In 2018, the 30-year old CEO of QuadrigaCX, Canada’s largest cryptocurrency exchange, unexpectedly died. And it so happened that Gerard Cotten was the only person with access to the customer’s cryptocurrency wallets. Unfortunately, more than $135 Mn dollars of bitcoin was left stranded and inaccessible to the company.
And this is just one such story.
According to this BBC article, almost $30Bn worth bitcoin has been lost forever on the blockchain. And this number only increases daily. Fortunately, there are some steps you can take to ensure that your cryptocurrency is not lost, today or even after you’re gone. All you need to do is include your Cryptocurrency in your Digital Estate Plan.
Here are a few steps to help you get started –
Create a list of your cryptocurrencies
Make a list of all your cryptocurrencies and the devices used to purchase them. Since cryptocurrencies work on the principle of Private and Public keys, it is very important to list the device used to purchase your cryptocurrency.
Manage your sensitive data
List your usernames, passphrases, PINs and any other information required to access your cryptocurrency. Use a crypto wallet to secure this information and segregate the data into desired categories for ease of access.
Add instructions on what happens to them when you pass on
This is the most important part. It is not just important that your loved ones have access to your cryptocurrency wallets, but that they also know what to do with them. Leave clear instructions on what you wish to do with all your cryptocurrency.
Choose a frequency period that suits you best. Use this time to update your instructions letter and crypto wallet with the revised data. Keeping this data updated in real time ensures that your cryptocurrency is not lost.
While this may guide you to create a will for your cryptocurrency, it is also necessary to consider various other factors: what if your executors are not familiar with cryptocurrency? How do you keep your cryptocurrency out of probate?
To help your executor, you can suggest they consult an attorney with cryptocurrency experience. And to keep probate out of the picture, you could consider having a trust for your cryptocurrency. If you decide on this, however, it is recommended that you meet an estate planning attorney.