it in writing, prioritised, as part of the report.

A dedicated inheritance planning service, including help writing family instructions and working alongside your solicitor, is in development. If that is what you need, mention it on the free intake call and you will hear when it is available.

KeyCompass never asks for your recovery phrase, a photo of it or any part of it, and never holds your crypto.

Can my solicitor hold my recovery phrase? Some people leave sealed instructions with a solicitor. Leaving the recovery phrase itself with anyone puts your crypto in their hands, so think carefully, and never leave it with someone who doesn't understand what it is.

Should I tell my family now? Usually someone needs to know the plan exists. They don't necessarily need to know where the backups are, or how to use them, until they need to.

What if I use a passphrase? Then your family needs both the recovery phrase and the passphrase. Without the passphrase, the recovery phrase alone opens a different wallet, not the one your crypto is in.

What happens to crypto on an exchange when someone dies? The executor contacts the exchange, which has its own process, usually asking for a death certificate and grant of probate. It is slower than a bank, but possible, as long as someone knows the account exists.

• Seed phrase storage: where should I keep mine?
• How to test your recovery phrase backup safely

Book the free intake call