Crypto Asset LawFamily LawInformation Technology LawInheritance LawWhat Happens to Crypto Assets Stored in a Cold Wallet in the Event of Death?

There is no question of a crypto asset held in a cold wallet ceasing to exist in legal terms upon the death of the testator. The asset remains registered at addresses on the blockchain. However, from the perspective of inheritance law, two distinct elements must be distinguished from one another:

• The crypto asset itself,
• The private key or seed phrase that enables control over this asset.

The fact that the cold wallet, as a physical device, forms part of the estate does not mean that the crypto assets within the wallet can actually be used by the heirs. In most cases, the hardware wallet is not the private key itself, but a medium that provides access to the key or uses it securely. If the seed phrase is unknown, the transfer of the device to the heirs may be, from an economic perspective, of little or no value.

The fundamental issue under Turkish law is not that the crypto asset exists in a ‘legal vacuum’. The real uncertainty lies in: how the crypto asset is to be identified within the estate, to whom and by what legal procedure the private key is to be handed over, how the technical access of a single heir is to be restricted in the case of joint ownership, and how the blockchain transaction will be reflected in the internal relationships amongst the heirs.

General Legal Framework: Where Do Crypto Assets Stand in the Estate?

A crypto asset is an asset included in the estate

Under the Turkish Civil Code, succession commences upon the death of the testator. The estate comprises the rights, claims and economic values within the testator’s assets. To the extent that they represent economic value, crypto-assets must also be included in the assets of the estate.

Under Article 3 of the Capital Markets Law No. 6362, following the amendment introduced by Law No. 7518, a crypto asset is defined as: as an intangible asset that can be created and stored using distributed ledger technology or similar technology, distributed via digital networks, and capable of representing value or rights. This definition establishes that a crypto-asset is not a tangible object, but rather an element of the estate that carries economic value.

A crypto asset is visible at a specific address on the blockchain. The private key, on the other hand, is the cryptographic information that grants the authority to transfer funds via that address. Therefore, it cannot be said that the private key constitutes the estate itself. The private key is the access element that enables the use or transfer of the crypto asset included in the estate.

Determination of the estate and protective measures

Under Article 589 of the Turkish Civil Code, the magistrate of the deceased’s place of residence may, upon request or on their own initiative, take the necessary measures to ensure the protection of the estate’s assets and their transfer to the rightful beneficiaries. These measures include the inventorying and sealing of the estate’s assets, the official administration of the estate, and the opening of wills.

does not produce the same result as the transfer of possession of the crypto-assets in question. Article 763 of the Turkish Civil Code (TMK) takes the transfer of possession as the basis for the transfer of ownership of movable property. However, economic control over a crypto-asset depends more on the ability to use the private key than on physical control of the device.

The legal implication here is the determination that the device forms part of the estate; however, it must also be established that access to the digital assets represented by the device is not yet possible. A request to the court for the creation of a private key or the generation of access information that does not technically exist. In this context, an ‘estate determination action’ is, in practice, usually brought before the Magistrates’ Court in the deceased’s place of residence. The claim is not limited solely to the identification of a house, vehicle, bank account or securities. Hardware wallets, the location of the wallet, relevant addresses, exchange accounts, transaction records, computers and mobile phones, backup tools and documents related to the crypto assets may also be included within the scope of the determination.

A blockchain scan may be carried out to determine the amount of the crypto asset. However, merely demonstrating that a blockchain address belongs to the deceased may not be sufficient. The deceased’s control over the address, the purchase record of the wallet, the location of the device, exchange transfer history, bank transactions, electronic correspondence, tax or accounting records and witness statements must all be assessed together.

Electronic data may constitute evidence under the Code of Civil Procedure.

Scenario 1: Seed Phrase Unknown

Following the testator’s death, a hardware wallet is found in a drawer. The device is operational; however, the PIN code and seed phrase are unknown. The family is aware that the device contains crypto assets; however, they do not know which addresses are used on which networks.

What is included in the estate?

In this case, the hardware wallet is included in the estate as a physical chattel. It could be argued that the crypto assets within the wallet also belong to the estate. However, the amount and accessibility of the assets constitute a separate issue of proof.

It is not possible to request the blockchain records when the device is handed over to the heirs.

What evidence can the court consider?

The following evidence may be of significance before the Magistrates’ Court:

• The physical presence of the hardware wallet,
• The purchase invoice or delivery records for the wallet,
• Wallet applications on the deceased’s computers and mobile phones,
• Transfer records from exchange accounts to the cold wallet,
• Blockchain addresses and transaction history,
• Emails, messages and notes,
• Witness statements,
• Expert analysis,
• Bank transactions and payment records relating to wallet purchases.

However, if the seed phrase cannot be located, the expert can, in most cases, only identify the device and potential addresses. Reaching the conclusion that ‘assets exist’ in blockchain terms does not imply that authorisation to transfer them has been obtained.

Scenario 2: The Seed Phrase Is Held by an Heir, but There Are No Records

In the second scenario, one of the heirs knows the seed phrase or claims that the deceased had previously given it to them. However, there is no will, written deed of transfer, message or any other record.

Can the heir make a direct transfer?

Technically, they can. By importing the seed phrase into a wallet, they can send the assets to another address. However, technical capability is not the same as legal authority.

If there are multiple heirs, a joint tenancy of the estate arises upon the death of the testator. Pursuant to Article 640 of the Turkish Civil Code, the heirs are in a joint tenancy encompassing all the rights and obligations of the estate until the estate is divided. The heirs hold the estate jointly and, as a general rule, exercise their rights over the estate collectively.

Consequently, a sole heir transferring a crypto asset to their own address using the seed phrase may be regarded as acting unilaterally in respect of the estate without the consent of the other heirs or valid authority to act on their behalf.

The fact that the transaction is technically finalised on the blockchain does not automatically render it lawful from the perspective of the estate. The other heirs may demand the return of the transferred value to the estate, its inclusion in the distribution account, or compensation for any loss incurred.

Furthermore, the use of a seed phrase may, depending on the specific circumstances of the case, give rise to criminal law claims. Article 160 of the Turkish Penal Code regulates the disposal of property—which has ceased to be in the owner’s possession due to loss or has been acquired by mistake—as if one were the owner without returning it; the appointment of a representative may be requested. This representative may play a significant role in safeguarding the crypto-asset, transferring it to a secure address, determining its value, or managing it up to the point of distribution.

However, the representative’s sole use of the private key does not confer unlimited authority. The scope of this authority must be limited by a court order, an agreement amongst the heirs, and the need to safeguard the estate. If a transfer is to be made, the address, amount, network, transaction fee and signature process must be recorded prior to the transaction.

Scenario 3: Seed Phrase Secured with a Notary

In the third scenario, rather than writing the seed phrase explicitly in the will, the testator has deposited it with a notary in a sealed envelope, an encrypted document or a separate storage arrangement.

In accordance with Article 538 of the Turkish Civil Code, a handwritten will may be deposited with a notary, a magistrate or an authorised official, either in an open or sealed form, for safekeeping. Under Articles 60 et seq. of the Notaries Act, notaries are required to safekeep wills submitted to them, whether in open or sealed form. Whether this provision applies directly to a seed phrase or a crypto-asset depends on the technical and legal nature of the specific case; no automatic conclusion can be drawn. However, a person transferring assets in their own name whilst being aware of their status as an heir and the rights of other heirs poses a serious risk in terms of criminal investigations and civil disputes.

The safest approach is not to transfer the assets to a personal wallet controlled by a single heir as the first step upon gaining access to the seed phrase; rather, it is to document the current balance, addresses and transaction history, inform the other heirs and establish a joint management protocol.

Who Has Access Rights in a Joint Inheritance?

Whilst the joint inheritance continues, the fact that a single heir holds de facto control on the grounds that ‘I have the seed phrase’ does not legally mean that they are the sole owner. Technical access is not a document of ownership or proof of an inheritance share.

If the heirs are unable to act jointly, it is possible to request the family court to draw up a record regarding representation in the joint inheritance under Article 640 of the Turkish Civil Code.

This method reduces the likelihood of the seed phrase being seen by a wide circle of people whilst the testator is still alive. However, notarial safekeeping does not imply that the private key has been technically verified or that the wallet’s functionality is guaranteed. The notary is not obliged to technically verify which networks the relevant seed phrase supports, which wallet it creates, or the current balance of the assets it contains.

Following death, the will or the stored document enters a process of handover to and examination by the relevant authorities. For this reason, rather than writing the seed phrase in plain text on the document, it may be more appropriate to store it in encrypted form and to protect the decryption information with a separate security arrangement. However, the location where the decryption key is to be kept, the identity verification of the heirs, and—if there are multiple heirs—the method of shared access must also be regulated.

The Difference Between Assets Held on an Exchange and Those in a Cold Wallet

For assets held on an exchange, there is a specific crypto-asset service provider dealing with the heirs. The platform may contain the account, customer identification details, transaction history, and records of deposits and withdrawals. This facilitates the identification of the estate.

However, the platform will not transfer the account or send the assets to another address based solely on a unilateral declaration by the heir. In practice, platforms generally require documents such as a death certificate, a certificate of inheritance, proof of heir status, the heirs’ identification, a joint request or a court order. Due to KYC and anti-money laundering obligations, additional verification may be required to transfer the customer’s account to the heir or to withdraw assets from the account.

In the case of a cold wallet, however, it is not possible for the platform to carry out transactions or verify the heirs. Transfers on the network are carried out by the person holding the private key. Consequently, whilst a ‘legal access barrier’ is more apparent in an exchange account, a ‘technical access barrier’ or the risk of unauthorised technical access is more prominent in a cold wallet.

Under Law No. 6362, the option of informing crypto-asset service providers and heirs, and the choice between joint administration or a representative appointed by the court, should be considered.

3. Under Article 589 of the Turkish Civil Code, an application should be made to the Magistrates’ Court for the protection and identification of the estate. Hardware wallets, electronic devices, blockchain addresses and related digital records should be included in the application.

4. If there are multiple heirs, a joint administration plan should be established in accordance with Article 640 of the Turkish Civil Code. Technical access, transaction approval, the transfer of assets to a temporary secure address and the sharing of accounts should be set out in writing.

5. For exchange accounts, the platform’s list of required documents must be ascertained in advance. A death certificate, certificate of inheritance, identity documents and, if necessary, a court order must be prepared; applications made to the platform and the responses received must be retained.

Consequently, crypto assets held in a cold wallet may form part of the estate upon the testator’s death. Even if the hardware wallet is physically handed over, access to the digital assets cannot be granted if the private key is unknown. Definitions of seed phrase storage services regulate the relationship between platforms and custodians with regard to customer assets or private keys; however, they do not establish a specific inheritance mechanism that comprehensively governs the post-death access procedure for assets held in the deceased’s own non-custodial cold wallet. This is precisely where the uncertainty lies: the absence of specific procedural rules governing both the inclusion of assets in an estate and the secure, shared use of the private key following death.