Bitcoin Inheritances: A Guide for Heirs and the Not-Yet-Dead
If you've just inherited Bitcoin or other crypto from a loved one, you're about to dive into a whole new world of logistics. Unlike traditional assets, accessing crypto can sometimes feel like searching for buried treasure. Here's what you need to know to navigate the world of crypto inheritances, and how to properly plan for your own.
Locating Crypto Assets After a Death
When someone passes, their digital assets — including crypto — become part of their estate. But unlike bank accounts, there’s no obvious paper trail for crypto. Here’s how to go about finding it:
Look for Clues: Check emails, devices, wallets, and password managers for any trace of crypto. Messages from exchanges like Coinbase, Binance, or Kraken, or apps like Trust Wallet and MetaMask, might point you in the right direction.
Search for Private Keys and Seed Phrases: If the person kept their assets in self-custody (like on a hardware wallet or with a Web3 wallet), you’ll need to track down the private keys or recovery phrases. These might be written down, stored in files, or even hidden in encrypted photos.
Exchanges vs. Self-Custody: If the assets are on an exchange (Coinbase, Binance, etc.), accessing them is more straightforward. You’ll need documents like a death certificate and proof of your relationship to the deceased to access the account. Self-custody assets are trickier, as you’ll need the correct passwords or private keys to access them.
Transferring Assets
Once you locate the crypto, it should be securely transferred to a location controlled by the estate or the inheritor. It’s crucial to do this cautiously:
Test Transactions: Before transferring large amounts, always do a small test transfer to ensure everything works smoothly.
Security: Be careful with unauthorized access. Some exchanges and wallets may consider accessing someone else’s account, even with the right credentials, as a violation of their terms of service.
Estate Planning: Preparing for the Inevitable
For those planning to pass on their crypto wealth, here’s how to ensure it’s easily accessible when the time comes:
Wills Are Not Enough: Simply adding crypto assets to a will is not enough. You must ensure that the person inheriting your assets knows where to find them and how to access them.
Backup Keys: Write down your seed phrases and passwords and store them in a secure location — like a fireproof safe or safety deposit box. Make sure your loved ones know where to find these backups.
Trusts for Crypto: If you hold significant crypto wealth, you may want to consider setting up a trust. A trust ensures your crypto is managed according to your wishes without going through the public probate process. However, it requires legal and financial planning and may cost upwards of $20,000 to set up.
Services to Help
Several services have emerged to help with crypto inheritances:
DGLegacy: Offers a “heartbeat protocol” that monitors social media and sends check-up messages, alerting beneficiaries if something happens to the account holder.
Casa: Provides a service that includes hardware devices and recovery tools for managing crypto inheritance.
InheritIt: A service that allows multiple beneficiaries to share ownership of crypto assets, while keeping the keys secure.
Final Thoughts
Planning for your crypto inheritance is essential, especially if you want your loved ones to benefit from your digital wealth after you’re gone. Whether you use a trust or just make sure to leave clear instructions and backup keys, ensuring your crypto is easy to access will save your heirs a lot of headaches.
Remember, it’s not just about passing on wealth — it’s about making sure your hard-earned crypto doesn’t disappear into the void. Start planning today! 💡
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