Avoiding a dead loss – the importance of crypto estate planning

This is especially true for crypto investors, the majority of whom are millennials. Younger individuals tend to have less experience with, and less expectation of sudden death, so crypto estate planning is not top of mind. If a crypto investor passes away unexpectedly, without leaving access to private keys it will be extremely difficult, if not impossible, for their families to recover the assets.

Crypto assets can be held in a variety of places including online wallets, hardware wallets, paper wallets and in exchange accounts. Many crypto users hold crypto in multiple locations. Wallet stored assets can only be accessed via a private key, while exchange accounts are protected by strong passwords and 2FA. It’s not surprising that up to 4 million bitcoins are already thought to be lost and no longer accessible due to the loss of private keys.

The importance of having a contingency plan in place should the unthinkable happen is illustrated by the recent incident involving the QuadrigaCX exchange. In December 2018, Gerald Cotton, the 30-year-old founder of the Canadian cryptocurrency exchange died unexpectedly in India. It seems that Cotton operated the exchange using his personal encrypted laptop, and he was the only person able to use the private keys needed to access the exchanges’ cold storage wallets.

It doesn’t have to be this way. Following the QuadrigaCX scandal, there’s a growing awareness of the importance for anyone holding significant wealth in crypto assets to make suitable arrangements for the distribution of their crypto estate in the event of their death.

Fortunately, there are solutions that aim to solve the complex problem of crypto asset estate planning. One of the simplest is a free solution provided by Paperjet, an online form filling / eSign product. Paperjet host a library of form templates including wills, NDAs, leases and more. Now, Paperjet has developed a crypto asset will template, available as a free download.

Security is the number one factor when dealing with the location of private keys and the details and passwords for exchange accounts. These should never be stored online.

As part of its template library, Paperjet has designed its crypto asset to be a guideline for beneficiaries and assist them in recovering assets. A user simply types in the basics, prints the will template, and then writes the remaining private details in pen. When the document is complete, users are advised to store it in a secure, locked location and provide information on how to access this to loved ones.