Ask HN: How to pass cryptocurrency assets in a will?

[coryl]

Does anyone have any good ideas on how one would pass on cryptocurrencies to family in the event of death?

I imagine you just need to pass on the type of wallet used, and the mnemonic recovery words so they can access the coins.

But you can't just leave those words in a plaintext will obviously. Any thoughts?

[thatha7777]

Shamir's Secret Sharing Scheme (ssss) would allow you to encrypt your recovery words in such a way that you could distribute the encrypted recovery words to N parties, and require the knowledge of K parties (n < k) to decrypt the secret.

ssss doesn't rely on any trusted party--for example, you could split into 5 "shares", and set a threshold of 3. Then distribute the shared amongst 5 of your most trusted friends (selecting them in such a way that it's unlikely they'll collude), and instruct them to only use their share of the secret when they've confirmed your death. 3 of them would have to "come together" (physically, or over a shared terminal or screen) and enter their "shares" to decrypt your recovery words. However, this would cause all 3 of them to know your recovery words.

To get around that, don't encrypt the recovery words themselves using ssss. Instead, encrypt the recovery words using a modern, strong, encryption algorithm, using a randomly generated key. Then use ssss to encrypt the randomly generated key, and share that.

Only give the ciphertext of the recovery words to the intended recipient upon death.

Instead of friends, you could also split the secret between your executor and the intended recipient/family remember, requiring consent from both.

Whatever you do, don't forget to write thorough instructions :)

[kilimchoi]

To add to this, you can instead use the multisig wallet and add your family members but in this case you are not splitting the private key amongst n members but you're creating n unique keys that's required to sign before the owners can complete a transaction. When someone dies in your family, you can remove that person from the wallet.

[IncRnd]

It's no different from leaving any bank account to an heir. You can leave the key to a safety deposit box that the named heir has to physically be present to claim.

You should be careful about using technical solutions, like secret sharing, since this is not a technical problem. It is a legal problem, and you don't want parties to conspire to obtain the property contrary to your wishes.

[thatha7777]

There is something ironic about trusting your decentralized cryptocurrencies to a centralized institution (like a bank that offers safety deposit boxes).

Someone who keeps enough assets in cryptocurrencies to want to include them in their will, chances are that they have a preference towards decentralized systems (or a distrurst/dislike of current authority/government-based systems). Nothing stops a government from forcing a bank to turn over the contents of a safety deposit box.

I definitely know 5 people that I can trust to not collude, even in the face of a subpoena or some government-issued directive.

[IncRnd]

Do what works best in your own personal situation, secret sharing, leave a riddle that only the specific heir can answer in order to find a location, safety deposit box, etc.

Just be aware that if you are leaving anything significant, people many times act differently when seeing dollar signs. Not just collusion, but refusing to divulge their secret without themselves getting paid.

Either way, you are trusting someone to one degree or another. If the expected passing is decades away, people losing their key material is a significant risk.

[_m8fo]

Easiest thing is to liquidate and leave those assets in a will. Anything else has a non-trivial chance of loss without recourse (unlike liquidated currency). That being said if you had that much money in crytocurrencies you probably wouldn't want to leave it to a bank.

[gesman]

Store them in fully reconstructable deterministic wallet (the one that can be rebuilt from scratch using long enough passphrase only). Split passphrase in 3 pieces (A, B, C) and store it in an envelope with instructions in three different, unrelated legal firms to be given to your heirs in case of your death.

Firm 1: A,B

Firm 2: C,B

Firm 3: A,C

This way:

- Your assets are protected from banks getting hold of your assets (including safety deposit boxes) in a future for whatever mayhem reasons.

- You assets are protected in case if any of these firms gets uncooperative, hacked, robbed or blackmailed to disclose password. Single firm cannot reconstruct your wallet - it doesn't have enough information.

- It's enough to have cooperation of 2 out of 3 firms = 2 letters to fully reconstruct the wallet.

[nyolfen]

put the mnemonic on a piece of paper in a safety deposit box