Bitcoin Inheritance Plan Coherence Factors

Inheritance Plan Coherence Beyond Legal Documents

This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.

Legal Documents and Operational Access Are Separate Problems

A Bitcoin holder may have considered what happens after death. Information may have been written down, shared informally, or referenced in estate documents.

This memo describes what determines whether a Bitcoin inheritance arrangement remains usable once the holder is no longer available to explain, correct, or supplement it.

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Legal Documents and Operational Access Are Separate Problems

A will can say that your Bitcoin goes to your daughter. A trust can name a trustee responsible for digital assets. An estate plan can acknowledge that cryptocurrency exists and assign it to beneficiaries.

None of this moves the Bitcoin.

Legal documents establish who has authority. They do not establish how that authority gets exercised. Your daughter may be legally entitled to the Bitcoin, but if she does not know where the seed phrase is, cannot unlock the hardware wallet, or does not understand which accounts hold which funds, the legal entitlement produces nothing.

This separation is the first structural problem in Bitcoin inheritance. The legal layer and the operational layer are disconnected. A complete estate plan and a complete access plan are two different things. Having one does not mean you have the other.

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Information That Exists Is Not the Same as Information That Can Be Found

You wrote down your seed phrase. You put it somewhere. You know where it is.

After you die, your wife does not know where it is. She knows you had Bitcoin. She may even know you wrote something down. But she does not know that the seed phrase is in the brown envelope in the filing cabinet in the basement, behind the tax folders from 2019.

The information exists. It is not discoverable.

Discoverability depends on someone being able to find the information without your help. This is harder than it sounds. You organized your system according to your own logic. Your labels make sense to you. Your filing system reflects your habits. None of this transfers automatically to someone encountering your system for the first time under stress.

An executor going through your papers after a sudden death is not calmly reviewing a well-indexed archive. They are opening drawers, flipping through folders, and trying to figure out what matters while also handling funeral arrangements, grieving family members, and legal paperwork. If the critical information does not surface quickly, it may not surface at all.

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Information That Can Be Found Is Not the Same as Information That Can Be Used

Your son finds a piece of paper with 24 words on it. He recognizes that this is probably a seed phrase. He does not know what to do with it.

He does not know which wallet software to use. He does not know whether there is a passphrase in addition to the seed phrase. He does not know whether this seed phrase controls all of your Bitcoin or just some of it. He does not know whether restoring this wallet will show him a balance or an empty screen.

The information is discoverable. It is not interpretable.

Interpretability depends on someone being able to understand what they are looking at and how to act on it. A seed phrase without context is a puzzle. Is this the current seed phrase or an old one? Does this go with the Ledger device or the software wallet on the laptop? Are there other seed phrases elsewhere?

Your son may spend hours researching, may make mistakes, may enter the seed phrase into the wrong software, may restore a wallet that shows zero balance because the funds are controlled by a different derivation path. The information was present. The ability to use it correctly was not.

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When Information Is Scattered Across Locations

You kept the seed phrase in a safe deposit box. You kept the PIN to your hardware wallet in a password manager. You kept the password to the password manager in your head. You told your brother about the safe deposit box but not about the password manager. You told your wife about the hardware wallet but not about the safe deposit box.

No single person has the complete picture. Each person has a fragment. The fragments do not obviously connect to each other.

After you die, your wife finds the hardware wallet and tries to use it. She does not know the PIN. Your brother knows about the safe deposit box and retrieves the seed phrase. He does not know there is a hardware wallet. Neither of them knows about the password manager that contains the PIN.

The information exists. It is distributed in a way that prevents assembly.

This pattern is common. People store different pieces of their custody system in different places for security reasons. Spreading information around reduces the risk that a single breach exposes everything. But it also creates a coordination problem at inheritance time. The security benefit during life becomes an access obstacle after death.

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When Documentation Contradicts Itself

You wrote instructions three years ago. You updated your system last year but did not update the instructions. The instructions say to use Wallet A. Wallet A is now empty because you moved everything to Wallet B. Your heir follows the instructions, restores Wallet A, sees a zero balance, and concludes that the Bitcoin is gone.

The Bitcoin is not gone. It is in Wallet B. But nothing in the documentation points there.

Documentation that once accurately described your system can become misleading over time. Custody systems evolve. People add wallets, consolidate funds, change devices, switch services. Each change creates a potential gap between what the documentation says and what is actually true.

Your heir has no way to know the documentation is outdated. They treat it as authoritative because you wrote it. They follow it precisely and arrive at the wrong conclusion. The documentation's existence creates false confidence that prevents further investigation.

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When Assumptions Replace Explicit Information

You assume your wife knows the PIN to your phone. You assume your son understands that the hardware wallet needs a seed phrase to restore. You assume your executor will figure out that the email account contains important information about exchange accounts.

Assumptions fill gaps in your mental model. You do not write down what you assume people already know. The problem is that your assumptions about what other people know are often wrong.

Your wife does not know your phone PIN—you always unlocked it yourself when she needed to see something. Your son has heard of seed phrases but has never actually restored a wallet. Your executor has no idea that email is relevant to cryptocurrency.

Every assumption is a potential failure point. The information that feels obvious to you because you live with it every day is not obvious to someone encountering your system for the first time after your death.

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When Multiple People Hold Partial Knowledge

You told your daughter about your Coinbase account. You told your son about your hardware wallet. You told your wife about your seed phrase backup. You did not tell any of them about the others.

Each person knows one piece. None of them knows that the other pieces exist. They may not even know to ask each other.

After you die, your daughter logs into Coinbase and sees a balance. She assumes this is all the Bitcoin. Your son finds the hardware wallet and cannot figure out how to access it. He does not know about the seed phrase backup. Your wife finds the seed phrase but does not know what it goes with. She does not know about the hardware wallet.

The information is complete in aggregate but inaccessible in practice. No one has enough context to recognize that the pieces fit together or how to assemble them.

This is different from deliberate security distribution, where pieces are intentionally separated with a plan for reassembly. This is accidental fragmentation, where pieces are separated without any mechanism for bringing them back together.

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What Coherence Looks Like

An inheritance arrangement holds together when someone who has never seen it before can, without your help, discover what exists, understand how to access it, and execute the steps required to move the funds.

This is a high bar. It requires that information be stored where it will be found. It requires that information be understandable to someone without your background knowledge. It requires that the pieces connect to each other in a way that a newcomer can follow. It requires that the documentation reflect the current state of the system, not a past version.

Coherence is not a property of any single document or artifact. It is an emergent property of how everything fits together. A seed phrase in a safe is one element. Instructions that explain what the seed phrase is for are another element. A map that tells someone the safe exists and where to find the key is another element. All of these elements, working together, produce coherence. Any one of them missing can break the chain.

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Summary

A Bitcoin inheritance arrangement holds together or falls apart based on structural properties: whether information can be found, whether it can be understood, whether the pieces connect, whether the documentation matches reality, and whether assumptions have been replaced with explicit articulation.

Intent does not determine outcome. You may intend for your Bitcoin to reach your heirs. Whether it actually does depends on whether the system you leave behind is coherent enough to be operated by someone who is not you.

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System Context

Examining Bitcoin Custody Under Stress

When Bitcoin Wallet Software Deprecated

Bitcoin Key Loss vs Key Theft

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