This article is a community contribution. The author is Richard Marshall, a cryptocurrency lawyer from the UK.

The views expressed in this article are those of the contributor/author and do not necessarily reflect the views of Binance Academy.

Abstract

• Crypto-assets are naturally decentralized, so the transfer of crypto-assets after the death of the asset owner will face some unique challenges.

• You need to carefully consider how your crypto assets can be found, identified, and accessed after your death to benefit your loved ones.

• There are many solutions available today, including handwritten mnemonics, encrypted private keys, and dead man’s switches.

After your death , what will happen to your crypto assets?

As the popularity of cryptocurrency continues, it is increasingly important to consider what will happen to your crypto assets after you die.

Estate planning is a common practice throughout the ages to ensure that your legacy assets are distributed according to your wishes. But for cryptoassets, this approach comes with some unique challenges.

Since there are so many software, hardware and trading platforms that can hold crypto assets, how to find and identify the owner after his death? Cryptoassets are the first hurdle to overcome.

It is almost impossible to access wallets and accounts due to lack of information related to private keys, mnemonic phrases or passwords. Find and access these assets. This means that your crypto assets such as Bitcoin, Ethereum or other altcoins could be lost forever.

You can plan ahead for your crypto assets or recover the assets of the deceased as a beneficiary through the following methods.

How to leave crypto assets as an inheritance to others after death

If you want to leave your crypto assets to others after your death, you should plan as early as possible. There are many ways to do this, but the most common solutions include the following.

Low-tech physical solution

Paper and pen writing

The easiest way is that you can write down the private key and The mnemonic phrase is kept in a safe, along with instructions on how to access your assets after your death. This approach is simple, but comes with trade-offs as the information could be stolen, lost or destroyed during your lifetime or after your death.

For added security, this information can be stored in secure vaults at banks that offer insurance coverage and have established Proven procedures for your beneficiaries or executors to gain access after your death.

USB or hard drive

Another option is to save the private key and mnemonic phrase on a USB or external hard drive and then set up password protection to ensure that the information cannot be stolen. But the biggest risk is that the USB or hard drive could become damaged or destroyed, making the information inaccessible. If this is your preferred method, it is recommended to prepare multiple backups.

If you set up password protection for the files inside, you will also need to store the password somewhere. The password can be written down by hand and kept. Well, you can also save it using an online password manager.

However, these options carry risks such as theft and hacking, so crypto asset holders should be careful to ensure that their beneficiaries understand how to use these means Recover assets.

Advanced solution

Encrypted Email

You can share your private key and mnemonic phrase in an encrypted email To the trusted recipient with instructions on how to access the assets after death. But the reliability of this method depends largely on whether the person you trust can follow these instructions while you are alive without compromising the security of the encrypted email.

There are also third-party hosting sites that can be used to access encrypted emails, which may require a password to gain access. However, if the third-party hosting site no longer exists, this information is gone.

Disabling switch

You can also set up a disablement switch, which will periodically initiate verification to you. If you fail to verify that you are alive, it will release your private key to the designated recipient.

This verification is as simple as sending or receiving an email or performing a quick task, and can be set up weekly, monthly or run at other intervals. If you fail to verify that you are alive within a certain period of time, the disabling switch will be activated and the private key information will be automatically released to your designated recipient.

But there is an important caveat with this approach. You may be unable to verify that you are "alive" for reasons other than death, such as illness or disconnection. Another problem is that the designated recipient of encrypted asset access information is not necessarily the ultimate beneficiary, so there will be certain hidden dangers. Furthermore, the law may not necessarily permit this form of asset transfer in your jurisdiction.

If you decide to implement an incapacitation switch in your end-of-life plan, be sure to consult an expert on how to do this safely to ensure the smooth transfer of your assets transferred to the beneficiary.

Social recovery through data hosting services

You can also use social recovery through a data hosting service, which means appointing multiple guardians to gather together after the death of the asset holder to reorganize the deceased's access information.

Hosting providers will typically require appropriate documentation to verify death. Some services are hosted on traditional websites, while others are on-chain, providing an extra layer of security.

When using such services, you must carefully select the most suitable guardian and set appropriate terms. Also, be very cautious about escrow services that allow a majority of guardians to reconstruct private keys without verifying that the account holder is truly dead.

Also important, be sure to clearly state whether the nominated guardian will only receive access information, or they will also be able to receive information from legacy Benefit from crypto assets.

Ethereum smart contract wallet and legacy wallet

Ethereum’s smart contract wallet allows multiple signers and is a good choice for social recovery. Crypto asset holders can create a multi-signature legacy wallet, naming themselves and the beneficiary as wallet holders. Using this method, any transaction made by a majority of the signers needs to be verified, even if the holder is still alive.

After the holder dies, the co-owners and one or more representatives of the deceased will access the wallet and transfer the access rights Smooth transfer from the deceased to the designated beneficiary.

Another form of legacy wallet can also be created, where crypto assets are transferred to the wallet during lifetime and deposited into an entity's secure vault. No third party can gain access until the death of the holder. After the holder dies, the personal representative must provide a death certificate and a court order stating they have access to the deceased's assets before they can access the wallet. Such physical vaults often provide insurance coverage.

How to include crypto assets in your will

Nominate someone to access your Crypto-assets do not mean naming the other party as the beneficiary of the assets. It is critical to ensure that any crypto asset planning is integrated into traditional estate planning.

The laws of each jurisdiction govern how property is transferred upon death, usually through a will. Given that most jurisdictions in the world do not recognize electronic wills, only paper wills with handwritten signatures, it is important to ensure that all will content related to crypto assets is legally recognized.

You can make it clear in your will how the private key should be passed to the recipient after death, or who should receive it from the subject. Benefit from the assets (if the beneficiary is different from the guardian or nominee).

What will happen to the crypto assets in the trading platform after death

Center Cryptocurrency trading platforms often assist individuals in locating and accessing crypto assets after the death of an account holder.

If the deceased had the trading platform application installed on a smartphone or laptop and the account was set to automatically Log in, then it may be simpler to identify the assets held by the deceased.

However, anyone handling an estate should exercise caution when accessing such accounts after the death. For example, accessing another person's account may constitute a criminal offense in the UK under the UK's Computer Misuse Act 1990. Each trading platform also has its own rules about disclosing passwords and granting access to third parties in its terms of service.

To avoid unknowingly breaking the law, executors should contact the trading platform to notify them of the death and provide all relevant information and document. Trading platforms will usually spell out the correct way to do this in their terms of service. This step typically requires proof of death, such as a death certificate and evidence that you have authority to handle the deceased account holder’s crypto assets. For example, the executor may provide a copy of the will or court authorization.

How the beneficiary accesses the private key

If you save the cryptocurrency In a self-hosted wallet, such as a hardware wallet or a paper wallet, you must have a plan to allow a few trusted people to access your private keys after your death.

Generally speaking, even if the deceased did not make a plan, there are ways to recover these assets. You might find a file containing a private key on their mobile device, or a note with a mnemonic phrase in their notebook or safe. However, if the deceased person took additional steps to protect the private key, such as through encryption or a password, it will be more difficult to find the private key. This also means that the deceased’s digital assets may be lost forever.

Can you pass your mining progress or DAO role to others after your death?

Some people also asked whether his/her progress in the game of making money while playing can continue after the player dies. If so, what should be done? Who will play. There is also controversy in the industry about who benefits from royalties from NFTs or unminted works, and what happens after death if the deceased engages in mining, crypto airdrops, or DAOs.

All of these matters can be clarified in a Will or in an accompanying letter of wishes, but all eventualities must be fully considered problems and actual situations.

Conclusion

The key is to have a succession plan in place so that your crypto assets can be found, identified, and accessed after your death. It’s best to integrate your crypto estate planning into the overall will creation process. You must ensure that the will is legally recognized and that the crypto asset portion complies with the regulations of your local jurisdiction.

Otherwise, your beneficiaries may have to fight for your crypto assets through complex legal proceedings, or your crypto assets may be lost forever.

In-depth reading:

• What is encryption Currency wallet?

• How to store digital currency safely

• Term analysis: private key

Disclaimer and Risk Warning: The contents of this article are facts and are for general information and educational purposes only and do not constitute any representation or warranty. This article should not be construed as financial, legal, or other professional advice and is not a recommendation that you purchase any specific product or service. If you need investment advice, please seek professional advice. If the article is provided by a third-party contributor, please note: these opinions belong to the third-party contributor and do not necessarily reflect the views of Binance Academy. For more information, please clickhereto read our full disclaimer. Digital asset prices may fluctuate. The value of your investment may fall as well as rise and you may not get back the principal invested. You are solely responsible for your own investment decisions and Binance Academy is not responsible for any losses you may suffer. This article should not be construed as financial, legal or other professional advice. For more information, please see ourTerms of UseandRisk Warning.