Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes. — Benjamin Franklin, 1789

There is no shortage of how much time many people spend annually planning how to pay less tax. But how much time does the average person spend ensuring their estate is in proper order upon their death? It turns out that less than one-third of Americans (32%) say they have a will or another type of estate planning document. Not only does this affect your loved ones, but also the crypto market in general.

I wrote previously about five methods that Bitcoin can be lost. Among those, Method #5 is:

Not sharing the above information (passwords/private keys, wallet recovery seed phrase) with another person before you die or become incapacitated

To ensure your crypto does not get lost, you should draft a will with a lawyer, and identify who you would like to receive your crypto assets after your die. In your will, you will need to instruct your executor which individual(s) you are leaving your crypto to, the amounts given, and explain the process of how to execute your wishes.

Crypto saved in a hot or cold wallet

One of the authors who I follow, Bitcoindelight, wrote a 4-part series about How to store your crypto. If your crypto is saved in a wallet, you should store your password and recovery seed phrase in a minimum of two secure locations if possible (safety boxes in two separate banks for instance). 

Among other things, your will should contain information on where your wallet password(s) and recovery seed phrase(s) are stored.

Crypto saved on an exchange or lending platform

While it is discouraged most of the time, there are still a number of reasons why many individuals do not have exclusive access to their private keys:

• Crypto may reside on an exchange, such as Coinbase, because some individuals do not want the responsibility of maintaining a password required for a crypto wallet, or because they wish to stake their crypto via the exchange.
• Crypto may be stored on a lending platform, such as BlockFi.

If your crypto assets fall into one of the above situations, there may be additional steps required to ensure they can be turned over to another individual after your death.

Coinbase

In the case of Coinbase, they have a process that will allow an individual to gain access to a deceased family member's account. While a beneficiary cannot be named directly within a Coinbase account, they would follow standard ownership transfer procedures per their contractual terms if one was named while working with your estate planning attorney.

BlockFi

Currently BlockFi doesn't have the ability to add Beneficiaries, however they can store that information on the backend until that feature is released. This form needs to be completed, and BlockFi will announce when a Beneficiary can be added directly your account. It's notable that you will likely need to re-add any beneficiaries to your account when that happens.

This goes without saying, but please let your family member know that you have named them a beneficiary in order for them to know they will need to contact your crypto custodians such as Coinbase or BlockFi when the time comes.

Although planning events after your death is never pleasant, it's an important step in your life. The last thing you should want is for your crypto assets to become lost forever.

Thanks for reading, and stay safe!

Cover art by Eduardo RS from Pixabay