E244 Who Should Have the Original Will?
So, you finally did it: you made and signed your will.
E218 Bitcoin Letter of Instruction to Heirs
Every bitcoin estate plan must include a simple, easy-to-understand letter of instruction to your heirs or executor. If you don’t, all of your hard-hoarded bitcoin may disappear.
E214 Transferring Bitcoin Upon Death
Let’s review a real-world case study of a client’s plan to transfer his bitcoin upon his death. This looks like an elegant solution, so let us know if you see any major red flags!
Cloned wallets and sharded seeds
The client’s plan focused on clone wallets and sharded seeds.
The plan starts with two clone hardware wallets. A hardware wallet is like a minicomputer that plugs into your USB drive, but it is not fully connected to the internet or the computer. It keeps your private keys/secret codes offline while allowing you to interact in online transactions. When you clone your hardware wallet, you make duplicates of it. Each clone wallet is password protected.
The client gives one clone wallet to his executor. He gives the other clone wallet to his sister (who is an heir). Neither the executor nor the sister has the PIN to the wallet. They just have the device. They will receive the PIN upon the client’s death either by dead man’s switch or from another heir.
Then the client shards his seed phrase. Remember the seed phrase is 12 or 24 secret words that you can use to recover your cryptocurrency if something happens to your hardware wallet.
The client has divided his 12 words into two chunks of 6. The client gives half of those seed words to his executor. The executor won’t receive the second half of the words until the client dies.
Upon death, the executor will receive the PIN code to his clone wallet and then he has access to the cryptocurrency. The back-up plan is that the sister receives her PIN code from another heir or dead man’s switch. Then she has access to the cryptocurrency. In the event of hardware failure, the executor will receive the second half of the seed words to recover the hardware wallet.
Risk of theft vs catastrophic loss
Plans need to balance risk of theft vs. risk of catastrophic loss. You are twice as likely to lose your cryptocurrency than to have a hacker steal it from you. It is more complicated than memorizing a PIN code. You don’t have the safeguard of calling a bank to reset your PIN. It is also easy to over-complicate things and make it too difficult for your heirs. There might be security holes in your plan, but are they big enough to merit increasing risk of catastrophic loss?
Redundancy, and balancing risks
Using multiple hardware wallets is tangible and understandable. A hardware wallet is a device, and it needs a code to access the cryptocurrency. If hardware wallets fail, then you can always shard the seed phrase.
By using cloned wallets, there is a slight increase for the risk of theft. In this case, the client accepted the increased risk of theft to decrease the chance of his cryptocurrency disappearing upon his death.
While this plan isn’t perfect, I like it. Please pick it apart – I want to hear your feedback. We might not be hard-core “bitcoin-ers,” but we do know what happens when people die! Being an executor is not easy. If you add cryptocurrency to the executor’s job, it’s definitely harder. It will be interesting to learn more as people die holding cryptocurrency.
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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E213 What if Witnesses to Will Cannot be Found?
We’ve talked about mistakes when choosing the witnesses to your will (5 Mistakes With DIY Wills and Witnesses), but what actually happens if you can’t track down a witness during the probate process?
E211 Use a Personal Property Memorandum to Bequeath your Stuff
Many people make this mistake with personal property when creating their estate plan: They include a long laundry list of the tiniest items in their official, legal will.
E210 How to Administer a Bitcoin Trust
In Episode 206 we talked about how to set up a trust. This time, we’ll talk about how to manage a bitcoin trust as the trustee.
E201 Should I Name a Trust as Beneficiary of My Accounts?
Another question that we receive often is “should I name a trust as beneficiary of my estate?” In a recent case, Rhonda reached out to us, because she wanted the benefits of a trust (avoid probate, reduce chance of a “will contest,” etc.), but she was not quite ready for the headache of a full-blown trust setup. In her particular situation, naming her trust as beneficiary makes sense. If you are considering this doing this, here are a few things you should consider.
E193 What Happens When Your Partner Dies and You’re Not Married?
It’s not uncommon for couples to forgo marriage. Instead, they choose to live their lives together as partners and significant others. But what does that mean for the other person when their partner dies?
E188 Erica’s Court-Appointed Stranger
Erica Loberg shares the story of her mom’s court-appointed stranger, and what she would to do differently to avoid a court-appointed conservator.
Erica first shared her full story at NextAvenue.org.
About Erica’s mom
When all this happened, Erica’s mom was 70 years old. She was not diagnosed with dementia, technically. But for years Erica’s dad had handled everything. So when he passed away, it created a vacuum for mom’s care.
How did she end up with a court-appointed guardian?
Unfortunately, Erica’s family was divided on how best to care for mom. So their uncle (mom’s brother) stepped in and hired his own attorney. And that attorney recommended an independent, court-appointed conservator to have legal authority over Erica’s mom.
Once that lawyer got the ball rolling, there wasn’t much discussion or debate. This was happening. And before they could get their bearings, Erica and her sisters were in court.
What was so bad about mom’s court-appointed stranger?
First, he was a total stranger. Neither mom, nor Erica, nor any of the family members had ever met this person. And even after he received his court-appointment, he only met Erica’s mom once.
Second, Erica discovered that he had a history of complaints. She spoke with the families of several of his past conservatees, and they had one message: keep him away if you can!
As for his actions:
- He isolated mom from her daughters
- He changed mom’s phone number several times to hinder contact
- He cleaned out mom’s house, disposing of all family and sentimental items
- He ordered renovations to the house, not for mom’s benefit, but to generate rental income or sell (once he moved mom to a nursing home)
- The court-appointed stranger was able to coerce mom into all these steps with the constant threat that he would move her into a nursing home, otherwise
How did Erica finally get rid of the conservator?
Erica contacted every agency and authority she could think of: from the court, to the police, and even the FBI. Finally, she had a breakthrough when she complained to the county Probate Investigator’s Office.
After some struggle and negotiations, they were finally able to rid themselves of mom’s nightmare court-appointed stranged.
What Erica would do differently?
- Discuss with mom her wishes and intentions. And not just when a crisis is at hand. Do it way before mom or dad is on the verge of losing capacity
- Help mom and dad make a will or estate plan
- The rest of family needs to keep their act together. Conflicts will only get everyone dragged into court,
More about Erica
Read the full version of Erica’s story at NextAvenue.org.
Erica is also an author, and published a book of poetry inspired by her experience titled “I’m Not Playing”
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E187 3 Best Free DIY Will Software
Many folks who ask me to be their executor, make their will using do-it-yourself methods. So here are some tips on how to maximize the chances your estate plan will actually work.
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