Baselayer bitcoin inheritance plan
7184 sats \ 18 comments \ @BTCExecutor 6 Oct 2023 bitcoin
Who? You have a single-sig hardware wallet, or planning to get one soon
What? A no-excuse, easy to make, frictionless bitcoin inheritance plan that will actually work when you die
When? Do this now, even if just a placeholder until you make a "better" plan later
Where? This is mainly for US bitcoiners, but most concepts apply worldwide
Why? Unlike legacy assets, there is no default inheritance plan, no safety nets, no fail safes for your bitcoin upon your death. YOU must create your own backup plan
How?
  1. Choose a non-heir executor who knows probate AND bitcoin
    • Ideally doesn't know your heirs personally
    • I offer this service (20+ years experienced NY executor/probate lawyer)
    • Or try your attorney, a bank, or fiduciary service company.
  2. Make a do-it-yourself will
  3. Create a poor man's multisig
    • Set a passphrase
    • Share your seed with your heirs, your passphrase with your executors
    • And their successors, for redundancy.
Later, you can level up and:
  1. Change your executor to a trusted, orange-pilled, friend or loved one who understands probate
  2. Pay for a lawyer-prepared will or trust
  3. Setup a proper multisig
Based on my years of experience probating 1,000s of estates, this plan should work as intended upon death. Even if you don't love parts of it, it's cheap and easy to put in place now as your safety net, while you think about your "perfect plan." When you make your "perfect plan," you may still be able to leave this one in place as your baselayer safety net.
I'll be writing up more detailed rationale in a short guide. Including why other concepts (letters of instruction, Shamir Secret Sharing, deadman switch, timelocks) are unlikely to work as intended upon death. DM if you'd like a copy.
Appreciate any and all feedback
write
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26 sats \ 1 reply \ @duvel 6 Oct 2023
If you have non-kyc bitcon and you keep it in custody with a notary, lawyer or something and your heirs want to retrieve it, do they have to pay taxes? That is what's holding me back. Also rules can change. With your government becoming more totalitarian, maybe bitcoin is banned, illegal or taxed to death at the point your heirs want to retrieve it.
I think it can be a good way to keep it in custody, but I have still a lot of questions.
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100 sats \ 0 replies \ @BTCExecutor OP 6 Oct 2023
Upon death you get a rare tax benefit called stepped up basis (https://anthonyspark.com/e135-what-does-stepped-up-basis-mean/)
So your heirs won’t owe any capital gains tax (https://anthonyspark.com/e266-bitcoin-taxes-during-probate/)
Yes, all this governmental risks are serious. But risk of catastrophic accidental loss, especially during the hectic months after someone dies, is a much greater risk.
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5 sats \ 1 reply \ @adexmakai4211 7 Oct 2023
I love this concept, but is this realizable in real sense?
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0 sats \ 0 replies \ @BTCExecutor OP 7 Oct 2023
Yes, this setup should work (e.g. successfully deliver to your heirs upon your death). The main drawbacks are the security concessions and trusting third-party executor. There are no perfect solutions atm.
Since the downside of no plan (or a failed overly complicated plan) is bitcoin gone forever, go with whatever has the highest likelihood of delivery.
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5 sats \ 0 replies \ @ladyluck 7 Oct 2023
I like this inheritance plan of leaving something for your love ones
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5 sats \ 0 replies \ @btcschellingpnt 8 Oct 2023
Your (3) is good and I'd note:
The passphrase with the executor doesn't need to be 'labelled' as such; it can be included in a private letter, sealed, that the executor is required to hand to the beneficiary.
The one further thing I'd add as a "just do it right now - today", is to make sure your spouse/loved one(s) know who your trusted bitcoin fren is.
Grief is incredibly stressful, and having a trusted bitcoin person help them with bitcoin-related matters at this time is important. Too many Reddit posts from grief-striken people: "can someone who understands bitcoin help me understand what to do with these 12 words my spouse left me"? Tragic .. gone in 60 seconds.
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5 sats \ 2 replies \ @JeanLamine 6 Oct 2023
There is no easy solution. All actors in your scenario could turn on you and steal your bitcoin.
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0 sats \ 1 reply \ @BTCExecutor OP 6 Oct 2023
Agree. But risk of catastrophic loss is greater. Especially during the hectic and emotional months after you die
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0 sats \ 0 replies \ @JeanLamine 6 Oct 2023
You are just adding other vectors of attack on the long term. And if you use bitcoin a lot you will most likely end up moving the coins around at some point and have nothing left in whatever instructions you gave.
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5 sats \ 2 replies \ @2bithits 6 Oct 2023
Sounds reasonable.
Do you trust your heirs with your seed though? They could lose it or someone else could find it.
The passphrase would need to be long!
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0 sats \ 0 replies \ @rhombus 8 Oct 2023
If you're uneasy giving the seed directly to your heirs, one suggestion would be to scramble the seed given to them by assigning each word an arbitrary number. In the private letter given to the executor you can provide the correct seed phrase order using the arbitrary numbers along with the passphrase.
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0 sats \ 0 replies \ @BTCExecutor OP 6 Oct 2023
Agree. Giving seed to heirs, as well as successor heirs creates at least some redundancy.
Leveling up to multisig is better. This is plan you can set up today, at almost no cost. So you’re not walking around with no plan at all.
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0 sats \ 0 replies \ @duvel 28 Oct 2023
I would also recommend this online Inheritance workshop by Andreas Antonopoulos: https://aantonop.com/workshops/crypto-inheritance-planning/
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0 sats \ 0 replies \ @justBrian 7 Oct 2023
I just keep all my corn in a wrapped eth token with an inheritance smart contract in place 🤣🤣🤣
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0 sats \ 2 replies \ @dtonon 6 Oct 2023
I don't know if adding two points of failure (my heirs and the executor) is a good idea.
Following your idea maybe I would use a different technique: give my heirs the seed in an envelope with some particular photo/graphic on it and tell them they will find the "other part" when they will review my possession. And then simply custody in my home an envelope with the same photo/graphic. This would make obvious the connection only to who own the first one.
Another idea is to zip encrypt the passphrase using the seed as password and put it on some usb, asking to 2/3 friends to give it to my heirs. Of course they should be informed that have to use the seed to retrieve the passphrase and then use them combined (more details can be stored in the zip itself).
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5 sats \ 1 reply \ @dtonon 6 Oct 2023
Or https://github.com/wizardsardine/liana Never tested it, I need to study and test it.
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0 sats \ 0 replies \ @BTCExecutor OP 6 Oct 2023
I’ll be writing up why automations (time locks, Dead man switches, beneficiary designations, etc) so often fail upon death.
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0 sats \ 0 replies \ @Chigala 7 Oct 2023 freebie
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