Executor Doesn't Understand Bitcoin

Executor Comprehension Gaps for Custody Systems

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

The Nature of the Comprehension Gap

An executor is appointed to administer an estate. The estate includes bitcoin. The executor doesn't understand bitcoin—not the technology, not the custody mechanics, not the access procedures. This lack of understanding creates a specific gap between the executor's responsibilities and their ability to fulfill them. The role assumes competence that may not exist.

What follows covers how executor incomprehension manifests in estate administration. When the executor doesn't understand bitcoin, the usual patterns of estate handling encounter obstacles. The asset exists. The authority exists. The understanding does not. What happens in this gap shapes outcomes for heirs and the estate.

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The Nature of the Comprehension Gap

Executors typically understand the assets they administer. Bank accounts work in familiar ways. Real estate follows known procedures. Securities transfer through established channels. The executor may not be an expert, but they grasp the basics—what the asset is, where it lives, how to access it, how to transfer it.

Bitcoin breaks this pattern. The executor may not understand what a seed phrase is or why it matters. They may not grasp the relationship between private keys and ownership. They may not comprehend why legal authority does not automatically produce access. The concepts are foreign, and their relationships to each other are unclear.

This gap is not merely ignorance of details. It is absence of the conceptual framework needed to understand even basic explanations. When told that a seed phrase controls the bitcoin, the executor may not understand what "controls" means in this context. When shown a hardware wallet, they may not understand why it differs from a USB drive. The foundation for understanding is missing.

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How Incomprehension Affects Assessment

An executor who does not understand bitcoin cannot accurately assess its situation. They cannot determine whether the estate's bitcoin is accessible or inaccessible. They cannot evaluate whether documentation is complete or incomplete. They cannot judge whether materials found represent everything needed or only partial pieces.

Assessment requires understanding what you are looking at. Finding a piece of paper with twenty-four words means nothing to someone who does not know what a seed phrase is. Finding a small electronic device means nothing to someone who does not recognize a hardware wallet. The materials may be present while the executor remains unaware of their significance.

Conversely, the executor may overestimate what they have. Finding bitcoin-related documents may create confidence that access is straightforward. The executor assumes that paperwork equals capability, as it does with traditional assets. Only later does the gap between documentation and access become apparent—if it becomes apparent at all.

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The Risk of Wrong Action

An executor who does not understand bitcoin may take actions that cause harm. They may discard materials they do not recognize as important. A piece of paper with random words may look like trash. A small device without obvious purpose may seem disposable. The executor cannot protect what they do not recognize.

Wrong action extends to attempted access. An executor who finds a hardware wallet may attempt to unlock it by guessing PINs. Each failed attempt consumes one of a limited number of tries. Eventually, the device wipes itself as a security measure. The executor's well-intentioned efforts produce permanent loss.

Distribution decisions may also suffer from incomprehension. The executor may sell bitcoin at the wrong time, through the wrong channel, or in the wrong way. They may distribute access materials without understanding that distribution means shared control. Actions taken in ignorance create consequences that comprehension might have prevented.

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The Risk of Inaction

Incomprehension also produces paralysis. An executor who does not understand bitcoin may simply avoid dealing with it. Other estate assets are more familiar and more tractable. The bitcoin sits untouched while the executor handles what they know how to handle.

Delay creates its own risks. Bitcoin's value can change dramatically during probate. Deadlines for tax filings arrive whether the executor understands the asset or not. Heirs expecting inheritance wait while the executor struggles to comprehend what they have been given responsibility for.

Avoidance may not be visible to others. The executor appears to be working through estate matters. The bitcoin simply never comes up because the executor does not know how to address it. This invisible neglect can continue until someone else asks about the bitcoin or until the executor admits they have no idea what to do with it.

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Seeking Help from Insufficient Sources

An executor who recognizes their incomprehension may seek help. The question is whether help is available and adequate. General estate attorneys may share the executor's unfamiliarity with bitcoin. Accountants may understand tax treatment without understanding access mechanics. The executor's professional network may lack relevant expertise.

Help from unqualified sources introduces new risks. Advice based on incomplete understanding may be worse than no advice. A professional who treats bitcoin like a bank account may guide the executor toward actions that make sense for bank accounts and not for bitcoin. The framework mismatch persists even when help is sought.

Finding qualified help takes time and knowledge. The executor must recognize what kind of expertise is needed, identify sources of that expertise, and evaluate whether specific helpers actually possess it. These steps require a baseline understanding that the executor may lack. Seeking help becomes its own obstacle when you do not know what you need help with.

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Documentation That Assumes Understanding

The deceased may have left documentation for their bitcoin. This documentation often assumes the reader has baseline knowledge. Terms are used without definition. Steps are described without explaining why they matter. The documentation was written by someone who understood bitcoin for someone they expected would also understand.

An executor without that baseline knowledge reads the documentation and cannot follow it. The words are English, but the meaning does not come through. "Restore the wallet using the seed phrase" presumes knowledge of what restoration means, what a wallet is in this context, and why the seed phrase accomplishes restoration. None of this is obvious to the uninitiated.

The executor may not even recognize their failure to understand. They read the instructions, think they follow them, and discover they have misunderstood. Or they recognize they do not understand and have no way to bridge the gap. The documentation exists but does not communicate because it was not written for this reader.

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The Dismissal Response

Some executors respond to incomprehension with dismissal. What they do not understand, they treat as unimportant. Bitcoin becomes something the deceased played with, not a serious asset. This dismissal may be explicit or may simply manifest as deprioritization.

Dismissal has consequences when the bitcoin holds significant value. The executor who treats it as unimportant may not allocate time or resources to understanding it. Heirs who expect to inherit it find the executor unresponsive. The asset slips through estate administration because no one took it seriously.

The dismissal response is often rooted in discomfort. The executor does not understand, and rather than sit with that discomfort, they reframe the situation. The bitcoin is not important anyway. The deceased probably lost access themselves. There is probably nothing there. These rationalizations protect the executor's sense of competence while abandoning the asset.

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Communication Failures with Heirs

Heirs may ask the executor about bitcoin. If the executor does not understand bitcoin, they cannot provide meaningful updates. They cannot explain what the situation is, what obstacles exist, or what timeline to expect. Their responses will be vague because their understanding is vague.

This creates friction between executors and heirs. Heirs may suspect the executor of incompetence or bad faith when the real issue is incomprehension. The executor is doing their best within their limitations; the limitations are simply severe. Neither party may recognize this as the core problem.

Communication about bitcoin requires shared concepts. If the executor cannot explain what a seed phrase is, they cannot explain that the seed phrase is missing. If they cannot explain what a passphrase does, they cannot explain that the passphrase is unknown. The vocabulary for discussing the problem does not exist in the executor's working language.

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When Understanding Arrives Too Late

Sometimes executors eventually develop understanding, but by then damage has occurred. The hardware wallet was wiped through failed PIN attempts before the executor understood the stakes. Materials were discarded before their significance was recognized. Time was lost before the urgency was grasped.

Understanding that arrives too late cannot undo actions taken in ignorance. The executor now comprehends what they did not comprehend before, and that comprehension includes awareness of irreversible mistakes. The learning curve has costs that cannot be recovered.

Late understanding also reveals the magnitude of what was at risk. The executor who finally grasps what seed phrases do now understands what was lost when they threw away that piece of paper with random words. The understanding brings clarity and regret simultaneously.

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The Structural Problem

The executor role assumes general competence with asset types. Executors are expected to handle bank accounts, securities, real estate, and personal property. Bitcoin was not part of this assumed competence when the role was designed. The role's requirements did not anticipate this asset class.

This structural mismatch means that naming an executor does not ensure bitcoin competence. A perfectly capable executor for traditional assets may be entirely incapable with bitcoin. The naming decision may not have considered bitcoin at all, or may have assumed that general competence would extend to any asset type.

The structure of estate administration does not accommodate this gap. Courts appoint executors and expect them to administer estates. No mechanism exists to verify bitcoin competence. No standard process addresses executor education. The system assumes capabilities that may not exist and provides no correction when they are absent.

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Conclusion

When the executor doesn't understand bitcoin, a gap opens between responsibility and capability. The executor has authority to administer the asset but lacks the comprehension to do so effectively. This gap manifests as failed assessment, wrong action, harmful inaction, inadequate help-seeking, and communication breakdown.

The executor's incomprehension is not a personal failing but a structural mismatch. The role assumes familiarity with asset types that did not include bitcoin when the role was defined. Traditional competence does not transfer to this new asset class.

When an executor doesn't understand bitcoin, the consequences fall on the estate and its heirs. The executor struggles with something they do not grasp. The bitcoin waits for handling that may never adequately arrive. The gap between what the executor knows and what the asset requires shapes everything that follows.

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System Context

Examining Bitcoin Custody Under Stress

Bitcoin Executor Education and Knowledge Gaps

Executor Authority vs Bitcoin Signer

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