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  • Don’t Lose Your Cryptos When You Die

    by LifeSong Milestones April 20, 2022 5 min read

    Don’t Lose Your Cryptos When You Die - LifeSong Milestones
    Don’t Lose Your Cryptos When You Die

    Your family could lose all your crypto assets when you die if you don’t have a specific plan in place.

    The number of Americans who owned a cryptocurrency has jumped from almost 8% in 2018 and 14.4% in 2019 to 23.16% in 2021 - which is an increase of 61% in two years, according to a survey conducted by Finder. Finder stated that roughly 59.1 million Americans own some form of crypto. According to Research and Markets, the global cryptocurrency market is expected to grow from a value of $1.7 trillion in 2021 to a whopping $32 trillion by 2027. With so much money invested in digital assets, this is all the more reason to ensure it doesn’t get lost on the blockchain forever, simply because owners didn’t have instructions laid out for their loved ones.

    What is Cryptocurrency?

    Most likely, if you are reading this you already know what cryptocurrency is. But for those of you who don’t, cryptocurrency, or crypto, is a form of digital currency. It’s not managed by a centralized authority, like a bank. Crypto transactions live on a blockchain (an immutable public ledger) and are independently verified via a network of computers.

    But because of its decentralized nature, the responsibility of what happens to it after you die is left up to you. If you don’t provide instructions, a record of all your assets, or your seed phrases (the strings of randomly generated numbers and letters that serve as your crypto “passwords”), then your money might not be accessible or given to your beneficiaries.

    Understand that none, not even widely used centralized crypto exchanges, currently have any beneficiary designations for crypto assets, like a transfer on death or payable on death arrangement that banks offer.

    How Do You Responsibly Protect Your Cryptos?

    You can choose to:

  • Include them in your estate plan and have an executor carry out that plan.
  • Have your seed phrases/pins in a safe place with directions and have a trustworthy person who is familiar with cryptos distribute the funds.
  • Set up an immutable Smart Contract to initiate after you die, to have it automatically send your funds to specific beneficiaries’ wallets you created.

  • Include in your Estate Plan

    List the following in your estate plan:

  • All your crypto assets
  • Where are they stored
  • The seed phrases for each/how to access them
  • Name beneficiaries and specify who should get what

  • The seed phrases are your passwords to access everything. Be careful with these. You will want to name an executor, someone who will administer your last will. Consider naming a separate digital executor who can protect, preserve your cryptos, and understand how to transfer your assets to your beneficiaries.

    If you can have just one executor, great. If you have two, one to take care of the cryptos and one to take care of your physical assets, then just make sure to clearly write down their responsibilities in your will to limit confusion.

    Tell your family or beneficiary where your detailed document is kept safe

    Create a detailed document including the four items listed above. Put it in a couple of different places (in case of a fire, flood, etc.) and notify your beneficiary/ies (only those few you trust). Depending on how you store it, is how they will get your cryptos after you pass.

    If your crypto is stored on a centralized exchange like Coinbase, eToro, or Gemini, the beneficiary may be able to contact the exchange to transfer your assets. At a minimum, they will need to provide your death certificate, probate documents (like a copy of your will), proof of identification, and a letter signed by your executor instructing what to do with the crypto coins. Research your specific exchange first to make sure this is possible for the exchange you are using. Also, just a note to the wise, leaving your money on the exchange is not as secure, as it’s never really YOUR money. The exchange, just like a bank, still has control over it, technically owns it, and can lock up your assets for certain reasons. The chance of hacking is possible as well. Make sure you are familiar with the exchange that you leave your cryptos on.  

    - If your crypto is stored on a “hot” wallet, which is a non-physical online wallet, it is more secure than leaving it on the exchange, but it is not unhackable because it is still connected to the internet. However, this is a good option if you want to continue trading with your cryptos often.

    - If your crypto is stored in an offline “cold” wallet, which is a physical storage gadget, this is one of the safest options. You will need to document where it is (ex. a fireproof safe in your closet), what are the private and public keys for each wallet, and any other needed info like a pin code or recovery phrase. Keep in mind that sometimes to be maintained, cold wallets need periodic firmware updates. Reminder, cold physical wallets need to be kept in a safe place. I’ve heard sad stories of people losing their wallets. You don’t want that to be you.

    - If your crypto is stored with an offline paper wallet, which is a physical piece of paper that has your keys to access your tokens, then you will need to let the beneficiary know where it is. Again, keep a couple of copies of this in several different places, in case of a fire, flood, etc. The paper needs to have your seed phrase, recovery phrase, and private/public keys. When you print this paper wallet, the keys are removed from the cryptocurrency network, but the tokens remain. 

    Set Up a Smart Contract

    Smart contracts are extremely cool. They are programs stored on a blockchain that a network of computers executes when certain conditions are met. The reason people like these is because they are absolutely unchangeable. If you set it up so that Benny gets five bitcoins and Sally gets five bitcoins, no one can come in and take more than their allotted amount. The transactions cannot be changed. Only parties who have been granted permission can receive the money.

    To elaborate, you can set it up so that upon death, money from your wallet gets divided into other wallets you've created just for this purpose. You can give someone (a family member or your executor) the instructions on how to launch the contract, and explain which family members get which wallets, along with their private and public keys/seed phrases. All the executor has to do is initiate the contract. When the contract is triggered, the funds are automatically transferred exactly as you instructed. Your beneficiaries can then use the seed phrase/pin/passcodes to access the crypto wallets. 

    This ensures everything goes exactly as you planned after you die. You don’t have to worry about any disputes or changes made after you pass because it’s not possible. Just make sure you have all the private/public key/seed phrases written down correctly so everyone can access their wallets. If you don’t know how to set up a smart contract, then you can hire a developer to do it for you.


    Cryptos are digital money. Due to its decentralized nature, you are responsible for making sure your beneficiaries can access the money after you die. Create a written plan with instructions. Then let an executor/beneficiary(ies), you trust, know about your plan and where the document is stored. This will help to ensure that your money is safely transferred to your loved ones.

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