Many people secure their cryptocurrency in ways that make it inaccessible in the event of their death. Some say to teach the person you want to inherit about crypto and how to access your crypto, but this isn’t an option for everyone, particularly as that access can be used against you. I wouldn’t be distributing my private keys or teaching someone to access them while I’m alive. This creates a need to not only pass down keys, but also knowledge about crypto and crypto security.
The Ideal Plan
Based on the above, there are certain aspects that are necessary to properly plan to pass on your crypto. There are also some details that could make things much easier for your heirs.
Required Elements:
- Crypto Knowledge
- Security Maintained
- Crypto Accessible
Optional Elements:
- Assistance
- Specific Instructions
Crypto Knowledge
Crypto currently has a steep learning curve to get into and in the case of the death of the family’s crypto enthusiast, it may be hard for a family to know how to access any value in cryptocurrency. The best case would be to handle teaching loved ones about crypto while you’re alive. Even the basics could prevent your loved ones from getting taken advantage if you meet an untimely demise. If this isn’t possible or you worry that they’ll need a refresher, include information in your estate planning. This can be a binder or a file of links and material on a flash drive, computer, or cloud storage. This is not sensitive information and needs to be easily accessible and referenced.
Security Maintained
Ideally, security is maintained, both while you’re alive by not sharing your private keys, and posthumously for your loved ones to not need to turn over devices for someone to access crypto on their behalf. The best way to figure this out is to list everywhere you have/or could have crypto and how you access it. Exchanges and various wallets, plus their types need to be identified. This is important because the process to access your funds in Bittrex is far different from the process to access your funds in etherdelta. The same can be said about web, desktop, paper, and hardware wallets.
Centralized Exchanges
In the case of centralized exchanges, you’ll want to identify the website, the customer service contact information, and your email address. You don’t want them clicking on a link they Google. The accounts on central exchanges are generally KYC/AML compliant and the contents can be inherited, but the account itself generally can’t be. The customer service teams are responsible for the transfer. This may take time to accomplish but is the legal and proper way to ensure the transfer. The ill-advised method is to note direct access – email and password.
Decentralized Exchanges (Dexes)
Dexes are a whole different beast. There is no central support team to contact in most cases, so you must include exact instructions for accessing your funds on a dex. Each dex functions a little bit differently, so make sure you cover all that you use.
Web Wallets
Treating web wallets like dexes is the best strategy. Provide exact, detailed instructions for each that you use. There are generally support teams for these but they are more technical that customer service. I would not rely on them to ensure your account is accessible to your heirs.
Desktop Wallets
Desktop wallets have a two-fold access issue. Your heir must access your device and your wallet. Provide instructions for both, and make sure you cover each desktop wallet you use. If you invest in altcoins, this can be a significant list by itself.
Paper Wallets
Paper wallets are one of the most secure forms of storage but need to be stored where not physically accessible or vulnerable to spills, fire, and more. They should also be tested before use in case there is a printing error. A waterproof and fireproof safe is a suggested solution, as are safe deposit boxes. You will need to provide instructions for use and security.
Hardware wallets
Hardware wallets are also secure and need to be protected from the dangers that paper wallets do. They’re more convenient in my opinion but have their own learning curve and you’ll need to provide instructions for these as well. A copy of your seed is also a good idea to store away.
Crypto Accessible
This is important because grieving loved ones may not have the capacity to sort through 30-40 places. An organized and detailed list will ease the difficulty of this process. Organize it by location, not by crypto name, and include estimated value. Update this regularly.
Assistance
There are a growing number of cryptocurrency consultants, lawyers, accountants, and other professionals in the cryptocurrency industry. If you work with specific ones it may be worth including their contact information for your heirs to have access to them also. This will be particularly helpful if your heirs have concerns about taxation, need help with technical aspects, or need accurate numbers on what you’ve got.
Specific Instructions
I mean this in a broader sense than the specific access instructions. It may be in the best interest of your heirs to wait for a specific event to cash out, or you may want a portion to go to charity, or for your crypto holdings to be split between multiple people. Make sure you’re including your cryptocurrency in the instructions of your legal documents so your crypto holdings don’t land your estate in probate court or cause contention between your loved ones.
My Ideal Plan (example)
- I’ve taught those close to me about cryptocurrency and created a resource document in case they need a refresher.
- No one has my private keys or passwords. There is a copy of everything organized with instructions and in a safe location that will only become accessible if I die, and only accessible to my heirs.
- I’ve created an organized file that tracks my crypto holdings and would serve as a detailed list in the case of my demise. There is a copy updated monthly in my safe storage location.
- I have identified a crypto professional as a point of contact for my heirs. They are aware they are designated to help if necessary.
- My crypto is included in my overall estate planning and I have logical exit points identified in my file that I use in my trading strategies.
Summary
It can be difficult to plan for your estate but it is particularly important for those who own crypto. Make a plan that includes security, accessibility, knowledge, and potentially, assistance. Include crypto in your overall estate planning paperwork and process.
Follow, Resteem and Upvote! Follow me on Twitter! Have you included crypto in your estate planning? If you haven’t, why not?
This is a worthwhile topic to discuss. And for the current environment I think you've outlined good steps to take.
In the future, I would expect a smart contract to take care of estate planning in all capacities. Something along the lines of the asset owner creating a contract with a specific set of requirements and a recipient(s) to receive assets after proof of death can be confirmed on the blockchain.
To simplify this example, asset owner A wants to will assets to owners B and C. B and C must prove A has died via the blockchain; then and only then are those assets than transported to B and C's respective wallets.
A lot of research needs to be done in this example such as how do you know that a death certificate hasn't been spoofed. But ideally it would be as simple as that.
I was actually discussing this with a friend who is part of Halo Platform. It wouldn't even be that complicated. We figured out a few ways to use a smart contract without being susceptible to a spoofed death certificate. :)
Can you link? Would really like to learn more. My parents are into crypto and this would be super helpful.
No I can't.
Upvoted and resteemed.
Thanks Frank :)
Can you provide any examples of a safe location that will only become accessible if I die?
A fireproof, waterproof safe in your home. A safe deposit box (if you trust them).
Thanks Jason :)
Thanks for this post. It needs to be broadcasted far and wide. Many are not thinking about this. I have trained my son some, but need to more. Thinking about a PDF and short video on thumb drive to be viewed only after my death. Can you elaborate on #4 above. There should be good opportunity for those who know there stuff around the crypto world and various platforms/ wallets.
I provide some people and companies with cryptocurrency consulting services. I've formed relationships with others who do as well and have included the contact information for one in my preparations.