You're skipping over large parts of the things fiat can do and crypto can't. E.g. there are chargebacks for fraud. There's the legal process that can be used by the bank to recover money from the fraudster (maybe not always, but also not "never").
> Wouldn't it be great if there was a technical solution such that there is no ambiguity about what happens to your money?
No, it wouldn't be great, it would be horrible. Real world is messy and hard to encode in a "smart contract". What if the will says something but the law invalidates it? Going through the legal process is a feature not a bug... remember how people complain about e.g. automatic bans that are handled and appealed by robots? How your Google account can be disabled with no recourse, and no explanation from a human? Yeah, that can happen to your grandma's crypto - it doesn't go to the family, and there's no way to appeal that or even find out "why".
For my will I literally enter into a form what I want to happen, but then when I die it'll be down to another human to go through it and manually carry out my instructions.
Chargebacks can be opt-in and escrow is a tutorial for smart contracts. I don't need chargebacks on a cup of coffee, and I've been unable to make a payment due to high chargeback risk - despite me being entirely willing to take on the risk of non-fulfillment.
The fact of the matter is that we have had the ability to create a technical process for executing a will for a long time. Banks allow you to designate a beneficiary who receives your assets after you pass away and that is executed automatically. We do not have to allow people to dispute that, and cryptocurrency does not really add much over such a system -- but we do not want that system because some objections are legitimate and disputes need to be resolved.
> There's an inherent fragility built into cryptocurrencies. If your physical bank notes are damaged, the bank will replace them. If you are defrauded, the bank will reimburse you. If your loved one dies, and you inherit their assets, the bank is legally obliged to give you access.
Damaging bank notes is probably covered by the fed. Fine. But fraud is a real expense. It's just not generally borne directly by the victim. Someone still pays it (normally the bank) but they make up for it by lending out your cash. As for handing over assets to someone that passed away, that's currently done through the legal process. Wouldn't it be great if there was a technical solution such that there is no ambiguity about what happens to your money? Seems like crypto would help there as well