What happens to my crypto assets if I die?

Cryptocurrency offers modern, decentralised financial autonomy, but that freedom also comes with a significant risk: without proper planning, your digital assets may become permanently inaccessible after your death. Bitpanda Custody recognises the critical importance of estate planning for crypto and provides a structured approach to ensure your beneficiaries can inherit your holdings securely and legally.

Estate Planning for Crypto Assets

Unlike traditional bank accounts or shares, crypto assets are secured using private keys and recovery phrases. Without these, even legally designated heirs will not be able to access your holdings. It's estimated that up to 20% of all Bitcoin may be lost forever due to inaccessible wallets. Bitpanda Custody strongly encourages proactive planning to prevent your assets from falling into this category.

How Bitpanda Custody Supports Inheritance

Bitpanda Custody has implemented policies to facilitate the legal transfer of crypto assets upon death. Your holdings can be passed on to legally authorised heirs, subject to validation and compliance with local estate laws. These assets are part of your estate and may be taxed in your jurisdiction.

To enable inheritance, your estate representative or heir must provide:

• A valid death certificate

• Probate documents naming the executor

• Proof of identity

• A copy of the will (if applicable)

Bitpanda Custody will then assist in the secure transfer of assets in accordance with applicable laws and our internal compliance standards.

Steps to Ensure Smooth Transfer of Crypto Assets

1. Inform Your Heirs
   Make sure your family, executor, or lawyer knows you hold crypto and where those assets are stored. Without this knowledge, they may never even begin the recovery process.

2. Document Access Details
   Record wallet addresses, custodial account logins, seed phrases, and recovery instructions. Store this information securely and share access with a trusted party or include it in estate documents (not in the public will).

3. Test Recovery Information
   Regularly verify that your recovery methods (e.g. seed phrases) still function. Link them to the correct wallets and ensure all assets are covered.

4. Consider Custodial Services
   Using custodians like Bitpanda Custody offers added security and provides structured mechanisms for transferring ownership. While some investors hesitate to use custodians, the existence of estate procedures can be a major advantage.

5. Appoint a Tech-Savvy Fiduciary
   Choose an executor or fiduciary who understands digital assets. If needed, appoint a co-executor specifically for your crypto estate.

6. Use Redundancy and Secret Sharing
   For non-custodial assets, consider multi-signature wallets or secret sharing methods (e.g. Shamir’s Secret Sharing) to distribute parts of a recovery phrase among several trusted parties.

7. Avoid Obsolete Technology
   Don’t rely on a single mobile device or outdated wallet app. Technology may fail or become unsupported by the time the assets need to be accessed.

Legal and Tax Implications

Crypto is considered personal property in many jurisdictions, including the U.S., where it is taxed like stocks or real estate. When beneficiaries inherit crypto, selling or converting it can trigger capital gains tax. Consult an estate planning attorney or tax professional to account for:

• Estate tax

• Capital gains tax

• Gift tax (if giving crypto while alive)

FAQs

What if I die without a will?
Your crypto holdings will pass under local intestacy laws, usually to your spouse or children. However, without access credentials, those assets may still be lost.

Can crypto skip probate?
No. Crypto is treated as property and typically must go through probate unless held in a trust or with a custodial service that permits direct beneficiary assignment.

Can crypto be lost forever?
Yes. Without access to wallet credentials, private keys, or recovery phrases, the assets cannot be retrieved.

Final Thoughts

Proper estate planning is essential to ensure your cryptocurrency investments benefit your loved ones. Bitpanda Custody supports inheritance through compliant processes designed to protect both your privacy and your beneficiaries’ access. We strongly encourage clients to take action now:

• Include crypto in your estate plan

• Designate beneficiaries

• Document access details securely

• Consider using our custodial services for added peace of mind

For additional guidance, please contact Bitpanda Custody Support or consult your legal advisor.

This article is for informational purposes only and does not constitute legal or tax advice.