No-one likes to think about dying, but equally many of us want the peace of mind knowing that our estate is in good order when the time comes.
Good order means ensuring that all the right documents are in place and that details of our assets are clearly documented for heirs and executors.
For most people this means your bank accounts, savings, shares and any other investments that make up your portfolio.
But as cryptocurrency ownership grows exponentially it is increasingly becoming part people’s estates, presenting unique challenges for those inheriting cryptoassets.
This means that if own crypto you will need to clearly document your holdings and ensure you – securely – pass on any private keys to avoid your coins being lost forever.
So, here’s a guide to some of the steps you can take to ensure this doesn’t happen:
Keep an up-to-date Will and letter of wishes
The first and most obvious thing to do is to make a Will.
In the UK, if you don’t have a Will you’ll die intestate meaning the Government decides how your assets are distributed, and they may not go to who you would have preferred.
You may choose to mention your cryptoassets here, but do not include specific details of your holding as a Will becomes a matter of public record, meaning anyone can obtain a copy.
It’s a good idea to write as separate – and private – letter of wishes for your loved ones.
Here, you could detail your cryptoassets and where they’re stored, such as an exchange or hardware wallet.
Write and idiot’s guide to accessing your crypto
Create a clear, easy to follow document listing details of all your crypto assets and how to access them.
You may wish to include logins, private keys and recovery phrases – all vital to gaining access to crypto – but be extremely careful where you store this information.
Do not keep it on your computer or on any device connected to the internet.
Assume you are writing for someone who has never heard of Bitcoin. Create a step-by-step guide to everything they need to do, including websites they may need to visit.
If you’ve stored crypto on a hardware wallet for safekeeping, such as a Trezor, then write down a clear set of instructions on how to use it.
Again, assume the person you’re writing for someone who has no knowledge of crypto or how to use hardware wallets.
Paper & metal wallets
This is where your private key is written on a piece of paper for safekeeping. There is also metal version on the market as well which can protect against fire and other acts of nature.
Ensure that your executor or loved one knows where to find this and store it somewhere safe! If your private key is lost, so are you cryptoassets.
Again, create a very simple step-by-step guide on what to do with this information.
Some people keep details of their cryptoassets and private keys on a USB stick.
This is not advisable because at some point you’ll have to plug the stick into a computer to access the information.
And the chances are, that device will be online, creating the possibility of a hacker accessing your private information.
If you do choose this route, make sure you include a comprehensive guide to keeping the device secure for your executor.
Dead man’s switch
This is an emerging solution which features an automated piece of software that sends routine emails to the user and waits for a reply.
If the reply isn’t received within a predetermined period, it will then automatically scour public records for a death certificate relating to the user.
If the user has died, their cryptoassets are transferred from their wallet to a nominated account.
At the time of writing this technology was still in its early stages and not widely available.
Third-party AI keyholders
There are number of third-party AI services that are emerging which will manage your private keys in the event of death.
Again, it’s crucial that you leave clear instructions about how to access these details for executors to follow.
Like any service where you’re passing control of your private crypto keys, approach with extreme caution and do your research before signing up.
Adam is the founder of The Crypto Adviser which offers experts guides and reviews on all things related to Bitcoin and cryptocurrency.
Adam is Diploma for Financial Advisers (DipFA) Level 4 qualified, a Member of the London Institute of Banking and Finance (MLIBF), and has worked for many years as a journalist and PR consultant, having studied with the National Council for the Training of Journalists (NCTJ).