Cryptocurrency is no longer a niche asset. Inland Revenue estimates there are over 227,000 unique cryptocurrency users in New Zealand, making around 7 million transactions annually with a value of approximately $7.8 billion. Yet, many crypto owners overlook a critical question: what happens to my cryptocurrency when I die?

Unlike traditional bank accounts, there is no central authority or recovery process for crypto. Access depends entirely on confidential information such as seed phrases and private keys. If these details are lost, the crypto is gone – permanently.

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Why Planning Matters

Executors can only manage cryptocurrency if the necessary information has been securely stored and made retrievable. Without this, even substantial holdings can become inaccessible.

How Crypto Is Stored

Crypto owners typically use:

  • Custodial wallets (hosted by exchanges)
  • Hot wallets (software wallets)
  • Cold wallets (hardware wallets)

Each wallet generates a seed phrase – a series of 12 to 24 random words – which acts as the master key to access funds. Losing this phrase means losing the crypto.

Balancing Security and Accessibility

Owners must protect their seed phrases during their lifetime while ensuring:

  • A property attorney can access them if legal capacity is lost.
  • An executor can access them after death.

Options include:

  • Durable backups (e.g., metal plates or disks stored in safes or vaults)
  • Splitting seed phrases into multiple parts stored separately
  • Using cryptographic solutions like Shamir Secret Sharing
  • Multi-signature arrangements with trusted institutions

Estate Planning Considerations

Details about crypto should not be included in a Will, as probated Wills become public records. Instead, sealed instructions should outline how to:

  • Access devices or wallets
  • Reconstruct seed phrases
  • Retrieve private keys

Engaging an estate planning lawyer experienced in cryptocurrency is essential to create tailored arrangements that protect assets during life and enable access after death as well as continued dealing in crypto if appropriate.

Enduring Powers of Attorney

If legal capacity is lost, an Enduring Power of Attorney allows a trusted person to manage assets, including crypto. The authority must explicitly permit holding, buying, or selling cryptocurrency.

Need advice? Contact our estate planning experts:
Peter Barrett | 021 472 106 | 04 916 0139 | [email protected]
Michelle Buckley | 027 358 5489 | 04 916 0156 | [email protected]