What Should You Know About Digital Asset Inheritance?
In the realm of digital asset inheritance, traditional estate planning approaches fail to address new challenges of complexity and risk.
Among the biggest risks are:
(1) failure to correctly create or maintain an up-to-date inventory of digital assets, resulting in inaccessible (lost) assets; and
(2) trusting a weak third party with credentials to access your digital assets. If you choose the wrong person, they could lose the assets, pass them on to an unauthorized third party, or even attempt to access them before they are entitled to do so.
Today's digital asset inheritance solutions must provide new ways to maintain digital asset inventories, protect Web3 assets with privacy and cutting-edge security, and include your trusted Guardians along the way. Vault12 is proud to offer the Guard app to solve these challenges.
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Introducing Digital Inheritance
Watch the video below for a brief introduction to Digital Inheritance.
What Is Needed For Traditional and Digital Inheritance at a High Level?
Whether you are planning inheritance of traditional physical assets or inheritance of digital assets, there are a few general planning requirements that you need to consider. How each of these should be performed will vary depending on whether you are planning to bestow traditional or digital assets. Each comes with its own set of risks.
1. Identify your beneficiaries.
2. Create a legally binding will.
3. Write - andmaintain - instructions detailing how to transition your various assets.
4. Contract for some form of storage to protect your inheritance plans.
Source: Cremation institute: https://cremationinstitute.com/cryptoasset-inheritance-planning/
What Inheritance Risks Are Related to Beneficiaries?
With traditional inheritance, an executor ensures that each beneficiary receives the specific assets that you intend to go to them at the appropriate time. Similarly, with digital inheritance, a robust digital inheritance plan must ensure that no beneficiary can access their inherited assets earlier than they should.
RISK - If you directly give your intended beneficiary digital access to your assets today, they could access your assets before they should. Additionally, anyone else who sees the instructions could access them inappropriately.
RISK - If you give a lawyer or executor digital access to your assets today to hold for your beneficiary, there are various forms of third-party risk: the firm could fail to adequately safeguard them, leading to their loss or theft. Or they could go out of business or otherwise have the assets seized.
Vault12 involves your beneficiaries in your digital inheritance plan without the risk of them accessing assets early, and without the risk of a custodian losing assets before it falls into your beneficiaries' hands.
What Inheritance Risks Are Related to Writing and Maintaining Instructions?
Your digital assets may be unique works of art, fungible cryptocurrencies, important documents, or a mix of all of these. And for each digital asset, depending on what it is, you may need to communicate specific instructions indicating where the asset is stored and all the pin-codes, seed-phrases, and passwords that are applicable to the asset.
RISK - You could incorrectly document your assets and access codes, or simply omit some.
The importance of keeping your instructions current cannot be overstated! Portfolios of digital assets can change frequently - you cannot rely on doing an inventory once, or for that matter continually, without assistance. With traditional approaches, you would need to amend your instructions each time you add a digital asset, together with all access details. Any errors or omissions could result in inaccessible assets, not to mention time wasted in documenting.
RISK - You forget to update the list of digital assets or the associated access information.
You also have to ensure that the detailed (and continually changing instructions) are not accessed by staff or other unauthorized people. In fact, it is imperative that these instructions are protected from theft.
RISK - Your instructions could be perfect but fall into the wrong hands.
Vault12 simplifies how you create and store your asset access instructions, and reminds you to test and confirm that the access steps are correct.
What Risks Are Related to Storing Your Inheritance Instructions?
In a traditional inheritance, you would likely pay for a safety deposit box in a bank or other physical custodial location.
RISK - Safety deposit boxes are not completely safe or accessible (such as during pandemic bank closings), nor are they insured in the event of loss or theft.
The Vault12 Guard app is a safer place to keep your digital asset inheritance instructions than a safe deposit bank or any other physical location.
Why Was the Digital Inheritance Company Vault12 Created?
Our CEO and co-founder spent time working on early crypto 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 securing seed phrases and private keys, and also that in the event of death or incapacitation, there was no mechanism to directly pass on assets to a designated individual.That revelation brought the genesis of Vault12!
Beyond the personal tragedy of failing to pass along digital assets to one's loved ones, another unfortunate side effect of unplanned “death events” in the crypto economy is that they permanently and forever remove large amounts of coins from circulation. Such crypto losses reduce the total circulating supply for all current and future users. Left unchecked, this may develop into a far bigger issue for the crypto industry as a whole since just as the industry enters mainstream use in the coming years and decades, the supply of digital resources available to new entrants will shrink in unplanned ways.
How Does Vault12 Digital Inheritance Clarify Your Intentions?
Vault12 Digital Inheritance is the first solution to offer a simple, direct, and secure way that all types of investors can ensure that all of your digital assets can be accessed by future generations.
- Traditional approaches to the inheritance of assets, when applied to digital assets, cause complexity and risk.
- Your portfolio of digital assets is continually changing - you cannot rely on doing an inventory once, or for that matter continually, without assistance.
- Vault12's simple Digital Vault solution with trusted Guardians accommodates all types of digital assets and reduces the uncertainty around assets not being available to the designated recipient. It also avoids having to approach and petition each service individually during probate to gain access.
How does Vault12 Digital Inheritance work?
- The Vault12 Digital Inheritance solution provides an app for protecting, backing up, and securing your digital assets. It enables you to designate a beneficiary who can inherit your entire portfolio of digital assets stored in your Vault when the time comes - no need to continually update an inventory or to issue updated instructions.
- Digital assets, including cryptocurrency, financial login information, legal documents, medical records, and more can be added to a Vault12 Digital Vault.
- The Vault is protected by a network of Guardians - these are friends, family, and business associates - people that you know and trust.
- A beneficiary is designated by the Vault owner from amongst the Guardians, and a declaration is digitally signed and transmitted to the beneficiary and lawyers as needed.
- Upon the passing of the Vault owner, when the beneficiary is ready to access the digital assets, a designated number of Guardians approve the request, and the assets are restored with access granted to the beneficiary.
- Should the beneficiary attempt to access the assets prior to the owner’s passing, the owner can veto the request.
Vault12 Maintains Digital Asset Inventory and Provides Private Access
Vault12 Digital Inheritance has been designed to reduce the risks associated with managing digital assets and preparing them for future transfer:
- Comprehensive Digital Asset Inventory: Designed to accept all forms of digital assets. When used to secure and backup an investor’s full range of assets, it provides an up-to-date inventory to be inherited.
- Direct access for the designated individual: Offers a simple and direct way for the designated individual to gain access to digital assets without having to petition multiple services or financial institutions.
- Privacy Protection: Ensures that, unlike with multi-sig solutions, information about the digital assets is kept private - even from lawyers.
What Are Some Personal Stories of Digital Inheritance Failures?
There is a steady drumbeat of these stories happening with worrisome regularity:
- In April 2018, Matthew Mellon, heir to Mellon family banking fortune and former chairman of the NY Republican Party finance committee, and cryptocurrency proponent died. Prior to his death, he held an estimated $1B in Ripple (XRP) - all of this remains were inaccessible as he left no instructions, even though he protected the cryptocurrency via cold storage in multiple locations around the US in different people’s names.
https://fortune.com/2018/04/17/matthew-mellon-crypto-billionaire/
- In 2017, an unidentified young crypto investor in Colorado died with a small fortune in cryptocurrency held in a coinbase account. The family, however, had no access to the account and eventually had to petition Coinbase directly. Eventually, the assets were released after a lengthy process. If the account holder had not been a U.S. Citizen, this would have been a much more complicated process.
Ready to Ensure Your Inheritance for Crypto Assets?
Please visit the Vault12 website to learn more and join us in the new era of Digital Inheritance. In just a few minutes, you can download the Vault12 Guard app and protect all of your digital resources.
