E283 5 Stages of Probating Bitcoin
Probating bitcoin is more complicated than usual probate. We’ve discussed the 3 stages of probate generally. Here, we’ll describe some specifics of the process for when the decedent owned bitcoin.
E278 How to Probate a Bitcoin Miner’s Estate
How do you probate a Bitcoin miner’s estate? We’ll cover: what a miner looks like, whether to keep the miner running through probate, and how miners will probably have yet another wallet to figure out.
E258 Bitcoin Estate Planning for 2 of 3 Multisig
As the default recommended multisig quorum, there must be lots of 2 of 3 multisig holders out there. So let’s make sure your 2 of 3 multisig also works as well upon your death as it does while you’re alive.
Three things to think about: who has your third key; access to keys 1 and 2 upon death; and consider a 2 of 4 multisig.
E256 Multisig Keys for Bitcoin Inheritance Planning
If you have a multisig, who should hold keys as part of your bitcoin inheritance plan? Multisig is a great way to reduce risk of theft or catastrophic loss by reducing single points of failure. Michael Flaxman does a nice job explaining why to use multisig.
E253 3 Steps When a Bitcoin Owner Dies
What do you do if someone dies owning Bitcoin, but you have NO IDEA how Bitcoin works? How do you recover the Bitcoin, so it doesn’t get lost forever? Right now, Bitcoin is delicately owned, meaning the tools of ownership are still being ironed out. It’s still very easy to have an accidental catastrophic loss.
E250 What Does Taproot Mean for Bitcoin Estate Planning?
Jimmy Song recently published a great article about what the Taproot upgrade could be for Bitcoin estate planning (video here). Taproot is the recent upgrade to the Bitcoin protocol, and we’ll do our best to outline Jimmy’s article in layman’s and through the lens of an experienced executor.
E245 What Happens to Your Crypto on Exchanges When You Die
What happens to your crypto on exchanges when you die?
E232 How Crypto Transfers at Death
Let’s answer a crypto question from Haille: How does crypto transfer on death?
E227 First Impression of Casa Beneficiary Account
Casa is really becoming a leader in Bitcoin estate planning and custody solutions. They recently launched their version of beneficiary designations for cryptocurrency, and I’m really hopeful about this. I think this is something that needs to be in place, because there is always the risk of catastrophic loss. So, let’s take a look.
How Casa Beneficiary works
You start by naming a beneficiary on your cryptocurrency, and he or she gets 2 keys in 3 of 5 multisig.
Casa uses 3 of 5 multisig as their custody solution for preventing the risk of catastrophic loss and preventing theft.
What is multisig? 3 of 5 means there are 5 keys to your cryptocurrency, and at any time, you need 3 of those 5 keys to take action (such as buying/selling).
In this scenario: you have 3 keys, your attorney or Casa has 1, and your beneficiary has 2.
No one has access while you’re alive. When you die, your beneficiary shows proof of death to Casa (or your attorney) and your beneficiary combines her 2 keys with that key. With 3 keys, the cryptocurrency can move to the beneficiary.
Think about it like you’re dealing with a bank or brokerage company. The beneficiary goes to the bank with a claim form and a death certificate. Similarly, the beneficiary goes to Casa with a claim form and death certificate to prove the person died.
Pros
(1) It avoids probate (for better or worse). “Better” meaning that the surrogate’s court won’t have to deal with cryptocurrency. “Worse” meaning that you’d be avoiding checks and balances (such as the ability for a child to contest if disinherited wrongly, or someone taking advantage of you by making himself your beneficiary). While probate is a pain, it is there for a reason: to make sure people get what they’re supposed to get.
(2) Casa’s multisig solution, in general, is an excellent reduction of risk of theft and catastrophic loss. I still think there needs to be a better version of it, but it does do what it’s supposed to do. They will probably work out all the kinks, and this is just one step in the evolutionary process.
(3) Casa will consult with and “handhold” the beneficiary (such as key custody, how to get access). Will your beneficiary even know what to do with the 2 keys from Casa?
Cons
(1) The beneficiary still must maintain 2 keys, and the beneficiary may not even know what they are. It’s unusual for a family to have two people who know how to deal with cryptocurrency. Casa tries to mitigate this by consulting with the beneficiary to make sure she knows what to do. I’m not sure how this will work, as my experience shows that handholding usually just isn’t enough in a sticky situation.
(2) It’s a bit expensive. To be eligible for this service, you must have a Casa Diamond account, which is $5,000 a year. The cost of an estate planning attorney is about $2,000 to $10,000 every four or five years. If you have a lot of cryptocurrency, it may be worth it since other benefits are included in the account.
(3) Beneficiary designations are not always ideal, as you may recall from a recent blog on illiquid estates.
It will be interesting to see how Casa’s multisig solution evolves. Owning cryptocurrency means you will need an estate plan. Every time I sit down to think about writing a bitcoin estate planning book, something new happens! However, if we get a lot of positive feedback, I will consider writing a short guide that includes high-level principals that don’t seem to change. Would you be interested? Let us know in the comments.
If you want to learn more about probate in general, please check out my book, “How Probate Works.” I don’t have a Bitcoin chapter yet, but you will get a sense of how the probate process applies to your Bitcoin situation.
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E222 Beneficiary Designations for Cryptocurrency Exchanges
One of our podcast listeners asked: “Is it possible to open a Binance account that is funded by a trust account? If so, does that by default make that particular Binance account a trust account with the beneficiaries named on the bank account that is used for funding it?”
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