We’ve talked before about why Solo Ager estate plans must be frictionless. Same goes for a bitcoin inheritance plan, even more so.
The best inheritance plan is the one that actually exists
In general, 60 to 70% of people have no will or estate plan at all. Why don’t they have an estate plan?
44% is due to procrastination – “I have time; I’ll get to it later.”
25% of people are not sure where to start.
13% say that it is too expensive to create an estate plan.
In the New York City area, the cost to set up an estate plan with an attorney ranges from $1,500 to $4,000. Especially if you don’t have the liquid funds available, it’s an understandable hesitation.
Making an inheritance plan is a series of tough decisions
We only have a limited amount of brain power for decision-making per day! Creating an inheritance plan uses a lot of that decision-making fuel. For example, do you start with a lawyer or do it yourself? If you choose a lawyer, do you know a good lawyer? Now you’re spending time and energy asking for referrals and setting up consultations. If you choose to make the plan yourself, what software will you use?
Once you decide on hiring an attorney vs. a DIY plan, do you want a will or do you want a will and a trust? There are many legal decisions to make as you develop your plan.
Next, who will inherit your estate? With a nuclear family, this will probably be straightforward. But, perhaps you want to add charities, friends, etc. You will need to decide what amount to give to each beneficiary.
Who will be your executor or trustee? If you have minor children, who will be their guardians?
These are just the major things you have to think about when planning your estate. Once you make it through one decision, you have to move on to the next. It’s easy to see why so many people put off making an estate plan.
Bitcoin custody adds more decisions to your inheritance plan
How will you hold your Bitcoin while you are alive to make it easier to transfer upon your death? How (technically) will that custody transfer to your executor when you die? There are technical logistics that you don’t have to worry about with legacy assets.
Will transfer actually work? From my conversations with various bitcoiners, many seem a bit overconfident that their bitcoin inheritance plan will work seamlessly. In our experience, even common assets, like stocks and bank accounts, have problems transferring easily, let alone something like bitcoin, where your heirs are probably very unfamiliar.
Have you compromised your existing security too much to make your plan happen when you die (meaning, is it a bit too easy to make a transaction while you’re alive)? On the flip side, have you compromised your existing convenience too much to make your plan as secure as possible (meaning, is it a pain to make a simple transaction now)?
Who in your life understands bitcoin custody, probate, and taxes well enough to be your executor? Chances are that you don’t know someone knowledgeable in all of those areas. This is where we can help as professional executors.
Most importantly, remember, the best inheritance plan is one that actually exists. You have to have something, or else you have nothing!
To learn more about probate, check out my book, “How Probate Works,” available on Amazon. It doesn’t address bitcoin specifically, but it can help you understand what’s involved in administering an estate. Hopefully soon, I will complete my bitcoin inheritance book!