Here’s a mental exercise to put yourself in the shoes of your bitcoin heirs. The underlying assumption is that your heirs know nothing or know way less than you do about bitcoin. Many bitcoiners have a pretty deep knowledge of bitcoin, self-custody, operational security, and so on. And you may be so deep down the rabbit hole that you forget how daunting and confusing bitcoin can be.
Maybe by the time you pass away, bitcoin knowledge will become more common. But for now, most people don’t know what they’re doing. All of the above topics may as well be a foreign language to your non-bitcoiner heirs. And that’s a useful way to imagine how your heirs will feel. Think as if your bitcoin heirs will probate your estate in a completely foreign country (or planet).
Bitcoin is a different world
Imagine you had to probate an estate in a completely foreign country. Even with translation apps, you really don’t understand the basic language, especially slang and technical jargon. Even the most basic concepts are completely different. For example, opening or closing an “account” doesn’t make sense in that foreign jurisdiction.
This is the type of confusion that your non-bitcoiner heirs may face, even if they have dabbled in bitcoin before. On top of all that, your heirs are dealing with the grief of your passing and other family dynamics.
Now imagine your heirs attempting bitcoin inheritance schemes
Now imagine your heirs attempting to follow a letter of instruction, a treasure map to constitute seed phrase shards, or operating a multisig wallet. If they do something wrong, everything could be lost.
Many of us still have a hard time empathizing, and think “I’ll write such a clear letter of instruction, no problem.” I’m sure your heirs wouldn’t want to be thrown into another planet with just one piece of paper telling them what to do. Remember, you have spent years researching and learning about bitcoin. An instruction letter is going to seem absurd and overwhelming to someone who knows next to nothing about bitcoin, let alone the probate process.
Pretend your uncle tells you he has assets in a foreign country: you don’t speak the language, you don’t know the customs or systems, and at every turn a corrupt bureaucrat or scammer could irrevocably steal everything. But don’t worry, he’s writing a really clear letter explaining everything!
How would you help your heirs with a foreign probate?
Whatever you think they’d need for a foreign probate is how you should help your heirs with their bitcoin inheritance.
You could try connecting them with a friend who is (reasonably) trustworthy and familiar with the foreign situation. You could go a step further by finding and vetting a local lawyer or other professional who your heirs can hire to help.
I know this rubs a lot of bitcoiners the wrong way because these ideas involve relying on a trusted third-party. From the point of view of someone who hates “trusted third-parties,” these suggestions may be a necessary evil to make sure your heirs actually inherit your bitcoin. A trusted third-party can be a back-up plan, but you can’t rely solely on a letter of instruction to a clueless bitcoin heir. That’s just asking for a post-death disaster.
If your heirs can’t administer your bitcoin correctly and it gets lost, everything you worked so hard for is gone.
As you know, I’ve been touring bitcoin communities to get a sense of how it all works. One thing I’ve observed from bitcoiners is their inability to remember how hard it was for them in the beginning. They know so much now, but it’s easy to forget that their heirs are starting from scratch.
Another thing is that people still mess up when dealing with “normal” bank accounts and brokerages during probate. Probate is not an easy process, and adding bitcoin to the mix just makes it that much harder for your executor and heirs.
Probate (can apply to Bitcoin)
Check out my book, “How Probate Works,” to get an understanding of the probate process. Then add all the extra steps your executor and heirs will need to do to administer your bitcoin.
As always, reach out with your questions and feedback!