Bitcoin Inheritance: The Side of Self-Custody That Most Try to Ignore

[Itz-prisigold]

There is a commonly used phrase that goes, “Not your keys, not your coins.” Your self-custodial gives us full control, we have freedom and also protect us from third-party. But however, there is a side of self-custody that is rarely discussed seriously. What will happens to your Bitcoin when you are no longer around? This is not about Bitcoin price, trading or adoption, it is about Bitcoin survival beyond the owner.

What happens to your bitcoins if you die?


1. Bitcoin Doesn’t Care About Real Life Events

What is going on in your life is irrelevant to Bitcoin. Any of these situations might actually happen to you:

.Passed away
.You’re sick
.You have dementia
.You can’t be able to access your wallet anymore

If you lose your private keys, then your coins are gone too, that's it. You can’t send a support email, there’s no recovery form, there are no recovery phrases, your family can not have any access.

2. Being Too Secretive Can Lead To Permanent Loss.

Bitcoiners use to keep their seed phrases a secret because they are important,  and it's the right thing to do.  But this often results to:

.Seed phrase is hidden so well that no one knows they even exist.
.No one makes any steps to leave instructions on how to access the wallet
. Family members might not even be aware that Bitcoin is even owned.
.Unless they have explained it, family members don’t understand what a seed phrase is
.Trusted people have zero technical knowledge.

So when something unexpected happens,  the Bitcoin dies with the owner.  Security without continuity just leads to self-destruction.

3. A Will Alone Usually Isn’t Enough

People use to say: “I’ll just put it in my will” is enough.

The problem is:

.Most lawyers don’t understand Bitcoin.
.A will can’t open a locked wallet.
.A will that says “my BTC goes to “X” mean nothing without being able to access it.

Having legal documentation saying that you own  something without having the ability to  reach it isn't worth anything.

4. The Real Problem Is Balance.

If you make access too easy,  people might steal it and If you still make access too difficult, you might lose if forever.

When it comes to Bitcoin inheritance,  is about finding a middle ground and not a perfect setup.


5. Lost Bitcoin Isn’t  “Bullish”  for the People Left Behind

People normally joke about lost coins reducing the supply, but to the family members:
.That could be years of saving gone.
.There are no chances to do a replacement.
.There’s nothing that could be done for recovery.
At this point, Bitcoin principals don't matter. Only the loss does.

Some ideas that might help: Not Perfect, But Better Than Nothing
.Multisig, when it comes to Multisig not only one person has complete control. Different people hold different pieces of information.
.Using Time-lock solutions in case of longer inactivity.
.Write down simple instructions for a family member who doesn't understand technical.

There are downsides to most of these,  but it’s going to be coins that will be lost if no one tries to do something.

In summary,  Self-custody gives you the control and it also gives you freedom,  but it also requires the responsibility. And that responsibility doesn't stop by just holding,  it requires you to plan for the unexpected.  Ignoring Bitcoin inheritance doesn't make your setup stronger, it just increases the chances of your coins disappearing forever.

[Zaguru12]

Topics like this have been discussed long time ago and the answers are still going to be the same, first off not your keys, not your coins generally is a phrase mostly use for centralized platform users where you can never have access to the private keys although it is used also for self custody but with self custody you have your keys with you and the whole sole custodianship of it not a complete third party and at this point you simply can give it out to just anyone that you trust. Because even in a world where trust is rare, you just have to trust someone with your inheritance details most likely it might be those who would be inheriting it.

Among the two options of either multi sig or timelock, most people actually stuck with timelock more because it prevent access to the bitcoin before your stipulated time and also doesn’t offer redundancy like Multi sig which needs two or more people. But yet again this is a decision left for the investor himself to make.

[Hypnotizer]

If you lose your private keys, then your coins are gone too, that's it. You can’t send a support email, there’s no
recovery form, there are no recovery phrases, your family can not have any access.

-snip-

This statement is somewhat not true, your Seed phrase can be used to recover your wallet if you ever lost your private keys, the only way you will lose access to your wallet is when you lost both your Seed phrase and private keys.
 In any event where you forget or lose your private key and still remember your seed phrase then you can use your seed phrase to generate the private keys.

[Dunamisx]

When we talk about that of Bitcoin, what about the same challenges faced by banks, when their user dies and left no next of kin and the fund remain dormant to their account, what happens to such users and their account funds.

In bitcoin network, we should value and respect  privacy, if the bearer want to have his decision the way he has chosen, then we must let be, because not everyone could easily find someone to confide trust in, if he is alive and can entrust his asset with anyone, then let it be, the same should happen after the person died, because while he was alive, he never wish sharing his asset information or keys with anyone.

[Itz-prisigold]

If you lose your private keys, then your coins are gone too, that's it. You can’t send a support email, there’s no
recovery form, there are no recovery phrases, your family can not have any access.

-snip-

This statement is somewhat not true, your Seed phrase can be used to recover your wallet if you ever lost your private keys, the only way you will lose access to your wallet is when you lost both your Seed phrase and private keys.
 In any event where you forget or lose your private key and still remember your seed phrase then you can use your seed phrase to generate the private keys.

You're not wrong on the technical part, I agree that a seed phrase can regenerate your private keys, I get it. but I think you are missing my point. There are users, and there is a user experience. See most people don't really separate their private keys and send phrases in practice. When you lose access to things that controls your wallet, whether it is a phone, backup, or just a piece of paper with a phrase or whatever it may be, that simply means your coins are gone for good, but as long as you still have your seed phrase, you don't have any problem with recovery. But the moment you lose that recovery info, There are no reset, there is no support  and no second chance. For me, I was talking more about the experience and the responsibility of a user owning their own crypto.

[noorman0]

3. A Will Alone Usually Isn’t Enough

People use to say: “I’ll just put it in my will” is enough.

The problem is:

.Most lawyers don’t understand Bitcoin.
.A will can’t open a locked wallet.
.A will that says “my BTC goes to “X” mean nothing without being able to access it.

You certainly can't rely on a lawyer alone, especially when it comes to large sums of money and multiple people entitled to your Bitcoin inheritance. The solution lies in the last section you outlined.

This statement is somewhat not true, your Seed phrase can be used to recover your wallet if you ever lost your private keys, the only way you will lose access to your wallet is when you lost both your Seed phrase and private keys.

That means you didn't lose your access key as the OP described. You're missing the point, and besides, I don't understand why anyone would have to feed the childs while they're caring for the mother.

[julerz12]

what happens to such users and their account funds.

The state/government takes it and will sit on it. Since BTC doesn't have that, everyone should really practice what OP has mentioned, like the few choices he mentioned: time-lock and writing down instructions to whoever you want to pass your BTC when you go permanently offline. Unless, of course, if you're the type of person who doesn't have that and wants to take everything to your grave (just like someone you described below).

Personally, I have already done one of OP's suggestions, and it's a very long process of explaining the basics of BTC, Blockchain, as well as a very detailed step-by-step on how she can access them.

In bitcoin network, we should value and respect  privacy, if the bearer want to have his decision the way he has chosen, then we must let be, because not everyone could easily find someone to confide trust in, if he is alive and can entrust his asset with anyone, then let it be, the same should happen after the person died, because while he was alive, he never wish sharing his asset information or keys with anyone.

If you really don't have someone you can trust, then you might as well give it to a charity, at least this way, it'll be used for something great, perhaps something noble.
PS. Don't ask me which charities, though, I haven't donated in years. Ah, maybe a few pints of blood. 

[Versatile_choice]

When we talk about that of Bitcoin, what about the same challenges faced by banks, when their user dies and left no next of kin and the fund remain dormant to their account, what happens to such users and their account funds.

This is also a very nice question but the answer is simple. Just as you said that when a Bank user dies and Left no next of kin, that what will happen to his funds. Of course the bank will claim everything because it is assume that the person doesn't have relatives or loved ones which is why he didn't add a next of kin, but when there's a next of kin the bank will try to investigate who the next of kin is sometimes the next of kin might even go to claim the funds. That is why we are supposed to apply this same method in our bitcoin investment I mean having a next of kin should incase the unknown"death" happen.

[Die_empty]

.Most lawyers don’t understand Bitcoin.

The lawyer doesn't need to understand Bitcoin to make a will. All he needs to know is where the seed phrase is located. You need to teach your heirs about Bitcoin since you are leaving it as an inheritance. However, a professional lawyer in this era should know that Bitcoin is money.

If you make access too easy,  people might steal it and If you still make access too difficult, you might lose if forever.

It is becoming difficult to find trustworthy people. Materialism and the uncontrollable desire to get money are making people do unbelievable things. But some people are lucky to have a reliable and trustworthy spouse, children, parents and even friends. I am also privileged to have one person who knows everything about me. 

In summary,  Self-custody gives you the control and it also gives you freedom,  but it also requires the responsibility. And that responsibility doesn't stop by just holding,  it requires you to plan for the unexpected.  Ignoring Bitcoin inheritance doesn't make your setup stronger, it just increases the chances of your coins disappearing forever.

Self-custody has no alternative. It would be better if I donate my coins to the community than to lose to centralised platfroms. Just devise a suitable plan that will grant you dependants access to your coins in case of emergencies. 

[Hypnotizer]

You're not wrong on the technical part, I agree that a seed phrase can regenerate your private keys, I get it. but I think you are missing my point. There are users, and there is a user experience. See most people don't really separate their private keys and send phrases in practice. When you lose access to things that controls your wallet, whether it is a phone, backup, or just a piece of paper with a phrase or whatever it may be, that simply means your coins are gone for good, but as long as you still have your seed phrase, you don't have any problem with recovery. But the moment you lose that recovery info, There are no reset, there is no support  and no second chance. For me, I was talking more about the experience and the responsibility of a user owning their own crypto.

Okay, I’d find how you wrote it wrong that why I replied.. because I saw something in your statement like “there are no recovery phrase” but that fine, I now understand what you meant. But you could have used words like “Access keys” or simply “keys”.

-Edited out-

[ABCbits]

Some ideas that might help: Not Perfect, But Better Than Nothing
.Multisig, when it comes to Multisig not only one person has complete control. Different people hold different pieces of information.
.Using Time-lock solutions in case of longer inactivity.

These idea already integrated on several Bitcoin wallet or service, where some of them considered as non-custodial. See https://thebitcoinhole.com/inheritance. But from some reading, the convenient one cost fair amount of money. The cheap or free one expect you and other participant require some technical knowledge.

That means you didn't lose your access key as the OP described. You're missing the point, and besides, I don't understand why anyone would have to feed the childs while they're caring for the mother.

I don't know why you bring up about taking care child and mother. But i suggest to search for term "sandwich generation".

[noorman0]

I don't know why you bring up about taking care child and mother. But i suggest to search for term "sandwich generation".

I mean, if someone has the seedphrase/masterkey (mother), why would they need to back up each of their private keys(childs) as well? I can't think of any specific reason for this other than simply increasing risk exposure. Obviously, someone would only back up private keys that have funds.

[viljy]

3. A Will Alone Usually Isn’t Enough

People use to say: “I’ll just put it in my will” is enough.

The problem is:

.Most lawyers don’t understand Bitcoin.
.A will can’t open a locked wallet.
.A will that says “my BTC goes to “X” mean nothing without being able to access it.

Having legal documentation saying that you own  something without having the ability to  reach it isn't worth anything.

I was interested in this. Let's say that the owner of bitcoins wrote a will for his bitcoins during his lifetime and confirmed his access to this address (ownership) with a signed message (i.e. confirmed possession of the private key) in the will. However, he left neither the private key nor the seed phrase to his heirs after his death (let's say this happened due to some intentional or unforeseen reasons).

Let's say whether the heir will be able to dispose of these "lost" bitcoins as a kind of "indivisible piece" of funds. For example, to issue a bill of exchange (at a discount, of course) for these bitcoins, or just sell your ownership at a very significant discount (it's like selling a bad debt).

After all, there is a chance that sometime in the future the private key may be found by someone who buys ownership of such "lost" bitcoins (this will already be a problem for the new owner, if he wishes, he can rent tens of thousands of video cards and search for the key, in this case it is important that theoretically there is a chance, although practically we can say that there is not).

In any case, this could be an option so that the "lost" bitcoins can be legally returned to circulation (albeit in the form of promissory notes or some other forms).

[Ruttoshi]

Multisig is good if the bitcoin is willed to more than one person so that, the cosigners will be aware before funds are being transferred but the lawyer shouldn't be part of the cosigners.

Time lock is good if the bitcoin in the wallet is willed to just one person and you want him to have access to the bitcoin at a particular time or age. I prefer time lock to multisig.

[hosemary]

Time lock is good if the bitcoin in the wallet is willed to just one person and you want him to have access to the bitcoin at a particular time or age. I prefer time lock to multisig.

It's not that you have to choose one of locktime and multi-sig options. You can use both.
If there are multiple people that will inherit from you, you can make a transaction with a locktime into the future that sends the funds to a multi-signature wallet.

[btc78]

The problem is:

.Most lawyers don’t understand Bitcoin.

how can you say that most don’t? they are lawyers and it’s their job to learn about anything that will be affected by legal decisions which includes your assets and includes bitcoin

if your lawyer do not know/understand bitcoin find a different one

[Hewlet]

2. Being Too Secretive Can Lead To Permanent Loss.

It's true but at the same time, you have to learn how to cut your cost such that you don't give out your private key to someone that will end up becoming a rebel to you. If you trust the person you're giving out your key to someone much, you can just teach the person about crypto, let him get involved first and then inform him that you have some asset you kept in a particular place that he's not supposed to touch until it's complete neccesary to. That way, you've safeguard yourself and him also since he doesn't know the exact key and doesn't also know the exact amount that's in bitcoin form.

Entrusting your seed phrase in the bank is not a good thing for me because it literally takes us back to the thing we are trying to avoid to even start with. If you're keeping your asset for a third party that's a love one, have a good plan in place as to how you're going to transfer that funds to them in the swiftest of ways possible so every feels okay in the end.

[ColdLava40]

 Once again, inheritance issues are something that can be solved on trust. Though it's difficult to find some one we trust these days that would hear about your bitcoin holdings and not ask questions. But then it's a good thing to let someone know about your bitcoin holdings Just In case, nobody knows.

You can use a will to let them know where the bitcoin might be but the dangerous part about this is how can you trust a lawyer with such vital information.. they might send attackers to come search your for it, putting the life of your loved ones In danger..

Bitcoin doesn't know you or me.. when it's lost, it simply remains dormant in supply and if luckily someone in your family were able to find it then they can spend it...

No one really plans for these case scenario to occur to them but being prepared is a crucial step in life..

[SeriouslyGiveaway]

There is a commonly used phrase that goes, “Not your keys, not your coins.” Your self-custodial gives us full control, we have freedom and also protect us from third-party. But however, there is a side of self-custody that is rarely discussed seriously. What will happens to your Bitcoin when you are no longer around?

When you are no longer around, passed away, your bitcoins lost if you don't leave any information for accessing it to your family members.

It's the same with bitcoins stored in either non-custodial wallets or custodial wallets like exchange accounts. With both custodial and non-custodial wallets, your family members need to have information to log in your exchange account, your email and withdraw the fund or wallet password to open the wallet file and get access to your bitcoin, or to have wallet backups for recovery and use your bitcoin.

Without any information, when you passed away, your bitcoin lost.

[X-ray]

People use to say: “I’ll just put it in my will” is enough.

The problem is:

.Most lawyers don’t understand Bitcoin.
.A will can’t open a locked wallet.
.A will that says “my BTC goes to “X” mean nothing without being able to access it.

With Will can't you just store your seed phrase somewhere else safe and let them retrieve it when the time comes.

Seed phrase is literally just words, you don't need to understand bitcoin in the first place and even surface level knowledge about bitcoin, you're most likely to understand how to use seed phrase and retrieve the bitcoin?.

Multisig isn't fool proof solution either, what if majority of signer suddenly gone?