[1,650 Words : 5 to 7 Minute Read]
Making a “Crypto-Handover-Plan” that takes effect after we die, well that isn’t easy.
What is a Crypto Handover Plan?
A ‘Crypto-Handover-Plan’ is a combined set of information and instructions related to your Crypto Investments. It’s purpose is to ensure that in the event you pass away in an unexpected and/or sudden way, that your loved-ones are able to find and access your Crypto Investments and Assets.
Sound’s simple enough doesn’t it. However when you sit down to design one you realise that there are a number of potential problems you need to consider.
A Badly thought out Crypto Hand-Over plan only creates risks, for example what if you write down the access details to your Wallets and someone unauthorised finds that list?
However, not having any sort of Handover plan, well that’s really risky, as the Mellon Family discovered.
Why does NestEgg want to help me design a Plan?
When I began my own off-the-top-of-my-head Crypto hand-over-plan the challenges quickly became obvious. I realised that should something happen to me then I needed trustworthy people to help my loved ones access my Crypto Assets, and those people needed written instructions showing them how to access my Assets.
I saw no way around needing to trust people with a document showing them how to access my Crypto Wallets. I’m sure you all see the same risks I did.
As I started to address these risks a ‘Model’ to help guide my actions developed. You see, designing ‘Process Models’ was a large part of my day job back then. So addressing these risks with a process Model was a logical way for me to go about completing my own Crypto Handover plan.
Which is how, one year later, I came to write this Article. I want to share this ‘Crypto Handover’ `model with anyone that wishes to use it. I’m hoping the Model will help others avoid the Mellon family’s experience.
But first a quick Disclaimer:
- I’ve decided to launch a start-up company and Application called NestEgg to help people design their own Crypto Handover plans.
- Don’t Worry you DO NOT NEED to be a NestEgg Customer to use the NestEgg Model. You can use our Application or just Paper and a Pen if you so wish.
- The NestEgg Model and Application DO NOT TRANSFER your Crypto Assets, they transfer your Handover plan
- Also you don’t put any Passwords or Private keys into Nestegg. You do not trust NestEgg with your sensitive information. We explain how to safely transfer sensitive details when you work on your own model.
Legally speaking, what is NestEgg?
What is NestEgg (and what it isn’t):
- The NestEgg Model and Application are a method to record and transfer your Crypto Handover Plan.
- They are not a Will and should not be used to replace a Will
- You can, and should, develop a Will later on, once you have your Handover Plan in place
- The NestEgg Model and the NestEgg Application DO NOT TRANSFER YOUR CRYPTOS.
- Your Cryptos are transferred only by the People you trust to do so (see ‘Trustees‘ below).
More about your Will and doing things “Legally”:
- You do not need a will to be in place to use the Model or Application, you can take care of that later, but please do.
- My own Father died ‘intestate’ without leaving a Will.
- It took me two years of family arguments and lawyers to sort things out.
- Don’t do that to your beneficiaries, but one thing at a time, let’s protect your Cryptos from being lost first then you can deal with the Will later.
Yes we did say ‘Legally’.
I know some of you would prefer just to have your beneficiaries claim the assets and avoid the legal necessities involved. The NestEgg model and Application cannot force you to do things legally, but we strongly suggest you should.
Ultimately however this is your decision.
We discuss the reasons to do things legally and the risks involved in not doing so in the NestEgg Model Template that you use to setup your Handover-Plan. We give you the link to the Template at the end of this Article.
A few points about the NestEgg Model:
- The NestEgg Model simplifies a complex real-world problem to help you solve it for yourself.
- Such ‘Process Models’ are not step-by-step checklists to be followed exactly.
- Process Models are general guides that often need small changes to be of use in specific situations.
- So if the NestEgg Model doesn’t exactly meet your needs then please adapt it so it does.
What about the Risks?
The NestEgg Model doesn’t remove every possible risk involved in posthumously handing-over your Crypto assets.
What it does do is:
- Identify the risks involved for you to consider.
- Then help reduce those risks to a level where you can feel comfortable.
Before we continue, Don’t Worry there is no need for you to ‘Remember’ everything you are about to read.
If you choose to use the NestEgg Model or the NestEgg application we give you a Template to follow that helps you apply all this information correctly.
How does the Model work?
The Model works like this:
- It helps as you setup the ‘First Draft’ of your Crypto Hand Over plan
- This protects your assets as quickly as possible
- Then over time you can re-visit each section of your Plan to refine them
- If you try to make the first draft of your Plan ‘Perfect’ the chances are you will end up frustrated and give up.
- So we make a ‘First Draft‘ first (see what I did there) and then refine the Plan in easy stages afterwards.
Who is the model for?
- Anyone who owns any amount of Crypto, large or small.
- Regular people without advanced coding or cyber-security skills.
- People whose Cryptos are bought in Crypto Exchanges and use Software, Hardware or Paper wallets to store those Cryptos.
When is NestEgg for?
Here is an interesting question I was recently asked.
“Will the NestEgg Business be around in twenty years and if not how can I trust it to help me today?”
Answer: NestEgg is a solution for now. For the next time you drive to work or cross the street. The technology and laws that apply to Crypto Currency are going to evolve over the years to come.
Today’s solutions for problems will also change and evolve as will your own circumstances. Your Plan will change over time as well.
The Parts of the NestEgg Model
1. Your Trustees:
These are the people who will help your beneficiaries access your Crypto Access if something ever happens to you. You will need several Trustees with different skill sets.
In the Template we discuss the skills needed in detail and offer some advice on choosing Trustees such as the following:
We suggest that your Trustees, in advance of anything ever happening to you…
- Do not know each other.
- Are not told about the size of your Portfolio
- Are not informed of the identities of the other Trustees.
These suggestions should:
- Prevent premature Trustee-to-Trustees discussions about your affairs
- Even well-meaning discussion can be risky, particularly over Instant Messenger or Email.
- It also limits the ability for Trustees to collude with each other in advance.
This is one example of how the Model works to reduce risks.
2. Your Crypto Asset Inventory:
The Model (and Application) help you pass your Public Crypto Wallet ID’s to your Beneficiaries. This serves as an ‘Inventory’ of your Crypto Assets.
Providing this Inventory gives your beneficiaries:
- Exact knowledge of your assets
- An audit ability for those assets using the applicable blockchain explorers.
This is designed to introduce a level of accountability over your Trustees, so they deliver 100% of your assets.
3. Two sets of ‘Portfolio Access Documentation;
- When combined these Documents allow the reader to access your Crypto Assets
- You will have complete control of these documents. Nobody will see either of them unless something happens to you
- In that case NestEgg sends one set of Documents to your Trustees
- Your Trustees contact the holder of the other Set of Documents (another Trustee)
- Together this group of Trustees then execute your wishes.
This is a summarised version of events. We go into more depth on how to manage this process in a low-risk way in our Template.
What Access Data are you documenting?
- The names of the Exchanges and Wallets you use to buy and store your Crypto Assets
- The restore (backup) phrases for those wallets
- YOU NEVER send any Passwords or Private Keys using NestEgg
You can also include other details such as
- Personal messages for your Beneficiaries
- Instructions for the distribution of your Assets. This is particularly important if you do not yet have a Will
- Other important information, such as;
- The names of the Banks or Investment firms where you hold accounts
- Details of other assets you may have such as Real Estate, Art Work or Wine Collections held in Bond
- The location of Grandma’s 50 Karat Diamond Wedding ring that she left to you all those years ago…
Just to recap about the Documents…
- We split the sensitive information across two sets of documents
- Different Trustees get different documents
- Your Trustees have to combine documents to access your Assets
- Choosing Trustees is crucial and of course we go into detail on how to do that in our Template.
Let’s discuss how you give access to your Assets without sending any Passwords or Private keys.
When completing your plan you will need the ‘Restore / Backup’ phrases of each of your Wallets (not your exchanges, just the Wallets).
Restore Phrases are usually a list of random words, shown here is an example Restore Key from a new MetaMask Wallet.
Your Trustees can use these words to restore a copy of your Wallet and access the Crypto Assets stored on it.
This works for all Wallets, not just MetaMask.
Safely Documenting Your Restore Keys:
We split the Restore Key up and hide those details between the Investor and the Trustee Documents.
In the Investor Documents:
In the “Investor” document (the documents you hide yourself) you will have a table that looks like this. Well it won’t have your actual Restore Key highlighted the way we did here.
The actual Tables use 100 words to hide the real words in your Restore Key(s)
You use one Table for each Restore Key you wish to hide.
In the Real table we do not use BOLD TEXT and highlighted cells to emphasise your Restore Key.
We’ve only done that here to show you how the system works.
In the Trustee Documents:
In the Trustee Documents we put the Key that allows the Trustees to retrieve the Wallet Restore Key words, in the correct order, from the first Table.
We use the same technique in the Documents to conceal:
- The names of the Exchanges you use
- The names of the Wallets you use
- All your Wallet Restore Keys, one Table per Key.
But ‘What If’….
I am sure many of you have now though up some ‘What-If’ scenarios. Scenarios that end up with this information being lost or both sets of information being found by the wrong people.
Yes we’ve thought of many ‘What If’ scenarios as well.
We give you instructions how to avoid such things happening in the NestEgg Model Template.
If those ideas do not work for you then please adapt them with your own ideas until they do. The concept of separating these documents and bringing them together in a controlled manner is the core of the NestEgg Model.
4. The Document Handover:
Once your Documents are ready we setup the Handover process. This is the process that sends the Trustee Documents to the Trustees should the unexpected happen to you
We give you various ‘Document Handover’ options to consider. Our application, “NestEgg” is one option but there are others for you to choose from.
You can use People or Technology to perform your handover or even a combination.
It’s also important to repeat that the NestEgg Application and Model move information only. They do not move your actual Crypto coins.
Please don’t try to to make the perfect plan first time…
Our first aim is to get you protected relatively quickly.
From there we return to the Model improve it in stages which continues to reduce the risks involved.
The Model and the two sets of Documents are living things. They will adapt and change as your own circumstances and assets change and as Technology changes.
So Please resist the urge to make your hand-over plan perfect on your first attempt or you may get frustrated and quit.
Many of your remaining questions will be addressed in the NestEgg Model Template.
So now lets go straight to the Template and begin working on your Plan. [This link will follow later in Dec 2018]
DISCLAIMER. The Author and NestEgg OÜ are not offering legal advice and nothing in this Article should be considered as legal advice.
This article and the others like it on www.nestegg.io are informational. We provide them free of charge without warranty or guarantees.
As you work through the Model you may feel that professional advice will help you. If you feel a need to speak to a Lawyer or Accountant, then we encourage you to do so.