Thinking about setting up an inheritance plan and you want your heirs to inherit cryptocurrencies?
Inheriting cryptocurrencies can be a complicated process. It’s important to understand how it works if you currently hold any cryptocurrencies, or if you plan on doing so.
Cryptocurrencies are digital assets that are often held in online digital wallets. Inheriting them is tricky. Your beneficiaries will need access to your private key or seed phrase that are associated with your wallet.
Without private key or seed phrase no one will be able to gain access to the inheritable digital assets.
In order to understand the digital inheritance process better. Let us take a look at the different types of cryptocurrencies and how they are commonly stored first .
Later we’ll discuss how to setup your own digital inheritance plan. So at least your loved ones can easily inherit cryptocurrencies when you pass away.
What are cryptocurrencies?
There are many different types of cryptocurrencies, but the most popular ones are Bitcoin and Ethereum.
There’s literally tens of thousands of cryptocurrencies in existence. All of them unique and serving different purposes.
Other popular cryptographic tokens stored on the blockchain are NFTs. NFT stands for Non Fungible Tokens.
An NFT represents proof of ownership of an underlying digital asset – often this is a graphic artwork.
But it can also be ownership of any other unique creation that’s stored in a digital data file. Think about audio, video, and more.
How are cryptocurrencies stored?
Both cryptocurrencies and NFTs are commonly stored on the blockchain and are accessible via digital wallets.
They can also be accessed via centralized exchanges, staking platforms, liquidity pools and more.
Storing your cryptocurrencies and NFTs in a digital wallet means that you have total control over your assets. It is one of the safest and most commonly used ways of storing digital assets.
A digital wallet makes your assets on the blockchain accessible. Wallet apps like Metamask or Trust Wallet are commonly used as an interface.
When you create a crypto wallet, you receive a seed phrase (a collection of words) and a private key (a string of symbols).
If you want to transfer assets out of your wallet, regain access, or wish to import your wallet into another app or device, you’ll need to use your private key or seed phrase.
Let your family inherit cryptocurrencies after you die
In order to make sure that your loved ones can inherit cryptocurrencies, it’s important they get access to your private keys or secret phrases after you pass away.
These are needed to access your digital wallet and to transfer tokens if they wish.
This is where a decentralized digital inheritance plan comes in handy.
Inherit cryptocurrencies via a decentralized inheritance plan
By creating a decentralized inheritance plan, you can store your private keys or secret phrases in a highly encrypted and safe system.
At the same time, it will allow you to keep using your wallets and assets while you’re still alive.
Keeping your cryptocurrencies safe during your life and after
A decentralized plan is a very safe way to store your sensitive data.
It goes without saying that all of these methods are unsafe. The data could easily get damaged, lost or stolen.
It’s also not a safe way for your beneficiaries to inherit cryptocurrencies, as they would have to know exactly where and how your data is stored.
The decentralized solution to inherit cryptocurrencies
In a decentralized inheritance plan your data is split and encrypted.
Your beneficiaries (“Stakeholders”) save their share of information until it’s time to decrypt the plan.
There’s no centralized point of control or failure with this method of inheriting cryptocurrencies . It will require the cooperation of all parties involved.
Beneficiaries, SafeKeys and Merge Authorities
When setting up your digital inheritance plan, you decide which persons get access to your wallets to inherit cryptocurrencies.
You can have 2 people as stakeholders to your inheritance plan, or 10.
In the end the process is the same. For every stakeholder you’ll need to configure a SafeKey. A SafeKey is a Universal Second Factor Authentication device on which the split and encrypted data shares will be stored.
You’ll also need to appoint a “Merge Authority” (MA), which is the person responsible for activating your plan and overseeing the decryption of all decentralized plan data.
The digital inheritance plan can be accessed by inserting every SafeKey into the computer on which Inheriti® is accessed.
The MA can be one of the heirs, a trusted friend of the family, a person with blockchain experience, or a legal professional.
Approval to access the digital inheritance plan
Accessing the inheritance plan that lets your heirs inherit cryptocurrencies involves an activation method which is called a “Dead Man Switch” (DMS).
When the Merge Authority activates the plan, all stakeholders will need to come together to insert their Safekeys into the computer.
When this is done, the Dead Man Switch is activated and a countdown period will start. During this period emails and text messages will regularly be sent to person that created the inheritance plan.
If that person does not reply to these messages and does not log in to their Inheriti® account during this time, it will be assumed that he/she has passed away.
The Dead Man Switch will be validated after the period expires. If that happens, access to the inheritance plan will be granted and Inheriti® will decrypt the plan’s data.
To decrypt all data, all stakeholders insert their SafeKeys again. After decryption, the data entered by the owner will be shown to every observing party.
Distributing your cryptocurrencies after your death
The shareholders will need to take care of a fair distribution of the inheritable cryptocurrencies, as the access data entered by the owner into the plan will be visible to all.
In the future, it will be possible to add a video or audio message to the decrypted plan as well.
If the owner appoints a legal service provider like a notary to be the Merge Authority, he/she can see to it that the decryption process will go smoothly.
And if you’ve created a will and included your cryptocurrencies in it, he/she can take care of carrying out your will.
If you don’t want to use a legal service provider as your Merge Authority, you can of course also appoint one of your heirs. This way you’re sure that the process is fully in the hands of your heirs.
But, it’s important to note that you must trust this person with carrying out your inheritance plan according to your wishes. It is advisable to appoint someone with a degree of technical knowledge, who you know to be trustworthy.
A 100% decentralized inheritance plan to inherit cryptocurrencies
The user-friendly user interface and the transparency of your inheritance plan make it that Inheriti® offers you a great and reliable standard.
It’s the only safe and 100% decentralized solution to securely backup your seed phrase. And we have multiple patents in different jurisdictions around the world.Back to wiki