Because the user experience is much closer to mainstream banking or stock investing. Hardcore crypto enthusiasts prefer to hold in their own wallets and private key. Many scoff at the larger exchanges because the exchange not you holds the private keys to your crypto. And they make for large and attractive targets for hackers. Holding your crypto on a large exchange is most like a mainstream brokerage account.
With a traditional brokerage account, you have lots of estate planning options:. These are great because your account gets paid directly to your beneficiary, and skips probate court but over-relying on beneficiary designations is a mistake. Another way to skip probate court is to place your accounts into a trust, which avoids probate. Coinbase, Bianance, nor Kraken only allow individual account owners.
No trusts, or even LLCs. This estate planning document is the most familiar and common. The good news is the process is the same for collecting from a cryptocurrency exchange. Cryptocurrency is sometimes called digital cash. And if you hold your crypto in your own wallet and private keys, instead of on an exchange, cash may be the best comparison for estate planning purposes. You would never leave piles of cash simply lying out in the open, Why not? Because any passerby would simply take it, and there would be no proof that it was ever yours.
What if you never tell anyone where you hid your stash of cash. Your heirs may sell the house, without realizing the treasure buried in the backyard or hidden in the couch cushions. Now imagine you can own millions of dollars on something as small as a USB stick, or even a scrap of paper. Probate is a hectic, grieving time, so this happens WAY more frequently than you might imagine. Private keys have one more risk: they must not be exposed or revealed. You can show someone your pile of cash, so long as after show-and-tell you lock them safely away.
Some examples:. Write it In your Will. Anyone who has seen it can access your cryptocurrency. And after death, your will is a public document that passes through the hands of many court clerks, before becoming a public record! Store in your safe deposit box. Give it to your attorney or trusted family member for safekeeping. They may lose your keys, or worse, accidentally reveal them.
Yes, hardcore private key-holders have a much bigger challenge. Luckily, there are ok options, which should improve with time. They need to be looking for it! How about dividing it up? Now, even if any one of them loses or forgets their keys, the other two have enough to assemble the full private key. Looks like this approach or some variant could work, but sounds complicated to implement, right?
The good folks at Casa recently launched their solution to the private keys problem: Casa Covenant. So, for example, 3 of your signatures could belong to your estate attorney, your executor, and Casa the company. Upon your death, those 3 of 6 could authorize access to your crypto. But during your life, keyholders such as Casa and your attorney would not grant unauthorized larcenous access, since they are public and liable entities.
This is an admirable first stab at solving the cryptocurrency estate planning puzzle. But as with most first attempts, it still has some work to do. As an experienced executor and estate attorney, I immediately see some drawbacks with Casa Covenant. Second, multisig places the keyholders in a quasi-custodian role, which comes with risks and responsibilities. A couple of examples:.
Keyholders may not want to bear all this risk and responsibility. 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. 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. 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.
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. 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. 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.
All posts. Newcomers' Community. Steem Venezuela. Comunidad Latina. Steem POD Team. Explore communities…. The Ideal Plan Based on the above, there are certain aspects that are necessary to properly plan to pass on your crypto. Decentralized Exchanges Dexes Dexes are a whole different beast. Web Wallets Treating web wallets like dexes is the best strategy. Desktop Wallets Desktop wallets have a two-fold access issue. 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.
Hardware wallets Hardware wallets are also secure and need to be protected from the dangers that paper wallets do. Crypto Accessible This is important because grieving loved ones may not have the capacity to sort through places. Assistance There are a growing number of cryptocurrency consultants, lawyers, accountants, and other professionals in the cryptocurrency industry. Specific Instructions I mean this in a broader sense than the specific access instructions.
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. 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. Follow, Resteem and Upvote!