[DISCUSSION] Bitcoin Inheritance Planning

[apogio]

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), 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.


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

[bitmover]

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

[apogio]

I am a student and I do not have an inheritance to give yet, but that does not prevent me from giving my opinion.

I am leaning towards plan A, but I think that a few elements should be added to make it even more solid. The idea of building a multi-signature wallet is really good for ensuring security, but it would also be important to train the heirs so that they know how to manage these assets. In addition, having clear documentation on the steps to follow and the locations of the backups could really help avoid confusion. For example, we can establish a document that explains how to access the backups and how to use the keys to recover the wallet, while showing them how to do it step by step. This would ensure that, even if something happens, the heirs can easily access all of this. Basically, plan A is solid, but good communication and preparation of the heirs are essential for a successful transition.

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

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.

[EL MOHA]

Any good plan that is shared in this discussion, I will add it to this post.

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

[notocactus]

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.

[ChiBitCTy]

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!

[Odusko]

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.

[Fiatless]

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.

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.

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.

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.             

[Dr.Bitcoin_Strange]

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.

[satscraper]

~

"Cryptoassets Inheritance Planing" (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.

"Cryptoassets will become part of your legal estate in most jurisdictions, and will be subject to local laws and taxes, whether or not you want them to be. This is the reality of our current jurisdiction-dependent judicial system. Your access plan alone won’t be enough to ensure your assets are passed to your chosen beneficiaries. Without a legal plan, the default laws of your jurisdiction will usually apply. In the next section, we’ll look at these default laws and ways to ensure you get to decide who gets what. We’ll also talk about taxes, what really happens in estates, and how to avoid the most common mistakes people make in estate planning."

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

Regarding my plan:

In my case, the relevant flash drives, PIN to HW pgp keys and detailed instruction will be handed over to heir by me in person,  while he will get the envelope with those physical pgp keys  from representatives of the legal service I have contracted with.

More about all of those  stuff (like HW pgp keys, PINs to them  etc) is here. 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).}
 

[Zoomic]

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.

[FortuneFollower]

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

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.

[Hewlet]

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 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.

[john_egbert]

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 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).

[ABCbits]

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

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

[deepskydiver]

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.

[betswift]

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.

[apogio]

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.

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:

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.

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.

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

[MysticRiver777]

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

[tread93]

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), 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.


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

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?!