Inheriting Crypto: How Your Heirs Actually Get Access, and Why the Seed Does Not Belong in a Will

The information provided in this article is for informational purposes only and does not constitute financial advice. Investing in cryptocurrencies carries a high level of risk.

Passing on crypto rarely fails because of the law. It fails because the heirs hold a claim to the assets without knowing they exist, or know about them and cannot reach them. The legal position in Germany has been settled for years. The practical one has not.

The decisive dividing line does not run between Bitcoin and shares but between an exchange account and a self-custodied wallet. With an exchange account there is a contracting party you can write to with proof of inheritance. With self-custodied coins there is nobody, only a private key that either can be found or cannot.

Inheriting crypto: the key points

• On 12 July 2018 the German Federal Court of Justice (case III ZR 183/17) ruled that a contract for a user account with a social network passes to the heirs under section 1922 of the Civil Code. Digital content is treated no differently from analogue content.
• With exchange accounts the route runs through a death certificate, proof of inheritance and a fresh identity check on the heirs.
• With self-custodied coins no court can help. Without access to the private key the balance is out of reach, lawful heirs included.
• The seed does not belong in a will. Under section 357 of the FamFG anyone who credibly asserts a legal interest may inspect a disposition once it has been opened.
• A Shamir backup under SLIP-39 splits the backup into shares. Below the defined threshold a single share reveals nothing.
• For inheritance tax the value on the date of death is what counts. We have written up those rules separately.

Inheriting crypto: what heirs receive in law

Under section 1922 of the German Civil Code the estate passes to the heirs as a whole. In 2018 the Federal Court of Justice held, in a case about a blocked Facebook account, that contractual relationships with online services are covered as well: the heirs step into the contract and are entitled to access the account together with the communications stored there. There is no reason, the court found, to treat digital messages differently from letters and diaries.

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