Bitcoin Forum

This subject is very important for me, for multiple reasons.

I think it worries many bitcoiners that, the fact that we have full custody of our hard money, makes it difficult to develop a good inheritance plan.

Searching through the forum, I 've seen many topics around this subject (like this (https://bitcointalk.org/index.php?topic=5180850.0)), but my purpose is to share some plans and (perhaps) construct a solid one together.

Plan A:
1. Construct a multi-signature wallet, that consists of 2 cosigners (2-of-2).
2. Back up the 2 cosigners twice each. So you will have A1, A2, B1, B2, where A1 = A2 and B1 = B2.
3. Store all the backups in 4 separate locations.
4. Hold A1 yourself and give B1 to your inheritors. A2 and B2 will be stored in very safe places that you will determine. A1 and A2 will be known to you only. B2 will be known to the inheritors. So they will know where B1 and B2 backups are.
5. In your will, you will give them the locations of A1, A2 and specific instructions on how to recover the wallet using one of the A1, A2 and one of the B1, B2. Obviously you can let them know about your plan and teach them what they will need to do beforehand. So in your will you need to specify the locations only. But a recovery plan written in the will is not redundant in my opinion.

Advantages:
1. Only you have access to the wallet during your lifetime, because the locations A1, A2 are not known.
2. The inheritors have B1 and B2, which means that they will need to "lose" both of them to lose access to the wallet.
3. The lawyers know where A1, A2 are stored, but even if they gained access to them, they can't do anything because they are ignorant about B1, B2.

Disadvantages:
1. Kind of hard for the inheritors? Perhaps...
2. If the lawyer loses your will, then both locations A1 and A2 become unknown, so the wallet is non recoverable. To mitigate this, you can use 2 lawyers, one holding A1's location and one holding A2's location.

Plan B:
1. Generate a wallet (simple single-sig) and give it to your children. Also keep a backup somewhere safe (the children can know about it).
2. Create a locktime transaction, setting the locktime to be X years from now. The receiving address will be one address from the wallet in step (1).
3. Give the locktime transaction to your heirs, but also keep some backups in some places.
4. When the time passes, the children can receive the funds.

Advantages:
1. Very easy. One broadcast and everything is good.

Disadvantages:
1. The fee needs to be planned ahead. Of course the children can use CPFP later, but this adds a little complexity.
2. The years are limiting. You can update the locktime transaction of course, but you will need to update your whole setup again. May cause confusion to the inheritors.

Please, share your ideas below and add your plans so we can have a discussion about them.

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More/New ideas:
Any good plan that is shared in this discussion, I will add it to this post.

I simple shared my seed with a trusted family member. He knows how to recover it or how to research about it.

I know some people has trust issues with their family. I think that if you lack trust every setup will be complicated.

The first idea of your plan is pretty good, but I don't like to get lawyers involved. I think bitcoin works better just p2p in this situation

I appreciate you taking the time to comment on the subject, but I 've already made these comments myself in the OP.

Seriously I don’t think any of the idea above is actually bad, one thing that many people are scare of are actually trusting their kin but i say no matter how you actually take this away from them the inheritance will fall to them, so rather than giving out too much information to an outsider it is better to find kin to trust and then use the plan B so you or them don’t spend it sooner or later.

What I will do is probably use the two idea, timelock the funds and would definitely be spending it to a multi sig wallet, give the other recovery seed to the lawyer to give out in the day of will reading and back the Same seed up at a bank deposit, the both shouldn’t necessarily get lost, the other co-signer seed will be give to my Kin with him having to know the location of also another to backup of it too.

I feel it might have its own flaws but we cannot simply defeats all the flaws in settings like this

I would like to create a single signature wallet as gift to my children and honestly, I don't know when I pass away so I will not choose a complicated method as your first one.

Making complicated inheritance planning is like using a complicated backup method that in the end can cause a loss. Backup in my opinion, need to be simple, so as inheritance plan for your children. I would like let my wife, husband knows about it too, just in case I sudden pass away, my partner will know about that inheritance plan, how to recover a wallet, and can do on behalf of me for my children.

I read through your OP kinda quickly so forgive me if I glossed over this but one of the most important things when it comes to inheritance planning is one of the most simplistic things and that is making sure that you've got a will established.  This is not even something that requires a lawyer to set up (such as a trust) and is one of the most pivotal l aspects of any financial plan/portfolio. So make sure to get those will's established!

It's simple at least for me, is not hard for me, just like others have said, inheritance doesn't need to be too technical, because for a life well leaved and accompanied with a successful Bitcoin journey as an alternative, passing on to whoever comes after me is not to be a big deal for me, since I have a daughter whom I have groomed with the knowledge about Bitcoin and she have access to all my financial details.

I think it is better to educate those who inherites our hard work Bitcoin since not educating them could lead to mismanagement of the inherited wealth and a waste of my life long hard work.

I don't keep my secret keys to myself and infact, my spouse have my keys and also my daughter, those are the most trusted people around me and I will like them to have my bitcoin when I am no more.

Having a complex inheritance plan will be proper if the beneficiary has sufficient knowledge about the step-by-step process to access the funds. If your next of kin doesn't have such knowledge, just make it simple.

It might be easier for married Bitcoiners to have an inheritance plan. You can easily teach your spouse how to recover a wallet and other Bitcoin transaction processes. For people who are single and want to give their Bitcoin to their parents, it is a big problem. Most of the elderly don't have an interest in Bitcoin. So we would have to make recovering and accessing a wallet easy. Another problem with unmarried people is the issue of trust. Telling a sibling or relative that you have bitcoin might be risky. These days people do anything for money.             

Sometimes, as the year proceeds we usually notice that there is someone in the family who we can confide so much on and if there's someone like that, you can entrust them with your Bitcoin, you don't have to tell them what it is but what they must only know is that the item you are handing over them should be given to the person you desire, after your departure. By then, if you want your kids to have access to the Bitcoin, you must have educated them about Bitcoin so that after you must have passed on, when they receive the package, they would know what to do to access the fund.

"Cryptoassets Inheritance Planing (https://www.amazon.com/Cryptoasset-Inheritance-Planning-Simple-Owners/dp/1947910116)" (by Pamela Morgan) is  the  good reading that could help your planning. It stresses that beside aspects relevant to technical details the inheritance plan should contain some legal part.


Will you do something in this direction to make legal the crypto-heritage  for your legatees?

Regarding my plan:


More about all of those  stuff (like HW pgp keys, PINs to them  etc) is here (https://bitcointalk.org/index.php?topic=5494771.0). Flash drives are not mandatory, The transferred media may be in the form of  SD card. My last purchase is  Samsung Pro Endurance microSD ^{(huge lifetime).}
 

The major issue here is trust, because if there is trust in the family, there will be no complicated process of hiding our person information about bitcoin from our spouses or children only to be revealed to them when we are no more alive. Just like @Odusko has rightly said, these same people we are hodling these investments for might end up mismanaging the investment or become too careless to disclose some information to scammers which might lead them to losing everything you worked for in one day. All these will arise because they were not educated by the right person on what to do and what not to do with all the information about bitcoin.

As a person with the intention of transferring my wealth to another person, I already know who I want to take over from me. I will make sure that person knows all I know about bitcoin so recoverying them when I'm no more will not be complicated. Except I don't trust anyone, then OP,s plan A will be an option.

That's what I thought too.
It's great when there is trust to put in someone that is your blood, however, sometimes, it's not possible.
I would do the same as you. And make sure the person I trust would know how to get my funds when the time comes.

I agree with this. Even though the level of trust in the society has dropped so drastically, it's necessary to look out for an insider you can trust when it relates to issues of your assets. Bringing a third party into the equation is definitely not a good idea even though he's a lawyer. The society is too bad and the possibilities of the most trusted layer behaving really unethical once it relates to issues of wealth is one you can't ignore.

There should be a brother, sister, wife or a child you can trust. Even if it involves just letting him know that you have a Bitcoin holding and that you've stored the access key to your asset in a given location that he can only access should you exit the earth before any of them. It's not always an easy thing most expecially when you consider we always feel that we still have a lot of time even when we don't. It's very risky when you can't trust a single person in your entire life.

Better to be prepared than to miss what you didn't do when you were able to.
A motto to live by, truly.
And I do think that each person should have someone to trust, from family or not (preferably from family, of course).

Regarding your plan A, there's also shamir variation[1] where IMO it's less complex for average people. And there's always option to use software or service which support inheritance feature, with various degree of trust needed.

[1] https://bitcoinmagazine.com/technical/protecting-bitcoin-shamir-backup (https://bitcoinmagazine.com/technical/protecting-bitcoin-shamir-backup)

There are problems with the solution that people suggest which involve handing over keys, seed phrases etc. to your beneficiaries.

To be clear, you shouldn't give your beneficiaries or lawyers access to your wallets.

Why?

First, most people do not have good security practices. We might have but our beneficiaries do not, so there is a risk of loss or theft once they have it.

Secondly, there is a risk that they may have a gambling or drug problem. Or someone in their life who convinces them to take it now. Or the lawyer you get to hold the keys - takes the coin.

I would just cross the lawyers out, and give to those I believe in.
Maybe there will be problems with them in the future, but I wouldn't be able to predict such an occurrence.

It's absolutely impossible for the lawyer to steal your coins with my system. If you read it carefully, the lawyer only has a note that indicates where the backups of cosigner A are stored. Using one cosigner can't help them steal the funds. The lawyer is absolutely ignorant about the existence of a cosigner B.

I 've pointed out the issue with the lawyers:

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I could definitely hear this option. Replacing the lawyers with trusted people seems ok to me.

HI,  I recently discovered this project dedicated to bitcoin inheritance in a decentralized way.
They talk about it at this post

 https://bitcointalk.org/index.php?topic=5516266

 https://bitcoin-after.life/

What do you think?

Regards.

MR37

Okay so that time lock mechanism is dope and I'd love to do that. Multi sig wallet is great to pair with that as well and making a wallet for your kid/s also fun. I'm probably going to make a super elaborate treasure map for my kids and they have to work together to figure it out. Maybe tell them each a different story while they're still young and keep telling them over and over and they all come together like that ending scene in thr movie thr pacifier. Idk it woild be super fun. Also pretty risky tho like whay if they just lose thr map etc lol. Probs not going to do that anyways. But it sure sounds fun dont it?!

Cool, but the most important thing is to keep things simple. Inherited Bitcoin is mostly lost due to the complexity of these treasure maps or the incompetence of the inheritors in order to successfully get the coins.
The whole strategy must be rehearsed with your inheritors multiple times, to make sure that when the time comes they will need to follow the exact same steps that they 've already followed in the rehearsals.

Essentially, the best thing with multi-sig is that you can reveal most of your plan (like the great majority of the plan) to your inheritors because there is no chance of them doing anything bad.

For example, hypothetically, I have a 2-of-3 multi-sig vault and I have a cosigner at home and the other 2 are geographically distributed and we need to get on a plane to reach them. Simultaneously, we need to cross some physically guarded places to finally reach the safes where the cosigners are.

You can kidnap me and get on plane while I am kidnapped and then go to the secured place no.1, where we need to identify ourselves and pass from several guards with weapons in order to physically access one of the cosigners. Yes, we can do it, but would we ever do it?!

You know my whole setup (without the actual places). But you know too much info and you can't do anything to rob me.

It definitely is cool but also quite risky right because of reasons mentioned. The only thing i don't like about multi sig is if some kind of freak accident happens and now you have completely lost access to the coins. I guess it's all risky. The only thing I don't see as being super risky from a legal standpoint and from an inheritance standpoint is partaking in the Bitcoin ETFs. I know this is a controversial topic but honestly just for that ease of mind it is tempting for long term purposes. Maybe just setting up separate funds or a joint fund to be split and passed down that way I feel would be the simplest way to ensure the bitcoin exposure hits them, but then again it's never actually real bitcoin right and you don't gave the keys to the coins. Decisions decisions

The ETFs are nothing more than the traditional inheritance of investments. There are intermediaries, so it's super easy to tell the owning company who will be your legal inheritors and, suddenly, if something happens they own what you owned.

But, they don't really own the bitcoin. They only own some contracts that guarantee them that they own your holdings in case something unexpected (or expected) happens.

So, it's like having bitcoin but not having bitcoin. In my opinion, anyone who doesn't do self-custody only tries to benefit from price increases and not from actually holding the coins.

You own bitcoin only if you own its private key or mnemonic seed. Without private key or mnemonic seed, what you have only a visually number on the screen that you have risk of never be able to access it in future.

Accesing it or not, it depends on the custodians that own private key, and whether they approve your withdrawal request or not. To be more exact, you still don't have acces, but they will access those bitcoins, and proceed it on behalf of you, and you will ONLY have access to those coins after receiving it from the exchange to your non-custodial wallet.

Again, the big condition at the end, is you must store your withdrawn bitcoin from that exchange to you non-custodial wallet, but if you store it in another centralized exchange, you again don't own those bitcoins.

Bitcoin ETFs are like this and many Bitcoin ETFs are even not self-custodians but they hire Coinbase doing this as a third party custodians.

Yes it surely has its pros and cons. It does solve the overarching issue of this thread but presents a just as bad of a problem losing all the freedom & self custody of the coins which you can't control or move the same way and it's more like a stock. If they made ETFs the same as they are now but added an option to convert them to bitcoin this would be ideal, and honestly I could see this happening in like 10 years or something if there is enough demand and a great enough call for it.... it would change the entire structure tho might end up creating a new type lf fund. Bitcoin Exchange Trade and Freedom Fund ETFF 😛

I never though about it. I am in my 30s. Now I am going to share my passwords and know how on how to use btc with my mother. Its always a good thing to plan inheritance.

What about your potential offspring? Wouldn't you try to teach him your ways, or maybe you plan to go with a bang, and you don't want such a thing?

It will happen much sooner than what you expect, but why do you anticipate it with such "happiness"?

What will this option offer?
I can think of the ability to justify where you got the bitcoin from, but I 've posted multiple times and have been very vocal about it, I believe this is something we don't need in bitcoin.

Food for thought:
If you buy this hypothetical ETF and keep it for 20 years, then all these 20 years they will hold the bitcoin for you, so when you wanna withdraw it, you may not be able to do so.
If you buy this hypothetical ETF and withdraw to self-custody immediately, it will be the same as buying with any KYC exchange, but with higher fees, so why choose to pay more?!

There may be case when people who bought Bitcoin ETF later learn about self-custodial and no longer wants to use 3rd party. With withdraw option, that means they could avoid hassle of selling Bitcoin ETF, buy Bitcoin on exchange and withdraw it which could cost more money and time.

Oh yeah certainly. I meant that if they want to buy Bitcoin in self-custody in the first place, then perhaps buying straight through an exchange is faster and cheaper. If they decide to withdraw at a later stage then you 're correct.

Food for thought again, but imagine a day where ETFs allow the withdrawal of the underlying asset (BTC in our case) and many people have learnt about self-custody and try to withdraw from the ETFs, essentially diminishing the AUM (assets under management) to minimal amounts. Would they allow a massive withdrawal? We come to the same argument again. It's not our Bitcoin, unless we have its custody entirely on our own.

In such scenario, i expect they wouldn't allow massive withdraw or find way to discourage (such as high withdraw fee or scare with inaccurate information). But for reference, gold ETF is popular enough despite it's possible to convert gold ETF to physical gold (although i don't know the limitation/fee).

Well, even though many people try to compare bitcoin with gold, I wouldn't do it, because gold has a huge problem and it's something that can't change... the material's volume.

You need lots of free space to store it and also some physical security as well. Because storing a gold bar doesn't have any security on its own, meaning that a thief can steal it and have it. With bitcoin, there can be passphrases, multi-sig, encryption etc. So storing a seed phrase or a BIP38 wallet for example can be much safer, since it has a 2FA, if I can call it this way. You need the physical backup, but also a way to "read" it. Why am I saying all this? Because I would feel much more worried to store a gold bar, than a bitcoin wallet.

So, I guess that's why people don't really convert the gold ETFs to physical gold.

Despite the pros and cons, I don't see Bitcoin ETFs as a "solution" to this. I still see "real Bitcoin" as a solution for inheritance plans. Because Bitcoin ETFs are not really Bitcoin like you can hold in a non-custodial wallet. The Bitcoin ETF providers are just providing contracts to their clients, they never hold that amount of Bitcoin in their wallets—it's like eating a vegetarian version of chicken, you just spend more time and money buying it, when you could be eating real chicken.

And as for the ETF to bitcoin conversion option, I think even if it were to become a reality, people would probably have to pay more fees to do the conversion and it would probably be limited in quantity and take longer to process. And I don't want to be bothered with that. But that's not certain because the ETF providers are only responsible for selling contracts to customers and they have no responsibility to provide the conversion feature to their clients since they are also restricted by regulations in this regard.

It would be even less convenient for the people, I totally agree.

And it's much better to be in control of your BTC than to control ETFs for it (not having access to it, in fact), because it's much easier than in comparison we had with real gold and ETF gold..

I guess the only benefit I suppose it will create a new avenue of adoption for bitcoin skeptics or the nocoiners by alleviatung some of the perceived risks of owning crypto by packaging it like a stock or mutual fund. These guys have doubts and these products offer ease of mind solutions IMO to problems like difficulty in being able to pass it down to heirs properly, getting hacked because of improper storage or from the exchange, or sending to a wrong address when transfering and losing coins, etc.


I agree with what you're saying in those last two points, it's all risky I suppose. I mean it's not but hey there is always the chance it all gets thrown out, or donated, or just flat out forgotten and passing into the wrong hands.

Better to teach people why their custody should matter to them in the long run.

I do think many people would change their stances once they would get more information about it.

OP, I will agreed with you 100%

It's very essential to secure your wallets, but inheritance planning is more essential.
In scenario where by an ownership protect his funds from any kind of thefts and also secure his wallet against his family due to lack of trust, however the ownership have successfully secured his wallet, no one got access to your password and wallet and at the end you left before them. so is there any hope that the oenership funds or passwords would ever be recovered or retrieve?

If (NO), then there is a need to set an inheritance plan. That is, no matter what happened between you and your loved ones, to get access to your Bitcoin holdings after you are gone, it is very important to know your wallet's information and password. In addition, an owner can also delegate a trusted friend or a trusted member of his family to get access to his Bitcoin holdings.
My opinion though.

Liana wallet makes inheritance route quite simple.

It may generate two keys, namely, the primary key which remains active indefinitely and the inheritance one which automatically activates after a specified period of inactivity from the primary key.



What’s more, Liana is capable to generate multiple inheritance keys each with different activation delays. Thus, your inheritance plan my be very simple and flexible.

Hi, thanks for pointing this one out. I was actually aware of Liana wallet because I saw a video on YT from BTCSessions and it covered multiple aspects in which Liana wallet facilitates inheritance. I kinda liked it, but I have a natural worry when a product offers features that aren't universally applied via some protocol or BIP. The reason for this is that if the software dies, then what happens? I admit I don't remember how it works very well, so I definitely need to refresh my knowledge. Because if it uses pure multi-signature, then it's worth a look, but if it's not, then I will avoid it for now.

We all have been contributing on how bitcoin can be passed as an inheritance to our younger generations, but there is this aspect i will like to bring into our attention, that because we make any inheritance decision, we should try as much to engage our beneficiaries on how strong is their knowledge and interest about bitcoin before leaving it for them as inheritance, because if they lack passion for this, they can sell everything we have toiled and labour for years within a day for something else.

Right from our presence, we need to see how they have been using bitcoin, how well are they equipped in understanding about the network and what are their personal goals which may have similarities to ours regarding the use of bitcoin, because any inheritance left on those who will not cherish to maintain same, they may just waste everything art the cause of time before realizing its all gone.

I assume you're referring to Liana being unsupported by the developers, right?

To mitigate any potential issues I would suggest the setting the shorter period of inactivity for the primary key ^{around 3 months seems optimal to me}. This way either you or haeres can take the necessary actions if needed. It’s hard to imagine something so severe happening in just 3 months that would prevent even unsupported software wallet from managing the funds.

Yes, but isn't it better if features are presented and developed as BIPs so that they can be included (or considered to be included) in the majority of the wallet software out there?

By the way, do they give backups in BIP39 format? If so, I guess you can still get the funds in the future? Or is it transferred to another wallet?

Nevermind, feel free to respond, but I need to do my own research, because I still have made minimal effort to understand how it works.