What happens to your crypto portfolio when you die? We investigate. Image: Getty

What Happens To Your Crypto Portfolio When You Die? An Investigation

3 min read

This article is for general information purposes only and isn’t intended to be financial product advice. You should always obtain your own independent advice before making any financial decisions. The Chainsaw and its contributors aren’t liable for any decisions based on this content.



When Ben H*, 38, from Sydney joined the crypto community, had already thought about “contingency for the worst case.” He had already discussed with his lawyer what to do with his crypto in the unfortunate event that he dies.

However, not everyone is like Ben.

Every year, millions of dollars worth of cryptocurrency vanish into the virtual void, locked away forever, because the people who hold them pass away. A 2021 Chainalysis study estimated that a staggering US$140 billion of Bitcoin is lost forever due to lost or forgotten keys.

But with more active crypto wallets than ever before, that amount could be higher.

Your keys, your crypto, unless …?

Individuals who enter the crypto scene are taught very early on that their seed phrase is, as Gollum says, their precious.

Usually 12, 18, or 24 words, a seed phrase is the key to retrieving any and all crypto, NFTs, and other digital assets that a person may hold; the phrase never to be shared with anyone else. Crypto users are usually encouraged to write their seed phrase down on physical paper and keep it in a secure place, like a storage safe.

It is precisely this that presents a challenge when it comes to accessing and transferring one’s wealth post-mortem. Law firms in Australia now provide assistance with including crypto assets in a client’s will. Clients can add a clause in the will specifying who the crypto will go to, the seed phrase, how to access a crypto wallet, and so on.

Ben* says he has “no concerns with a lawyer having my seed phrase.” However, storing sensitive information with a law firm is not the perfect solution.

Harry Dell, a tax lawyer from Sydney who specialises in crypto-related matters, says that law firms are not a one hundred percent secure destination for data when it comes to end-of-life crypto custody.

“We have had massive privacy breaches from a hack on [Australian law firm] HWL Ebsworth recently who no doubt had excellent security. Small and medium firms simply don’t invest in security like the big firms, and even if they did it it’s not 100% secure,” he explains.

“[Crypto keys] are not like an ID document that can be cancelled and reissued, once these keys are out there your crypto is gone,” Dell says.

Fortunately, in Australia and New Zealand, there are experts who are coming up with additional solutions to address existing issues.

Your keys, distributed

Everlasting, a crypto custody service in New Zealand, wants to beef up the security of end-of-life custodial services. Co-founder Luke Ryan shared with The Chainsaw that instead of having one entity hold the keys to a crypto kingdom, they are “replacing seed phrases with people.”

For example, a crypto user would have one crypto wallet that functions as a ‘vault’. “You have five keys that are on that vault, and you need three keys to be able to do anything on it,” Ryan says.

“So, if you were to sign a transaction, you need three or five keys to actually confirm it – just like you would a bank account… the client has two keys, Everlasting has two keys, and the lawyer has one key,” he explains.

Dell shares that he has a client who is currently looking to implement a similar approach. 

“It’s a 3/5 method with me as a lawyer and friend, some colleagues, and overseas family all holding key shards. We have to be careful to construct each group not holding enough keys to take control, so people are not motivated to [execute a rug pull],” he tells The Chainsaw.

Dell says that as a lawyer working in the crypto space, people seeking end-of-life crypto custody services are on the rise: “People are intending to hold mostly large [capitalisations] for a long time, so it’s a part of their succession planning.”

But what if your next of kin are not knowledgeable about the ins-and-outs of crypto? Fortunately, for Ben*, having worked in the crypto industry, his close ones know a thing or two about crypto.

“I trust my family or friends to access my crypto for my wife if required,” Ben* says.

*Not his real name.