Blockchain removes intermediaries from transactions. For the most part that’s a good thing – but it can also have unintended consequences. For example, cryptocurrencies like Bitcoin flow between people much like paper money would
be handed over. No financial institution is involved in the transaction. The same is true for other assets being tracked by blockchain technology, such as corporate shares. But when someone dies or becomes incapacitated and they did not use a third party wallet, used a pseudonym or lost their private keys, these assets could be lost forever. With about $200 million in unclaimed property currently held by the State of New Mexico alone, recording your access information so that your survivors can liquidate your Bitcoin or other cryptocurrencies is a must. The Foster Legal Advisory Group has created a letter for your loved ones with all the relevant information needed to access your cryptocurrency. Call us today!
When someone dies or becomes incapacitated, trustees or attorneys typically get control of that person’s assets through the intermediary. For example, if a trustee knows that the person has a bank account at bank X, they merely contact the bank, prove they have authority, and the bank co-operates to transfer the assets.
If a trustee wants access to social media and other online accounts such as email, they need to have the person’s logon credentials. Some social media platforms have procedures in place to allow trustee access through authentication processes designed for that situation much like traditional assets.
But what happens if a person dies or becomes incapacitated owning Bitcoin or other assets tracked by blockchain? Some people use third party wallet and exchange services to track their cryptocurrency, which may offer a solution for a trustee. But not everyone uses those, and there may be no intermediary to contact. If the person used a pseudonym for their credentials, it would make it even more difficult to prove who owned the account.
There have been stories about people who have lost their bitcoin private keys and have been unable to access their own money. A trustee would be in the same position if they don’t have the person’s private key. Potentially huge amounts of money or assets could be unrecoverable.
Blockchain and cryptocurrency holders might want to store their logon credentials and private keys in a safe place and let a family member know where it is. Or they might keep these credentials and private keys in a password manager, store the access details somewhere, and let a family member know where to find
Does blockchain itself perhaps provide a solution to this? Smart contracts execute automatically based on the happening of an event. Such as a market price threshold or temperature. Is there a smart contract solution that transfers access to cryptocurrency or other blockchain tracked assets of a person based on proof of a trustee or attorney’s authority to act? What would that proof look like? It is not, after all, a simple objective event such as a market price threshold.
Create a letter to your loved ones today that includes relevant information and directions for access to your cryptocurrencies. We have developed one at the Foster Legal Advisory Group, call for your FREE copy today! 505-238-8385.