Multisig Heir Coordination Problems

Heir Coordination Failures in Multisig Setups

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

The Cooperation Assumption

Some multisig configurations distribute keys among multiple heirs. A holder might give different keys to different children, to a spouse and a sibling, or to various trusted parties. This distribution intends to prevent any single person from acting alone. The concern about multisig heir coordination problems arises because requiring cooperation assumes cooperation will be available.

Human relationships are unpredictable over time. People who cooperate today may not cooperate after the holder's death. Heirs who are reachable now may become unreachable later. The coordination requirement embedded in the architecture depends on social conditions that the holder cannot control or guarantee.

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The Cooperation Assumption

Multisig architectures encode assumptions about future behavior. A 2-of-3 setup assumes that at least two key holders will be willing and able to work together when needed. This assumption seems reasonable at setup time but may not hold at execution time.

Death changes family dynamics. The holder's presence often maintained equilibrium among family members. Their absence removes that stabilizing influence. Conflicts suppressed during the holder's lifetime may surface during estate settlement. Cooperation that seemed natural before becomes contentious after.

Years between setup and death allow relationships to evolve. Siblings who were close grow apart. In-laws enter the picture. Divorces, remarriages, and estrangements reshape the family structure. Key holders chosen during one configuration of relationships may be poorly suited for a different configuration.

The holder cannot update key distribution after death. Whatever coordination requirements were encoded at setup persist regardless of how circumstances change. A design that made sense for the family that existed becomes a burden for the family that remains.

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Availability Failures

Key holders may be unavailable when coordination is needed. Travel, illness, or incapacity can prevent participation. A key holder in a hospital, on a remote trip, or dealing with their own crisis may not be reachable when other heirs need their signature.

Death among key holders creates gaps. If one of three key holders has also died, a 2-of-3 setup effectively becomes 2-of-2. Both remaining parties must cooperate; either can block the other. The redundancy built into the threshold evaporates when key holders themselves become unavailable.

Geographic distance complicates coordination. Key holders spread across different cities, states, or countries face logistical barriers to working together. Shipping hardware wallets, coordinating across time zones, and managing international complications all slow the process and create failure points.

Contact information may be outdated. The phone number the holder recorded years ago no longer works. The email address bounces. The physical address has changed. Heirs who need to reach other key holders may not be able to find them.

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Refusal to Cooperate

Key holders may deliberately refuse to participate. Estranged family members may withhold cooperation as a form of conflict. Disagreements about how the inheritance should be distributed can motivate one party to block another. The key becomes a weapon in family disputes.

Financial disputes drive non-cooperation. If heirs disagree about their respective shares, the key holder who feels shortchanged may refuse to sign until their demands are met. What was intended as security architecture becomes leverage in negotiation. The funds remain frozen while disputes play out.

Resentment from other life events carries over. A sibling passed over for other inheritance, a family member who felt mistreated by the deceased, or a relative harboring long-standing grievances may express those feelings through non-cooperation. Emotional dynamics override practical considerations.

Strategic behavior emerges when power is uneven. A key holder who realizes they can block others has bargaining power they may not have possessed otherwise. Even family members who would cooperate in normal circumstances may exploit the leverage the architecture gives them.

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Disagreement About Execution

Heirs may agree to cooperate in principle but disagree about how to proceed. Disputes about when to move the bitcoin, where to send it, and who should control it after recovery can prevent action even when all parties are willing.

Timing disagreements stall progress. One heir wants to recover immediately; another wants to wait for tax reasons; a third wants legal advice first. Without consensus, the recovery does not happen. The bitcoin sits frozen while heirs debate.

Distribution mechanics create conflict. How exactly will the bitcoin be divided? Who receives first? Who bears transaction fees? What if market price changes during the process? Each logistical question can become a battleground where cooperation breaks down.

Trust deficits block intermediate steps. Coordinating signatures often requires one party to initiate the transaction. Other heirs may not trust the initiating party to distribute fairly afterward. Fear of being cheated prevents even the first steps of a multi-step process.

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Legal System Limitations

Courts can resolve many estate disputes. They can order asset distribution, compel cooperation, and settle disagreements about inheritance. But courts have limited power over cryptographic systems that do not recognize their authority.

A court order to release bitcoin does not produce a signature. The key holder must actually sign. If they refuse, contempt proceedings can apply pressure, but pressure may not produce cooperation. A person willing to accept legal consequences can still block access indefinitely.

Jurisdictional issues multiply complexity. Key holders in different jurisdictions may be subject to different courts. Coordinating legal action across multiple jurisdictions adds cost, time, and uncertainty. The legal remedy, even if available, may be impractical.

Legal processes take time. While courts deliberate, the funds remain frozen. Estate timelines, tax deadlines, and heir needs do not pause for litigation. The legal remedy arrives too late to serve immediate purposes, even if it eventually resolves the dispute.

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Technical Barriers to Workarounds

When human coordination fails, technical workarounds are limited. The threshold requirement is cryptographic. Two signatures cannot be forged. One signature cannot become two. The mathematics does not care about family dynamics or legal orders.

Lost keys compound coordination problems. If a non-cooperative key holder has lost their key, even changed willingness does not help. The key that would enable cooperation no longer exists. The combination of non-cooperation and key loss creates permanent deadlock.

No reset mechanism exists. The holder who created the setup cannot be consulted. The architecture cannot be renegotiated. Whatever threshold was chosen at creation persists. The only way through is satisfying that threshold, which requires the cooperation that has failed.

Partial information does not help. Knowing where another key is stored but not having authorized access to it does not enable recovery. Breaking into a safe deposit box to retrieve someone else's key introduces legal and practical complications that may exceed the value at stake.

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Time Pressure Amplification

Estate settlement operates on timelines. Tax filings have deadlines. Beneficiaries have expectations. Executors have duties. Coordination problems that might resolve given unlimited time become crises when time is constrained.

Urgency increases conflict. When pressure mounts, patience decreases. Heirs who might have negotiated calmly become adversarial under deadline stress. The time pressure that demands resolution makes resolution harder to achieve.

Opportunities expire while coordination fails. Bitcoin prices change. Life circumstances evolve. What the funds could have accomplished at one point becomes impossible at another. Delay has real costs even if access is eventually achieved.

Exhaustion leads to abandonment. After months or years of failed coordination attempts, heirs may simply give up. The effort no longer seems worth the aggravation. Bitcoin that could have been recovered with sufficient persistence instead remains permanently inaccessible.

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Structural Factors in Architecture Design

How the holder designed the multisig affects coordination failure modes. Higher thresholds require more cooperation. A 3-of-5 setup needs more parties to agree than a 2-of-3 setup. Each additional required participant increases coordination risk.

Key holder selection at setup time determines who must cooperate later. Choosing parties based on current relationships assumes those relationships persist. Choosing parties based on role rather than relationship—such as professional trustees—changes the coordination dynamics but introduces other concerns.

No design eliminates coordination risk entirely. Every multi-key architecture requires multiple parties to act. The holder can influence who those parties are and what threshold applies, but cannot guarantee future cooperation. The architecture depends on human behavior it cannot control.

Simplicity of coordination and security trade off against each other. Lower thresholds require less coordination but provide less protection during life. Higher thresholds provide more protection but demand more cooperation after death. The holder chooses a balance without knowing which risk will actually materialize.

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Summary

Multisig heir coordination problems occur when key holders cannot or will not cooperate to execute recovery. Availability failures, deliberate refusal, disagreement about execution, and legal system limitations all contribute to coordination breakdown. Technical architecture cannot compel human cooperation.

Time pressure amplifies coordination failures. Estate timelines demand action while disputes remain unresolved. Urgency increases conflict rather than resolving it. What might eventually be worked out given patience becomes permanent deadlock under deadline stress.

The holder who distributed keys among heirs created dependencies on relationships and cooperation they could not guarantee. The architecture that prevented any single party from acting alone equally prevents action when parties cannot work together. Security during life and accessibility after death pull in opposite directions, with coordination failure lying between them.

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System Context

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