What do you need to know about digital asset inheritance?
In the realm of digital asset inheritance, traditional estate planning approaches fail to address the new challenges of complexity and risk.
The biggest risks are:
(1) Failure to properly create or maintain an up-to-date inventory of digital assets may result in inaccessible (lost) assets.(2) Trusting credentials to access your digital assets to a weak third party. Choosing the wrong person can result in losing your assets, transferring them to an unauthorized third party, or attempting to access your assets before you are authorized to do so.
Today’s digital asset inheritance solutions must provide new ways to maintain digital asset inventory, protect Web3 assets with privacy and state-of-the-art security, and include trusted guardians. Vault12 is proud to offer the Guard app to address these challenges.
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Introduction to Digital Inheritance
For a brief introduction to digital inheritance, watch the video below.
What is needed for high-level traditional and digital succession?
Whether you are planning to inherit traditional physical assets or digital assets, there are some general planning requirements to consider. How you accomplish each of these requirements will depend on whether you are gifting traditional assets or digital assets. Each carries its own set of risks.
1. Identify the beneficiary.
2. Write a legally binding will.
3. Write – andmaintain – Detailed instructions on how to convert various assets.
4. Enter into some form of custody agreement to protect your estate plan.
Source: Cosmetics Lab: https://cremationinstitute.com/cryptoasset-inheritance-planning/
What are the inheritance risks associated with beneficiaries?
In a traditional estate, the executor ensures that each beneficiary receives the specific assets you gave them at the appropriate time. Similarly, in a digital estate, a strong digital estate plan should ensure that beneficiaries do not have access to the assets they inherit earlier than expected.
Risk – If you give your intended beneficiaries digital access to your assets today, they may access them before they should. Additionally, others who view your instructions may gain inappropriate access.
Risk – Today, giving an attorney or executor digital access to assets held for a beneficiary poses a number of third-party risks. The company may fail to properly safeguard the assets, resulting in loss or theft. Or the business may go out of business or assets may be seized.
Vault12 allows you to involve beneficiaries in your digital estate planning without the risk of beneficiaries accessing assets prematurely or the risk of the administrator losing assets before they are in the hands of the beneficiaries.
What are the inherited risks of writing and maintaining instructions?
Your digital asset could be a unique piece of art, a fungible cryptocurrency, an important document, or a combination of all of the above. And for each digital asset, depending on what it is, you may need to provide specific instructions on where the asset is stored and any PIN codes, seed phrases, and passwords that apply to the asset.
Risk – Assets and access codes may be recorded incorrectly or some may be omitted.
The importance of keeping your guidelines up to date cannot be overstated! Your portfolio of digital assets can change frequently. You cannot rely on creating an inventory once or over and over again without assistance. Using the traditional method, you would have to update your guidelines with all access details every time you add a digital asset. Errors or omissions can result in inaccessible assets and waste time documenting.
Risk – Forgetting to update your digital asset list or related access information.
It is also important to ensure that detailed (and constantly changing) instructions are not accessible to employees or other unauthorized persons. In fact, it is essential that these instructions are protected from theft.
Risk – Even if your instructions are perfect, they can still fall into the wrong hands.
Vault12 simplifies how you create and store asset access instructions, and lets you test and verify that the access steps are correct.
What are the risks of keeping a will?
In a traditional inheritance, you would have paid for a safe deposit box to be set up at a bank or other physical storage location.
Risk – Safe deposit boxes are not completely secure or accessible (e.g. during bank holidays due to a pandemic) and are not insured in case of loss or theft.
The Vault12 Guard app is a safer place to store your digital asset inheritance instructions than a safe deposit box or other physical location.
Why was the digital inheritance company Vault12 created?
Our CEO and co-founder spent time working on early cryptocurrency industry deals at Andreessen Horowitz (one of the first and most reputable venture capital firms in the blockchain space). He observed that there was no end-to-end solution for backing up and protecting seed phrases and private keys, and no mechanism for directly transferring assets to a designated individual in the event of death or incapacity. This discovery led to the birth of Vault12!
Beyond the personal tragedy of not being able to pass on digital assets to a loved one, another unfortunate side effect of an unplanned “death event” in the crypto economy is that a large amount of coins are permanently removed from circulation. This loss of cryptocurrency reduces the total circulating supply for all current and future users. If left unchecked, this could lead to a much larger problem for the entire crypto industry, as the supply of digital resources available to new entrants will be reduced in an unplanned manner as the industry gains mainstream adoption in the years and decades to come.
How does Vault12 Digital Inheritance clarify your intent?
Vault12 Digital Inheritance is the first solution that provides investors of all types with a simple, direct, and secure way to ensure that all of your digital assets are accessible to future generations.
- Applying traditional approaches to asset inheritance to digital assets introduces complexity and risk.
- Your portfolio of digital assets is constantly changing. You can’t rely on creating an inventory once or continuously without help.
- Vault12’s simple digital vault solution with trusted guardians accommodates all types of digital assets and reduces uncertainty about the intended recipient not being able to use the assets. It also avoids having to individually approach each service to petition for access during probate.
How does Vault12 digital inheritance work?
- Vault12 Digital Inheritance solution provides an app to protect, back up and secure your digital assets. When the time comes, you can designate a beneficiary who can inherit your entire portfolio of digital assets stored in Vault. No need to constantly update your inventory or issue updated instructions.
- You can add digital assets such as cryptocurrencies, financial logins, legal documents, medical records, and more to your Vault12 digital vault.
- Your vault is protected by a network of guardians. Guardians are people you know and trust, such as friends, family, and business associates.
- Beneficiaries are designated by the owner of the safe from among the guardians, and the declaration is digitally signed and transmitted to the beneficiaries and their attorneys as needed.
- When a Vault owner dies and a beneficiary is ready to access the digital assets, a designated number of guardians will approve the request, and the assets will be restored and access granted to the beneficiary.
- If a beneficiary attempts to access assets before the owner dies, the owner may deny the request.
Vault12 maintains an inventory of digital assets and provides private access.
Vault12 Digital Inheritance is designed to reduce the risk of managing digital assets and preparing for future transfers.
- Comprehensive Digital Asset Inventory: Designed to accommodate all forms of digital assets, it provides an up-to-date inventory to inherit, used to protect and back up the investor’s entire asset range.
- Direct Access to Designated Individuals: Provides a simple and direct way for designated individuals to access digital assets without having to petition multiple services or financial institutions.
- Privacy: Unlike multi-signature solutions, information about your digital assets remains private, even to your attorneys.
What are some personal stories of digital inheritance failures?
We continue to hear of such incidents occurring with worrying regularity.
- In April 2018, Matthew Mellon, heir to the Mellon family’s banking fortune, former chairman of the New York Republican Finance Committee, and cryptocurrency advocate, died. Before his death, he held about $1 billion in Ripple (XRP). He had secured the cryptocurrency through cold storage in different places across the United States under other people’s names, but he left no instructions, so all these artifacts were inaccessible.
https://fortune.com/2018/04/17/matthew-mellon-crypto-billionaire/
- In 2017, an unidentified young cryptocurrency investor in Colorado died with a small amount of cryptocurrency in his Coinbase account. However, his family was unable to access the account and eventually had to petition Coinbase directly. Eventually, the assets were released after a lengthy process. If the account holder was not a U.S. citizen, the process would have been much more complicated.
Are you ready to secure your inheritance in cryptocurrency?
Visit the Vault12 website to learn more and join the new era of digital inheritance. Download the Vault12 Guard app in just a few minutes to protect all your digital resources.