Private keys, PINs, passphrases, are all Access Details which are the mere requirements for exercising complete control on Cryptocurrency Wallets and Exchange accounts. The privacy of these details is crucial but sharing them becomes a necessity after the demise or incapacitation of the account holder for the financial benefit of the family members.
Disclosing the details of Cryptocurrency accounts through an Estate Plan is the best way to ensure security during life and after death. People often disregard Estate Planning for Cryptocurrency and instead put confidence in makeshift methods because they do not anticipate their bizarre outcomes.
One such story is of Mark Frauenfelder, who bought 7.4 Bitcoin by spending $3000 in January 2016 and stored them in a Web-Based Wallet. By the end of the year, the value of his Bitcoin grew significantly and he transferred funds from a Web-based Wallet to a Hardware Wallet from Trezor and set it up by entering a 24-word passphrase to yield a Private key and a 5 digit Pin Code to unlock the device.
He wrote the passphrase and Pin Code on paper and stored it under his daughter’s pillow which was later thrown into the trash by the cleaning service. Confident in himself, Mark didn’t bother and a week later tried to unlock the Trezor device with the Pin Code he remembered and made a disastrous discovery that, the Pin Code was wrong.
With plenty of trials, including soldering and hypnosis, Mark finally recovered the Pin Code and passphrase but is everybody fortunate enough?
Certainly not! around 20% of Bitcoin is lost due to missing access details. Crypto account owners either lose the passwords themselves or fail to instruct heirs about these accounts resulting in abandoned funds after their demise or incapacitation.
Creating an Estate Plan resolves security and access issues of the Crypto Assets. If you’re worried about the safety of your Cryptocurrency and the financial well-being of your family after you’re gone or could no longer handle financial matters then, following are the 4 steps to include Cryptocurrency in your Estate Plan.
Identify And Create A Record Of Crypto Assets
Start with locating your Cryptocurrency Wallets and Exchange accounts and the devices used to store these accounts, then make a list stating all this information. Make sure no account or device is missed from being in the list.
Secure The Record
Record carrying information of the Cryptocurrency accounts and storage devices should be held somewhere safe and accessible. It’s convenient to use an Online Storage Platform like Clocr to store confidential information that one day needs to be disclosed to benefit your family members, in other words, your Cryptocurrency funds would be easily accessible to your beneficiaries after you’re no more.
Leave Directions For Beneficiaries
Develop a complete guide including technical steps, location of Cryptocurrency accounts and devices, platforms, or applications used for storage for faster access of the accounts by your beneficiaries.
Leave instructions to your beneficiaries about the future you desire for your Crypto funds whether you want to keep them, encash them or exchange them for another Cryptocurrency.
You might also be interested in reading:
Estate Planning and Digital Estate Planning to Manage your Finances
5 Brilliant Ways to Ensure Your Loved Ones’ Peace of Mind
Update Estate Plan
Any changes made to the Cryptocurrency Wallets or accounts should be updated in the Estate Plan. Creating, updating, and maintaining an Estate Plan could seem troublesome to many but covering all the requirements to plan for your Cryptocurrency and other Digital Assets becomes simpler with a Digital Estate Plan.
Digital Estate Planning is all about catering security and legal needs of Digital Assets which are different from tangible assets. With Clocr, you can create and maintain a Digital Estate Plan with ease and protect assets with personal and financial value to you and your family.