How do I pass on my cryptocurrency? Plus the Digital Blockchain Trust (DBT) explained.

How do I pass on my cryptocurrency? Plus the Digital Blockchain Trust (DBT) explained.

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Transcript

Greg McIntyre:

Hi, Greg McIntyre, McIntyre Elder Law. We're going to talk about what happens to your crypto when you die. We're going to talk about how to pass it through a will, how to pass it through a trust, and we're going to talk about some really cool theoretical stuff that's coming that could replace traditional trust called a Digital Blockchain Trust or DBT. I just published a white paper on the Digital Blockchain Trust, so check that out on our website, mcelderlaw.com/blog. Go to our blog and it's right there. So, how do I pass my crypto if I pass away? Can anybody access the accounts? How do they access the accounts? Does it just go away? That would be a horrible thing to think about, that you've invested this money, time, effort into this cool thing, cryptocurrency, and it just locks up or it goes away or you're unable to access it.

            Well, there are straightforward ways for your executor with a will, your trustee with the trust, to access your crypto accounts and pass those as you have laid out in your will, in your trust. Here's how to do that. So, with a will, you would name an executor. That executor would probate the will. Now, when you're drafting the will, you wouldn't want to put your usernames, password, identify instruments like phones or other electronic instruments that help with two-factor authentication. You would want to place that in a separate memorandum, a cryptocurrency memorandum. And what we do is direct your executor to locate that memorandum and to not file that memorandum, but follow your wishes and use that information as laid out in that memorandum. So, in your will, you are going to say, "My crypto holdings, I'm going to divide it a certain way, maybe equally among my children, and I empower my executor to make that happen under the watchful eye of the court in a process called probate."

            The problem with probate is it can be a lengthy process. So, if we want to go faster and not have heirs that receive cryptocurrency through a will, we're going to look at adding beneficiaries through a trust. But staying on the will for a second, let's say I'm probating that will, I'm the executor, I'm going to look at all the passwords, the usernames and I'm going to be able to access those accounts, but Coinbase and other popular exchanges actually have a process whereby you show the court orders or documents, say letters of probate, letting them know that you are the executor, and they verify that and they allow you access to the account so you can distribute the crypto assets as you dictated in your will. That's what the executor does. It executes the orders and the will under the watchful eye of the court, okay?

            So, if we want to avoid that lengthy probate process, we're going to maybe look at using a trust for our crypto. In our trust, we would also want a memorandum, we would want to have a crypto memorandum, having the trustee look at a separate document outside of the trust document that has your usernames, passwords, devices used for two-factor authentication, how that works. We want to lay that out and we have a format by which we've come up with that works well where you can lay that information out in that cryptocurrency memorandum. Now, your trustee is going to be you while you're alive. So, you're going to be able to operate your cryptocurrency accounts through your trust. And big crypto exchanges like Coinbase would allow you to set up an account in the name of a trust. So, you're the trustee, they know you're the trustee, you're operating that account just like it's your personal account.

            If something were to happen to you, you became incompetent, incapacitated, or passed away, then your successor trustee, your second person would step up and take your place. That needs to be an extremely trusted individual, obviously, because you would be handing them to keys to your crypto kingdom. And that second person would come in and play the role as trustee and be able to do, manage your crypto accounts, do the same things that you could do while you were competent, while you had capacity. Or if you passed away, they would then start the administration upon death and they would follow the rules that you set out to distribute your crypto to any charities, to any children that you might name as beneficiaries. So, that is a manual way to distribute crypto using existing estate planning tools like wills or trust.

            There is another theoretical way, which I just wrote a white paper on, it's called a Digital Blockchain Trust. And I've put a Digital Blockchain Trust map there. You can get the white paper by going to our website mcelderlaw.com and go to the blog. It's mcelderlaw.com/blog or just click the blog link on the website and you will see the white paper in our blog. Now, a Digital Blockchain Trust, or DBT for short, would and if you have researched or know a lot about blockchain, I don't know a lot but I know enough to be dangerous about programming blockchain and how it works, okay? So, essentially, blockchain is packets of information that one block looks at the previous block. The first block is the Genesis block. Every block after that looks at the previous block to make sure that it has this authentication, okay, so they're able to work together.

            And if you change the information in one, it invalidates the rest of the chain, unless you do proof of work on each one, which takes time, okay? But without getting too deep into blockchain and how it works, let's say that you have a Digital Blockchain Trust, and that's programmed and has information in it that you've put in. Let's say, you use an interface like a web form, something like that, to set up that Digital Blockchain Trust. And you say, "If I die and there is a verifiable death event and there would be a process to verify you passing away, when that happens, either your digital currency is already in the trust or it funds the trust at that point, okay? And different states have different state laws about seed trusts that are unfunded, so it would be a good idea to go ahead and fund that Digital Blockchain Trust while you're alive.

            You funded the trust, something bad, awful happens and you pass away, there's a verifiable death event, upon that, there's already programmed. So, instead of a human trustee saying, "I'm going to, a successor trustee taking over." What's going to take over is the digital instructions that are held on the blockchain, on that Digital Blockchain Trust that's associated or tethered to your digital currency. And it says, "Okay, when that happens, I've got a charity that gets 20%, I've got two children that get, that split the remaining 80, 40% apiece." And when that happens, there has to be some type of form of identification to verify that your children are exactly who they say they are and that the charity is what it's purported to be the one that you're giving it to. So, there would be an identification process and that's called identity verification points.

            And that would be a pre-program process by which your children, for example, would get a text, email, perhaps a phone call, and this would be an automated thing that would happen based on the code, based on the instructions that you gave and the choices you made when setting up your Digital Blockchain Trust. After they've sufficiently verified, they are who they say they are, then a wallet is funded, created, funded, and they will receive, say an email, a text to create their own password to that wallet and then they now have their portion in their Sub Trust Wallet or SWT, okay? So, their Sub Trust Wallet would be funded, they have access, and now, they can either manage that currency in that Sub Trust Wallet, or they can withdraw it as cash and put it in a bank account, they can withdraw it and put it in their own digital wallet and move on to invest that however they see fit.

            So, that is what a digital, in theory, a Digital Blockchain Trust is and that's how it works. I can't wait to show you the white paper. I'm going to put a screen recording of that white paper and the Digital Blockchain Trust map right at the end of this video and I hope you enjoy it. Thank you for watching. I'm Greg McIntyre with MacIntyre Elder Law. We can absolutely help you and your family preserve and pass your digital currency and preserve that for generations. Just as an in aside with a Digital Blockchain Trust or with again, a traditional trust, both can or could pass digital currency, a Digital Blockchain Trust. You might not want to distribute it outright, you might want to distribute the funds over time. So, the digital wallet, the Sub Trust Wallet, would be funded over time as you pre-programmed it to.

            So, this is what's coming. We can, right now, pass your digital currency with a will or trust. Or if you'll wait five minutes, because it'll go by like that, the future will be here and a lot of the ways that we do estate planning and past assets will change as currencies change the more and more digital in nature and the blockchain becomes much more widely used with smart contracts, with separate features and automated systems like a Digital Blockchain Trust. That is the future, guys. I mean, change is constant in our world and in our life. We might as well embrace it and we want to be on the forefront of that change at MacIntyre Elder Law. If you needed anything, please go to our website, mcelderlaw.com and you can contact us. You can always send us an email at info@mcelderlaw.com or give us a call, 704-749-9244. Thanks. Have a great day. And I'm going to show you the white paper right now.