Who Can Legally Act on My Bitcoin If Incapacitated

Legal Authority for Bitcoin During Incapacity

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

Legal Authority and Its Sources

Incapacity arrives without warning. A stroke, an accident, a sudden illness leaves someone unable to manage their own affairs. Bitcoin exists among their assets. The question surfaces: who can legally act on my bitcoin if incapacitated? This question assumes that legal authority translates into practical capability, but these two elements operate in separate domains that may never intersect without deliberate effort to connect them.

This assessment considers how legal authority to act during incapacity differs from technical ability to access bitcoin. Legal documents can grant authority—the right to act on someone's behalf. Technical access requires something different entirely: possession of cryptographic materials that legal documents cannot conjure into existence. The gap between these two requirements creates situations where authority exists but capability does not, leaving bitcoin frozen while legal powers sit unused.

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Legal Authority and Its Sources

Legal authority to act on behalf of an incapacitated person comes from specific documents or court orders. Power of attorney documents grant authority to named agents while the person is still alive but unable to act. Conservatorships or guardianships involve court proceedings that appoint someone to manage affairs when no prior arrangements exist. Trusts may name successor trustees who step into control when the original trustee becomes incapacitated. Each mechanism creates legal standing—the right, recognized by law and institutions, to make decisions and take actions on behalf of another person who cannot act for themselves.

These legal mechanisms developed in a world of institutional assets. Banks recognize power of attorney and release funds accordingly. Brokerages accept trustee documentation and transfer securities. Real estate can be sold when proper authority is demonstrated. The legal system and the institutional system evolved together, creating pathways for authority to translate into action through recognized procedures that both sides understand and accept.

Bitcoin in self-custody exists outside this operational framework entirely. No bank holds it. No brokerage controls it. No institution stands ready to recognize legal documents and respond by releasing assets. The legal authority that unlocks every institutional door finds no door to unlock when it approaches self-custody bitcoin. The authority is genuine and legally valid, but it operates in a domain where validity alone accomplishes nothing without corresponding technical access.

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Technical Access and Its Requirements

Moving bitcoin requires cryptographic signing. This signing requires access to private keys, which are controlled by seed phrases, hardware wallets, PINs, and possibly passphrases. No court order can produce a seed phrase that was never recorded. No power of attorney can unlock a hardware wallet when the PIN is unknown. No conservatorship can recover a passphrase that exists only in the memory of someone who can no longer communicate. Technical requirements do not bend to legal authority because they operate on mathematical principles rather than social agreements.

The person who holds technical access to bitcoin is whoever possesses the necessary materials and knowledge. This might be the bitcoin owner alone. It might be the owner plus a trusted person who was given backup materials. It might be multiple parties in a multisig arrangement. Whoever has the keys has the capability to move the bitcoin, regardless of whether they have legal authority to do so. Conversely, whoever lacks the keys lacks the capability, regardless of how much legal authority they possess.

Technical access was established at the time of custody setup, under circumstances that may bear no relationship to the incapacity scenario now unfolding. Perhaps the owner set up their custody years ago, when incapacity seemed distant and abstract, and gave no one else access because they planned to handle everything themselves. Perhaps they intended to arrange backup access but never completed the task. Perhaps they told someone where materials were stored, but that person has since died or become unreachable. The technical access situation was frozen at some point in the past, and incapacity reveals what that frozen state actually contains.

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The Gap Between Authority and Access

When authority exists but access does not, a characteristic failure pattern emerges. Someone holds a power of attorney naming them as agent with broad powers over the principal's assets. They discover bitcoin exists—perhaps through financial records, tax documents, or simply knowledge that the incapacitated person owned bitcoin. They understand they have legal authority to manage this asset. Then they attempt to exercise that authority and find nothing to act upon. No institution responds to their legal documents. No mechanism exists to convert their authority into movement of the bitcoin.

This gap feels wrong to people encountering it for the first time. Legal authority is supposed to mean something. Courts exist to enforce rights. Documents exist to prove standing. The entire apparatus of law developed precisely to ensure that proper authority translates into proper action. But self-custody bitcoin opted out of this apparatus by design. The same feature that prevents governments and institutions from seizing bitcoin also prevents legally authorized agents from accessing it when access was not separately arranged.

Attempts to bridge this gap through legal action alone tend to fail. An attorney can draft documents asserting authority. A court can issue orders confirming that authority. Neither the documents nor the orders can produce cryptographic keys. The blockchain does not read court filings. The hardware wallet does not accept legal briefs. The person with authority confronts a system that simply does not accept authority as an input. It accepts valid cryptographic signatures and nothing else.

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Incapacity Differs from Death

Incapacity creates complications that death does not. When someone dies, estate administration eventually runs its course. Probate may take time, but it resolves. Assets pass to heirs. The deceased person's wishes, as expressed in a will or determined by intestacy rules, eventually govern outcomes. Incapacity offers no such resolution timeline because the person remains alive, unable to act but also unable to pass on their assets through death-based mechanisms.

During incapacity, the person's wishes matter in a different way. They did not intend to have their bitcoin frozen indefinitely. They may have strong preferences about how their assets should be managed during this period—paying for their care, supporting their family, maintaining their financial stability. These preferences cannot be expressed or updated while incapacity persists. Whatever arrangements existed at the moment incapacity began are the arrangements that govern, whether or not they match what the person would want now.

Incapacity can also be uncertain in duration and degree. Some people recover partially or fully. Some decline further. Some remain in ambiguous states where their capacity fluctuates or is contested. This uncertainty complicates planning around the bitcoin because no one knows how long the situation will persist or whether the person might eventually be able to provide access themselves. Decisions that make sense for permanent incapacity may be premature for temporary incapacity, but distinguishing between these scenarios in real time is often impossible.

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Who Might Have Authority

Several categories of people might hold legal authority to act on bitcoin during incapacity, depending on what arrangements exist. An agent under a durable power of attorney receives authority through that document, assuming the document was properly executed and grants sufficient powers. The durability feature means the power of attorney remains effective even after the principal becomes incapacitated—a critical distinction from ordinary powers of attorney that terminate upon incapacity.

Successor trustees step into authority when trust documents specify that incapacity of the original trustee triggers their succession. If bitcoin was held in a trust and the trust names someone to take over upon the grantor's or trustee's incapacity, that person acquires legal authority over trust assets including the bitcoin. The trust document defines when incapacity occurs, what evidence proves it, and who assumes control.

Court-appointed conservators or guardians receive authority through judicial proceedings when no prior arrangements exist or when existing arrangements prove inadequate. Courts can appoint someone to manage the incapacitated person's financial affairs, which would include any bitcoin they own. This authority comes with court oversight and reporting requirements, but it is genuine legal authority recognized by the legal system. Whether it accomplishes anything depends entirely on whether technical access accompanies it.

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Scenarios of Authority Without Access

Consider a situation where someone becomes incapacitated suddenly—a car accident leaves them in a coma. Their spouse holds power of attorney and immediately begins managing affairs: contacting banks, paying bills, handling insurance claims. Institutions respond to the power of attorney as expected. Then the spouse discovers a hardware wallet in a desk drawer. The device requires a PIN the spouse does not know. The seed phrase backup, if one exists, is nowhere to be found. The spouse has complete legal authority and zero technical capability. The bitcoin sits visible but untouchable.

Another scenario involves a trust arrangement that seemed complete. The trust owns the bitcoin. Successor trustees are named. Incapacity provisions are detailed. When the grantor becomes incapacitated, the successor trustee steps into their role smoothly, equipped with full legal authority over all trust assets. But the predecessor trustee—now incapacitated—never shared how to actually access the bitcoin. The keys are in their head, or in a location they never disclosed, or protected by information they alone possessed. The trust structure is legally perfect and operationally useless.

A third scenario features a court-appointed conservator dealing with no prior planning at all. The incapacitated person made no arrangements for anyone to access their bitcoin. The conservator, authorized by the court to manage all financial affairs, researches what bitcoin is and how it works. They discover that accessing it requires information the incapacitated person never shared with anyone. They can document the bitcoin's existence for the conservatorship inventory. They can report it as an asset to the court. They cannot move it, spend it, or convert it to pay for the person's care. The legal process worked exactly as designed; the bitcoin remains frozen anyway.

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Why the Gap Persists

This gap between authority and access persists because bitcoin's design treats them as fundamentally separate concerns. Authority is a social construct—a shared agreement among people and institutions about who has the right to do what. Access is a technical fact—possession of information that enables action regardless of rights. Traditional assets merge these concepts because institutions mediate between them: the institution recognizes authority and then provides access. Self-custody removes the mediating institution, leaving authority and access disconnected.

People planning for incapacity often do not recognize this disconnection because their experience with other assets does not prepare them for it. They create power of attorney documents that have always worked for banking, real estate, and investments. They establish trusts that have always governed asset transfers effectively. These familiar tools address the authority problem completely and the access problem not at all. The tools are not defective; they were simply designed for a different kind of asset.

Bridging the gap requires addressing both problems separately and then connecting them. Authority still needs to be established through appropriate legal documents. Access needs to be arranged through sharing of technical materials with the person who will hold that authority. Neither solves the problem alone. Authority without access produces the frozen scenarios described above. Access without authority creates different problems—someone who can move bitcoin but has no legal right to do so. Only when both exist in the same hands does the system function as intended during incapacity.

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Summary

The question of who can legally act on bitcoin during incapacity points to a fundamental gap between legal authority and technical access. Legal mechanisms exist to grant authority: powers of attorney, trusts, conservatorships. These mechanisms developed for institutional assets and work effectively in that context. Self-custody bitcoin does not reside in institutions and does not respond to legal authority unless technical access accompanies it.

When someone becomes incapacitated, whatever arrangements existed at that moment determine what is possible. If technical access was shared with the person who holds legal authority, the system can function. If access was not shared, authority accomplishes nothing. The bitcoin remains frozen regardless of how many legal documents exist or how clearly they grant powers to act.

Incapacity differs from death in ways that compound these problems—no resolution timeline, uncertain duration, ongoing needs that the frozen bitcoin cannot address. The gap between authority and access is not a bug in either system. It reflects the fundamental difference between social agreements about rights and mathematical requirements for control. Both systems work as designed; they simply do not connect automatically.

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System Context

Examining Bitcoin Custody Under Stress

The Authority-Access Gap in Bitcoin Custody

Legal Authority vs Technical Access Bitcoin as Parallel Systems

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