Passing Down Bitcoin As An Inheritance Is Pretty Simple
Bitcoin as an inheritance seems like a headache for anyone looking to get into crypto investing. At first thought, you might be wondering how to transfer a decentralized currency that works on cryptography and anonymity as security measures. (Good Question). You’ll soon find out that it’s no different from any other asset, even if there are some additional steps you might have to take.
“If you don’t create a copy of that key and put that key in a safe place where the people that you trust can find it and know what to do with it, then the wealth that you’ve accumulated in crypto is just going to sit there. It just is locked away, stored in its address, and nobody can get to it,”
says Matthew McClintock, an attorney who specializes in cryptocurrency estate planning.
Methods Of Securing Inheritance Keys
To pass down Bitcoin as an inheritance, investors have come up with some inventive ways. Of course, putting the public keys and the private keys in a safe seems to be the go-to for most investors. Then, access to that safe is the only worry left because it still has to be entrusted to someone else.
One of the more elaborate methods is to lock your crypto keys in a multi-layer security protocol. To further explain, this means that you would bury your keys under layers of private keys distributed across a network. Getting even more elaborate is something called the deadman switch. It begins with a hard drive that holds a unique key. Then, that key is shared with a loved one, and when it’s used, the original owner gets a notification. Suppose the owner doesn’t respond to the notification. In that case, it’s assumed they’ve passed away, and information is immediately transferred to the loved one giving them access to the crypto. As you can see, crypto as an inheritance might require more elaborate planning to pass down. But it’s not really any different than anything else.
Who Is The Executor?
When we pass a car or house down as inheritance, it means transferring the ownership. When we pass down an account or assign the legacy of the contents of an account, someone must know the account number and have access to it. These things are typically taken care of by an executor. Assigning an executor, in most cases, is a critical detail.
A lawyer, especially an estate planning attorney, is a costly but often effective way to create and execute a will. It’s a more common method because the position requires a high level of ethics, and that code binds a professional. A family member is also a common choice for assignment as an executor of the will. The owner simply chooses a family member they trust, and they are empowered with the knowledge of the will.
Assigning executors is a traditional problem of ANY inheritance planning. Your Bitcoin will be storing a great deal of value. Whom do you trust? You know what information they will need. Make sure they have that information so that your crypto never gets lost in the blockchain abyss. But make sure you have an executor you could trust with your life because that’s actually the case.
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