Don’t Lose Your Bitcoin – A Guide to Crypto and NFT Inheritance Platforms

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Are you one of the growing number of people who’s invested in crypto or NFTs?

If you are, at some point you might have wondered what would happen to your cryptocurrency portfolio if you died suddenly and unexpectedly without making provisions to pass on your assets.

Without a plan in place your digital wealth could be lost forever, especially if you’ve taken precautions and implemented tight security to protect your coins, such as using a hardware wallet.

Even for those of you who want to be prepared, an added complication is that most financial advisers are still reluctant to discuss crypto with clients.

In the UK more than 3 million people own cryptocurrency or NFTs, a figure which is growing all the time meaning inheritance planning has never been more important, especially when you consider that a staggering 4 million Bitcoins are believed to have been lost forever because of accidents and user error.

Take a moment to think whether you’re loved ones could easily access your digital assets if you were to die suddenly.

Do they have access to your passwords, digital keys and recovery mnemonics? Can they access your hardware or paper wallet if you have one? Do they have the technical know-how to move your crypto to an exchange and sell it? Are they aware of the tax implications?

If you’ve answered ‘no’ to these questions read on to discover some of the solutions on offer.

Using a Will and/or Letter of Wishes to pass on your cryptocurrency

As a first step you can add details of your crypto to your Will like any other asset, and include exact details in a private document, often called a letter of wishes, kept in a safe place that your beneficiaries know about.

Note: Never put specific details in your actual Will as this can potentially become a public document which anyone has the right to access, whereas a letter of wishes remains private.

You cryptocurrency will remain stored on the blockchain for as long as the blockchain is in existence no matter what happens to you.

Keeping your crypto on an exchange

You could keep all of your crypto on an exchange, such as Coinbase, and ensure you give a copy of your login details to your loved ones.

In the event of your untimely death, your beneficiaries can notify the exchange with the correct evidence (in the UK, possibly a Grant of Probate if required for your estate) and they’ll grant access to your funds in a similar way that a bank or building society would.

But a lot of people are wary about keeping significant sums on exchanges.

One of the reasons is that there have been a number of high profile hacks, although platforms such as Coinbase have numerous protections against this, including cold storage.

Another concern is that by keeping your funds on an exchange you’ve effectively handed over control of your private keys and, as the saying goes, ‘not your keys, not your crypto’.

Exchanges such as Coinbase are incredibly safe these days and they even offer a £150,000 guarantee scheme against malicious actors stealing your coins. But nonetheless, people are still keen on cold wallet solutions.

Another issue is that exchanges such as Coinbase don’t allow customers to directly name a beneficiary within their account as say a pension provider does.

They do however have a useful guide for people who’ve inherited a Coinbase account listing the steps people need to take to access the crypto.

The documents they require include:

• Death Certificate
• Last Will and Testament
• Grant of Probate/Letter of Administration
• Government issued photo ID
• Letter signed by the executor(s)

Tech solutions for crypto inheritance planning

Inheriti

There are several startups that are specifically targeting the problem of crypto inheritance.

One of these is Inheriti, developed by Safe Haven, which claims to be the world’s fist 100% decentralised inheritance platform for storing and transferring crypto or other digital assets such as Non-Fungible Tokens (NFTs) when you die.

Inheriti puts security at the forefront of its proposition, which involves using a combination of blockchain, cold storage and cloud technology to create a fully decentralised inheritance tool, which can be used for any digital data, not just crypto.

There are different solutions available depending on your needs which can protect anything from social media accounts and passwords to crypto private keys and seed phrases.

Inheriti also features a dead man’s switch which can be set up to triggered within hours of your untimely death.

Those who aren’t technically minded may find it difficult to get a handle on Inheriti as it involves three stages to create a protection plan.

They are:

• Creating a Comet Wallet – a special wallet for the decentralised web.
• Purchasing and storing 10,000 SHA tokens on your wallet.
• Buying a SafeKey decentralised cold-storage solution for each beneficiary.

Casa

Casa bills itself as the world’s first personal key manager and is aimed specifically at securing Bitcoin for your beneficiaries.

The system uses multiple keys to give your crypto an extra layer of security, each of which can be held on different devices, such as a hardware wallet or smartphone.

These devices can then be stored across multiple locations which adds a further layer of protection against thieves or natural disasters.

Casa extends this service to a specific Bitcoin Inheritance Protocol which can run in tandem with your existing estate plan but does not require the services of solicitors or financial advisers.

This comes at a pretty hefty price though – to get the inheritance and estate planning functionality you’ll need to subscribe to the ‘Diamond’ service level at $5,000 per annum.

There are cheaper service levels available, starting at $120 for multisig security, which could be useful if you’re looking at simply beefing up your existing security.

Casa also offers a completely free Bitcoin wallet for those with a small amount of crypto. It includes automatic encrypted backups to your iCloud or Google Drive.

Letter of wishes

I touched on this earlier, but a letter of wishes is really something you should consider writing sooner rather than later, whether it be for crypto or anything else.

In terms of crypto, simply leaving detailed instructions on how to access your digital assets may be enough to enable your loved ones to gain access to your coins without have to pay for expensive subscriptions.

Make sure it’s in a very safe place and that your loved ones (whom you obviously trust!) know exactly where it is.

You could always do a trial run with them to ensure they understand the technology and are able to login in to your crypto wallets.

Image if you were to suddenly die and your loved ones had no idea how to access your crypto, or maybe that it even existed?!

Do a quick search online and you’ll find many stories where this has happened.

Frustratingly, some people know their loved one had a significant crypto holding but cannot access it because they were never passed the crucial information needed to do so.

Adding your crypto holdings to your letter of wishes can be as simple as mentioning you have an account with an exchange and the amount of crypto you hold there.

It’s slightly more complicated if you’re using a non-custodial wallet, such as Trust Wallet, as the process of accessing the crypto is a bit more technical and you’ll need to leave more detailed information.

But either way, simply making your loved ones aware that you hold crypto, if you haven’t done so already, and giving instructions on how to access it can make the different between them benefiting from your investment decisions or potentially losing the funds forever.

Related link: What happens to my cryptoassets when I die?

Crypto asset recovery

There are a growing number of firms that specialise in recovering crypto in circumstances where some of the crucial information needed to access a wallet has been lost.

Even if you think you’ll never be able to access your or a loved one’s crypto, don’t give up hope.

There have been some high profile success stories where these companies have managed to recover huge Bitcoin fortunes through a variety of investigative and forensic methods.

These companies often work on a percentage basis meaning they don’t charge anything up front but will take a slice of any crypto they manage to recover.

If you find yourself needing to use one of these companies, make sure you do your research first to ensure they’re offering a legitimate service and won’t abscond with your coins.

Related links:

• Do I have to pay Inheritance Tax on my crypto?
• How to reduce and avoid a Bitcoin Inheritance Tax liability

A note on hardware wallets

Hardware wallets, especially the air-gapped kind, can be a great way of adding an extra layer of protection to your crypto assets.

Using them may seem daunting to crypto beginners but they’re actually quite straight forward once you get the hang of it.

A hardware wallet is definitely worth considering if you want to move your crypto off an exchange and store it somewhere that’s secure yet easy to access.

Just make sure you give your loved one step-by-step instructions on how to access your coins and maybe get them to use it once or twice to familiarise them with the technology.

It’s an inexpensive way of protecting your assets, with a simple wallet from Trezor costing around £50 or so with no ongoing subscription costs.