Crypto inheritance planning is the process of designing a system that lets a designated heir recover self-custodied digital assets after the owner's death or incapacitation, without granting anyone premature access to the private keys while the owner is alive.
The problem of digital asset inheritance
Traditional assets like stocks, real estate, and bank accounts have well-established legal inheritance frameworks that courts and institutions already know how to execute. Self-custodied cryptocurrency has no equivalent safety net: if the private keys are known only to one person, that wealth is mathematically unrecoverable the moment that person is gone, regardless of what a will says.
How non-custodial dead man's switches work
Services like Sarcophagus use smart contracts alongside decentralized storage networks to hold encrypted recovery payloads. The account owner sends a periodic on-chain heartbeat transaction, typically every 90 or 180 days, to prove they are still active. If that heartbeat is missed for a defined period, the smart contract automatically decrypts the key shards and releases them to the designated beneficiary addresses, with no human intermediary required.
Structuring a 2-of-3 inheritance multisig
A common structure splits control across three keys. The owner holds one key in their primary cold storage vault. An heir gains access to a second key held in a safety deposit box, released only upon presenting a death certificate. A trusted estate planning attorney or corporate fiduciary holds the third key in escrow. Because any two of the three keys can recover the funds, the heir and the attorney can combine their shares to complete recovery, and neither party can act alone or move funds while the owner is still living.
- The owner's key stays in their own cold storage vault at all times.
- The heir's key is released only on presentation of a death certificate.
- The attorney's key remains in professional escrow as the neutral third share.