[DISCUSSION] Bitcoin Inheritance Planning

[apogio]

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.

[tread93]

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

[apogio]

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.

[tbct_mt2]

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.

[tread93]

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.

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 😛

[thecoincrow]

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.

[nemesis_incarnate]

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?

[apogio]

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 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?!

[ABCbits]

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 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.

[apogio]

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.

[ABCbits]

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).

[apogio]

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.

[retreat]

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 😛

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.

[hero_the_bossman]

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.

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..

[tread93]

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 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?!

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.

[john_egbert]

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.

[B-BossMan]

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.

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.

[satscraper]

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.
 

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.

[apogio]

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.

[Doan9269]

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.