You started with a little Bitcoin, then maybe you bought some Ether. Over time your portfolio got more complex as you traded and purchased a variety of alt coins putting them on several different wallets and a number of exchanges. So where is it all? Have you kept track? You might have it all straight in your head, able bounce from desktop wallet to exchange to hardware wallet easily. Or maybe all you have is that little bit of Bitcoin, maybe you’re still thinking about buying some. Sound familiar?
Suddenly your teenager walks in the room and you think… what if something happens to me? She doesn’t know what half of these assets are, let alone how to access any of them. You know you should do something about it but the process seems complicated and no one really likes to think about their own demise (and besides, it’s time for dinner).
A will that includes digital assets has two main elements: the legal and the technical. The legal side is your will. It tells your executor how much of your crypto you want to leave to each person, while the technical side tells the executor where to find the crypto and how to access it.
Creating a reliable and complete will, even with a cryptocurrency component, doesn’t have to be complex! Cryptocurrency is so unique it can even be a fun process. We like to think of it like creating a treasure map for your loved ones. We’ve broken down the process into simple steps that will ensure your assets are all accounted for.
This week we’re looking at the technical planning side. The next blog in this series will cover the legal considerations when including your digital estate in your will.
Overall, your beneficiaries will need to know what crypto you own, where it is kept and how to access it. The key with it all is to keep things simple!
Step 1: Spruce up your security
Keeping your crypto safe with proper key and password management is, well… key.
A password manager, like LastPass, Dashlane or Keepass, stores all your passwords so all you need to do is remember the password to the manager. It can also provide you with clever suggestions for new passwords so you’re not using the name of your dog as your super secret code across multiple sites. For your digital estate, a password manager combines convenience with security and lets you direct your beneficiaries to the one password that rules them all.
If you’re keeping your private keys on bits of paper hidden around the house, it’s going to make it very difficult for your beneficiaries to find them all. Some people find placing keys and master passwords in a safety deposit box or fireproof home safe the best alternative at the moment. In the future, we will have solid blockchain methods for key and password management. The Wakefields Tech Team is in conversations with developers regarding this and other methods to provide our clients with a secure alternative where they do not need to trust a 3rd party with their private details.
Step 2: Create an inventory
This can be a simple chart stating the type of coin, where it is kept and how it is accessed. Leave out details like coin amounts. You’ll want to keep this simple so that updating it is easy. For example:
It will also be helpful if you’ve been keeping your transactions up to date using coin tracking software, such as Cointracking.info, Delta or NZ based CryptFolio. Let your beneficiaries know this in the next step.
Step 3: The Treasure Map
Now your beneficiaries need to know how to access your coins. Keep in mind the level of technical understanding they may or may not have.
For every wallet and exchange, write down from start to finish, how you access it. Do you use your laptop? Is there a password for the laptop? If so, where is that password located? Do you use 2 factor authentication (2FA) (hopefully the answer to this is yes)? Where are the backups to the 2FA kept?
Then test out your directions as if you’ve never accessed your crypto before. Follow them to the letter and fill in any gaps in your map. Test and update this regularly.
Consider if there is anyone who can help your beneficiaries with accessing your crypto and converting it to fiat if necessary. But choose wisely. Directing your beneficiaries to someone for assistance could mean that your private keys are exposed to someone other than the intended recipient. Many people choose to entrust this task to lawyers skilled in the tech space (i.e. – us!). We are bound by fiduciary duties of confidentiality.
Step 4: Link to the Legal Side
You can link the inventory and treasure map to your will by reference. But don’t actually put them in your will. Keep them separate and in a secure location. If you have written your will with your lawyer, then they should be able to keep your technical instructions secure for you.
Keep an eye out for the launch of Wakefields’ Treasure Map feature for anyone needing a digital asset friendly will. This will streamline the instruction process with prompts and helpful suggestions and make a complex set of instructions as simple as it can be.