E342 Thank You to Our Listeners!
Anthony S. Park
Based on feedback from you, the audience, we're pausing these episodes and will focus on writing instead: Our blog: Our books on Reviews always appreciated! Thank you for sharing all your amazing questions and stories, and thank you for listening!
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E341 How Long to Transfer Real Estate After Death
Anthony S. Park
There is no legal time limit to transfer real estate after death. It could happen quickly, or it could take years. We’ve seen cases where the real estate doesn’t get transferred until generations later. A fast sale is ideal, because problems can emerge in the meantime. There is a lag between the date of death and when the executor gets legal authority to handle the property. So, even “fast” isn’t very fast. How long does it take to get preliminary letters? The executor does not have full authority over the estate until he gets letters testamentary (or letters of administration) from...
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E340 Reasons Not to Make a Loved One the Executor
Anthony S. Park
We’ve talked before about not making a loved one your executor. I recently read an article titled, “.” Here, we’ll add our own perspective for why it’s not a great idea. Being executor can be emotionally difficult It is a duty that begins almost immediately after the death of your loved one. You are grieving the loss while facing a list of daunting tasks. Even normal probate is a lot of work and can be tough while grieving. In a somewhat difficult probate, you . If you are also family and friends with these people, it can be awkward. They will continually ask you when they will...
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E339 Why Sharing Your Seed Phrase is a Bad Bitcoin Inheritance Plan
Anthony S. Park
In this episode, we will talk about self-custodied bitcoiners (not those who have their coin on an exchange or with a third party). Some bitcoiners share their seed phrase with their spouse or adult children. Or perhaps they share their cloned wallet with those trusted individuals. It’s temptingly easy, essentially . But, as we’ll discuss, it can be insecure for reasons you may not think of. Sharing your seed phrase can be dangerously . Relationships change One reason that this plan is not flexible is because relationships change. Married couples can become divorced or...
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E338 Should I Sell My Home Before I Die?
Anthony S. Park
This is a very common question that we get from Solo Agers. We’ll review the pros and cons of making that decision. Reasons to sell your home before you die The biggest reason Solo Agers want to sell their home before they die is because they don’t want to leave a mess for their loved ones. Otherwise, there may be a lot of cleaning, maintenance, and packing for the heirs to do. Additionally, the before it is in sellable condition. Another reason is that Solo Agers may want to downsize anyway. Downsizing is a different topic, so we won’t focus on that here. Reasons to...
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E337 Who Owns a House During Probate?
Anthony S. Park
When someone dies, many folks are confused about who owns the house during probate, right after the death. Technically, the heirs own it immediately upon death, subject to debts and taxes of the estate. But, sometimes is not clear who the heirs are. The probate process decides who exactly are the heirs and places an executor in charge to sort out all those debts and taxes. So, the heirs own the house, but if it is not clear who the heirs are, then you kind of need to wait to see who really owns it. Understandably, this is a bit confusing. We’ll cover common questions on who owns the property...
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E336 Risks of Being an Executor
Anthony S. Park
What are the risks of being an executor? An executor has a lot of power and responsibility during probate, but is correspondingly accountable for everything that happens within the estate. We’ll cover how an executor has risk of even personal liability, how long that risk lasts, and how an executor can protect himself from these risks. Executor personally liable for debts and taxes The executor has personal liability for debts, taxes, and anything wrong with the estate. If an executor makes an error, the court’s first reaction is to deny payment of the executor's commission. If the...
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E335 Why a Letter of Instruction for Bitcoin Inheritance Will Fail
Anthony S. Park
A letter of instruction will likely fail for your bitcoin inheritance plan and should have only a marginal role in your plan, if any. Search for “bitcoin inheritance” and you will probably find lots of people advising you to write a letter of instruction for your heirs. We talked about this and even provided a . Now, having spent a bit more time delving into different approaches to bitcoin inheritance, we’re de-emphasizing a letter of instruction. Note: this applies to self-custodied bitcoin, not held through a third-party. Educate your heirs A letter of instruction is a subcategory the...
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E334 Why Hire a Professional Trustee?
Anthony S. Park
I do serve as a professional trustee, not just executor, or our Solo Ager clients. We’ll cover why our Solo Ager clients are looking for a professional trustee, why they don’t use banks, and how much it costs to hire a professional trustee. Disputes between trustee and beneficiary Why are our Solo Ager clients looking for a professional trustee? The main reason is because of potential disputes between the trustee and the beneficiaries. Unfortunately, this kind of conflict is very common, even more so than between heirs and executors. A trust creates a much longer relationship: an estate...
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E333 Seller Credit When Selling Probate Real Estate
Anthony S. Park
This happens when the buyer agrees to a higher contract price, but the seller also agrees to credit back a set amount to the buyer, so the net purchase price is lower. For example, if the buyer wants the house for $250,000, they would set the contract price at $300,000 with a side agreement that the seller would credit $50,000 on the closing statement, effectively making the price $250,000. Why not just a price reduction? Co-ops (and sometimes condos and homeowners’ associations) want the closing price to be (artificially) higher to maintain their average price per square foot. They don’t...
info_outlineMultisig or a passphrase ("poor man’s multisig") are two ways to transfer custody to your bitcoin executor upon your death. Let’s compare, so you can decide which best fits your bitcoin inheritance plan.
Why multisig for bitcoin inheritance?
The main feature is splitting access to your bitcoin, so that it’s not catastrophic if just one of your keys is revealed, leaked, or hacked. While you should always be careful of how you manage your security materials, using a multisig allows you to be a little less uptight with your security practices. By contrast, if all of your stash is in a singlesig wallet, then access to that one key could cost you all of your bitcoin. If one key is lost, you lose it all. If one key is hacked, it’s all stolen.
Also, this is not necessarily what’s best for estate administration (which can last years), but rather the immediate transfer of custody to your executor. So this is not about how your executor will hold your keys during his tenure as your executor. This analysis is specifically regarding the pros and cons of how smooth the transfer will be from you to your executor upon death.
Lastly, the general pros and cons of multisig vs. singlesig with a passphrase (multi vs. single vendor risk, costs of multiple hardware wallets, ease of setup, etc.) are beyond the scope of this analysis. For the purpose of this discussion, we are just looking at the pros and cons of transfer to your executor upon your passing.
Leaving a passphrase for your bitcoin executor
First, we’ll look at using a passphrase as a poor man’s multisig for your non-bitcoin executor. Your seed phrase and your additional passphrase combine as an imperfect 2-of-2 multisig of sorts.
A passphrase would be easier for a non-bitcoin executor, in theory, because it feels more like just a second password. By contrast, multisig can be more intimidating: and feel like those movies with a nuclear submarine where the captain and the first mate must each put a key in and turn on the count of three...
If you or your executor lose your passphrase, there’s at least theoretical hope to recover it with enough computing power (depending on length and complexity of the passphrase). People are not too great about choosing phrases randomly, and often use short passphrases that are easier to remember. A lost 12- 24-word seed phrase could not be recovered for the foreseeable future.
You could also hide your passphrase in plain sight, so that it’s easier to transfer to your executor. For example, writing a letter to your executor, where every fifth word comprises your passphrase. My understanding is this is poor opsec with a 12- or 24-word seed phrase, because seed phrase words are a finite set, and hackers have algorithms to scan text for seed phrase words.
But be aware: passphrases are not really designed for this, and there’s not much support for its use as a poor man's multisig. A non-professional executor may have trouble finding information online about passphrases as a 2-of-2 multisig. Whereas there are companies that, for a consultation fee, will take the time to walk the executor through the multisig process.
How your bitcoin executor will handle your multisig
With a 2-of-3 multsig, there are three independent keys (seed phrases and/or hardware devices), and you need two of them to access the bitcoin and make a transaction.
Multisg has more leeway for error: even if you lose one key, you still have two and can recover. This provides a margin for error in terms of catastrophic loss. With a passphrase (or any 2-of-2) set up, there are only two "keys", so if you lose either one, you can’t access your bitcoin.
A second benefit of multisig is that each key is strong and offers full protection because each key is a 12- or 24-word seed phrase, created with the fully researched cryptography security. Whereas you create your own passphrase, and we're all pretty bad at being sufficiently random (admit it, we use our kid’s name, anniversary, favorite movie quote, etc. as passwords).
Lastly, multisig has lower “smudge risk” than a passphrase. Since 12- or 24-seed phrase words comes from a finite set of possible vocabulary words, if just of the handwritten seed words and smudgy, there is still good a chance of figuring out the word. But since your passphrase can be any word, in any language, or even gibberish, guessing a smudged word would be complete guessing.
The focus here is how your executor will solve the puzzle after your death so your bitcoin isn’t lost. For further reading on what executors deal with in general, check out my book on Amazon, “How Probate Works.”
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