Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Pamela Morgan: Cryptoasset Inheritance Planning

Episode Date: June 21, 2018

While many cryptocurrency holders have thought about how to secure their assets, how to pass on cryptoassets in case of one’s death is rarely on people’s mind. Lawyer Pamela Morgan has been helping people and organizations build solutions to safely store their cryptoassets and has recently turned her attention to inheritance planning. Though we have often explored the legal issues surrounding blockchains and cryptocurrencies on Epicenter, never have we discussed the topic of inheritance. We discussed her new book “Cryptoasset Inheritance Planning” and how people can design a simple plan to give heirs a high chance of recovering assets in less than an hour. Topics covered in this episode: How an impassioned talk on Bitcoin by Andreas Antonopoulos started her crypto journey Common misconceptions lawyers have about crypto Her work through Empowered Law on educating lawyers Third Key Solutions and building non-custodial key management solutions The most frequent mistakes people make when it comes to protecting cryptoassets How to do inheritance planning for cryptoassets Differentiating between technical and legal aspects to inheritance planning Episode links: Empowered Law – Law and Education to Empower the World Third Key Solutions – Non-Custodial Key Management and Consulting Services Cryptoasset Inheritance Planning Book Inheritance Planning for Cryptocurrencies: 3 Steps in 3 Minutes When Disaster Strikes: Developing a Recovery Plan for Bitcoin and Digital Tokens Pamela Morgan on Twitter This episode is hosted by Brian Fabian Crain. Show notes and listening options: epicenter.tv/240

This is Epicenter, Episode 240 with guest Pamela Morgan. This episode of Epicenter is brought to you by DAPCON. DAPCON is a two-day developer conference, organized by Gnosis, taking place in July 19th and 20th in Berlin. The conference focuses on decentralized applications, tooling, and scaling solutions on Ethereum. Go to dabcon.io to get your ticket today. Hello and welcome to Epicenter, the show which talks about the technologies, projects, and startups, So I'm decentralization and the global blockchain revolution. My name is Brian Farman Crane, and I'm here today with Pamela Morgan.

Pamela Morgan is a lawyer, and she's also the founder of empowered law, of a kind of blockchain security company called Third Key Solutions. And most recently, she's written this book called The Crypto Asset Inheritance Planning, which is going to be kind of the main topic for the show. Yeah, so thanks so much for being on the show, Pamela. Thank you for having me. I'm really excited to chat with you today about all things inheritance planning. Right. So this is actually kind of an unusual episode, I would say. Mostly, you know, we sort of try to explain complex, technical concepts or sort of the next big ideas in crypto. And these are like sort of seemingly straightforward and trivial. But, you know, practically very, very important and very relevant things that we're going to speak about.

And probably things that many people also can take away some actionable stuff that they can do today or this week to actually improve, improve kind of how maybe a sense of security, how they feel with their crypto, but also looking out for their hair as in case something terrible happens. Absolutely. So maybe you can start there. How did you first become involved in Bitcoin and cryptocurrency? My origin story starts as so many others.

I was actually speaking at a conference, not about Bitcoin. I was speaking at a conference called Disrupt Startup Scale Up. And at that point, I was teaching entrepreneurship. I was teaching entrepreneurship professors how to teach an entrepreneurial mindset. So that's like pretty meta. But I loved my job. I was traveling the world.

I was teaching people. I felt like I was really making a difference. And I was at this conference. And many of the other speakers were not so disruptive. Their ideas were pretty boring, to be completely honest. And I was like, oh my gosh, really, this is disruption. And then Andrea Santonopoulos got on the stage, and he started talking.

about Bitcoin. And I was in the audience. And I remember just being mesmerized, thinking to myself, if half of what this guy says is true, this technology might actually change the world. And so I was super inspired. And I left the event. And I studied Bitcoin for a couple of months.

And then I decided that I was going to quit my full-time job. And I was going to make a career in Bitcoin. And that's what I did in early 2014. I started practicing law specifically for Bitcoin and open blockchain companies. And I've been doing that ever since. Best decision I ever made. Leaving a full-time job to work in Bitcoin and open blockchain full-time. Absolutely recommended.

And of course, Andreas, yeah, absolutely such an amazing speaker. And I think the way he's able to convey some of the ideals. and values around blockchain and inspire people to get involved in the space is pretty unparalleled. So I can imagine that conversion experience, how that happened. It was really, I feel very fortunate

to have been in the audience and to have been in a position to actually hear what he was saying, meaning that so often in our lives we're not really in a position to hear these sorts of things. And then you start to listen to someone talk about a message of hope

and genuine change presenting this technology that actually has the capacity to change the way that we interact with one another. And, you know, I was ready for that. You know, the conference of disrupt. I was like, yes, let's disrupt things. Let's make a change. And so it was a really, it was a good time. And it was a good message.

And I'm very fortunate that I was there. Great. And so then you're a lawyer, right? And you say, okay, I want to work in, or you still are, right? And then you say, okay, I want to work in this cryptocurrency, Bitcoin blockchain field. So what did you do? first do then? Well, so at that point, it was early 2014, and there were a lot of startups in the space, like there are now, but then there weren't a lot of lawyers who were helping these

startups. Most of the startups, you know, can't really afford or don't want to seek legal counsel, and so, but they do need some sort of protection often. And so I was helping startups who kind of wanted an alternative perspective on understanding what their risks are and what their options are. I don't tell my clients what to do. That's not my job. My job is to explain what the options are and what the risks are and help them make an informed decision. And at the end of the day, it's whatever you want because it's your name on the line, right? And so a lot of startups found that perspective to be refreshing. So I was helping startups who were managing cryptocurrencies. And at that point, there were a number of stories of CEOs who would get funding in Bitcoin and then get hacked

or mysteriously run away with all of the funds. And I was like, why is this happening? There's this multi-sig feature. There's this multi-signature feature that's built into Bitcoin. Why aren't people using it? And then I realized why. And the reason is because it was super hard to use. There weren't any nice, like, copay interfaces.

there weren't any of that. And so I started helping companies not only prepare their legal documents, but talking to them about how to secure their funds. And I was asking all of the smart people that I had talked to in the industry, like, hey, can you help me do this? Can you help me do this? And a number of them said yes. And one of them spent a ton of time helping me kind of develop these processes,

and that was Andreas. And so he helped me with the technical side of the most. multi-signature implementation, and I worked on the process side. So what many of your listeners might not know is that multi-sig is more than just the tech side, right? And we learned that, you know, when BitPay got fished, we learned that over and over again that, like, okay, being able to click a button and sign a transaction isn't really necessarily what's going to keep you safe. And so I worked on the process controls. Andreas would help out with the technical when I needed it. And that's actually how third key solutions came to be.

Because that's not really practicing law, right? I mean, helping people come up with corporate governance and processes around how they hold their cryptocurrency safely in their companies or even as individuals. That's not really practicing law. It's much more of a consultancy kind of practical hands-on application. And so that's how and why we created third-key solutions. Yeah, I can well imagine that, right? Because multi-sake, probably again, to many listeners, it sounds like this obvious thing.

Okay, now you have just two people signing it. But then to think through things like, okay, you know, what happens if one guy you loses the keys or there's some backup or now you have multiple people and maybe one leaves the company, how do you switch? There's so much complexity around it. Exactly. And the thing is, is you don't want to be making. these processes and policies.

You don't want to be thinking about this for the first time when it happens, right? So like when the key is gone, you don't want to be having an emergency meeting like, oh shit, so-and-so is resigned from the company. And how are we actually, do we need to move the funds? How are we going to move them? When are we going to move them?

Are we creating a whole new multi-sick address? Like what is the actual process? And you want that in place before it's like emergency time. Great. So in all of these cases you've done at third key solutions, can you give an example of maybe like one, which is a simple but typical case, case story? And let's say one that's a, you know, very unusual and interesting one that, you know, that you found particular memorable. Sure. So I have to be kind of vague about this. So the stories might not be so great because we have confidentiality, right? So we don't share generally.

who our clients are. And so I kind of have to keep that private, but I'll do my best. You know, for third key solutions, our standard clients are startups. Generally, we only work with startups. We are approached by a lot of different companies. Last year was the year, I call it the year of the hedge fund, where pretty much every week we were getting two and three requests for people who wanted to hold cryptocurrencies and their hedge funds. And they're funds and they wanted to do it securely. So that's kind of, you know, what are the organizational processes to do that? And, you know, pretty much I'm breaking hearts all across the world when I tell them that there's really not a lot that you can do as a trusted third party, right? You know, you can

mitigate the risk, you can have best practices, but at the end of the day, I'm a big believer in having people manage their own keys. I think that's one of the main promises of Bitcoin and cryptocurrency, and I think that's one of the ways we actually do change the power structures and not just change who's in charge of the power structures, which seems to be what a lot of people are kind of moving to in our industry. So, you know, there's a lot of organizations that really, really want to hold cryptocurrencies for other people, and obviously that's dangerous. They become a honeypot.

It's dangerous for the company, but it's also dangerous for the people who are trusting these third parties to hold their crypto. So a lot of times we, to answer your question, a lot of times we have these organizations come to us and they want us to help them implement policies. I've actually written a few articles on this and there's one in particular that people might find useful. It's called disaster recovery planning and I believe it's on the Third Key Solutions website, but it goes through step by stop and asks all of the questions, not all of the questions, most of the questions, that I would ask you if you hired us to help you with your organization. And there are a lot of the questions that you brought up earlier, right?

What do you do if there's a breach? What do you do if someone loses their key? What do you do if a principal leaves the company? And that is kind of a tool so that people can start to develop these practices on their own and not have to hire someone like me because we don't scale. We are a boutique firm. To move into the individuals, this kind of came about organically, where we were helping these startups and we were helping them secure their cryptocurrencies.

And then inevitably, I would ask the question, like, okay, how much of your net worth is being held in, for example, Bitcoin? And they would look at me as if I was stupid. And they would be like, all of it. And I'm like, okay, cool. So if something happens to you, do you have people that rely on you? Do you have a family? Do you have children?

Do you have parents that you need to support? Are there people who rely on you who would need or really, really benefit from these assets if something were to happen to you? And then they're like, well, yeah, okay, well, then the next question is how are they going to get them? Have you made a plan? Or are your private keys so private that access dies with you? you. You know, another point I think that's relevant is that it doesn't just have to be death, right? It could be you have an accident and, you know, you're in a coma or you have surgery or

something like that, and maybe your family needs access to those funds to pay your medical bills. If you're in the U.S., they do. If you're anywhere civilized, they don't. Or maybe they do. Maybe I don't really know. But, you know, the idea is that estate planning and inheritance planning isn't just for, you know, the, your, your demise. It can be for all sorts of other, you know, issues. You mentioned before the show and also here, right, like, so the third key solution doesn't really scale and you guys are like full inundated with requests, can't take more clients. Like, why not hire more people, scale the company? Because obviously this is needed and needed at, you at a large scale as the industry is growing,

why not pursue that and scale that? One of the reasons that I left my former employment, one of the benefits of being an entrepreneur, one of the things that I value, is creating my own success. And I think it's important that people define what success means to them. For me, it's not a Lambo, which I do not have. and do not want, and could not afford, but that's beside the point.

For me, success involves a lot of freedom. It involves freedom to travel. It involves freedom to work with only people that I want to work with. It involves me working on projects, only projects that I think are benefiting the world. For me, that's what I care about. And so in order to scale the business, and in order to take all of these clients who want to hire, us, we would have to work with people who, not people who I don't care for, but on projects that I don't think are making the world a better place, right? And so, and it's totally subjective,

and it's completely unfair. And that's how life is. So, you know, we don't want to scale third key because we're very interested in working on specific problems that we think we can provide ultimate value to, and we prefer to scale in education. We prefer to scale in education. We prefer first, for example, that's one of the reasons why I wrote this book. It's because the way that we want to scale isn't by taking on more and more clients, but it's by providing educational resources to people so that they can be empowered to kind of educate themselves and do the sort of work on their own. And then when they need that extra help, when they need to go that last 20%, then they can hire someone who really needs them. That's the honest answer. No, that makes perfect sense. Yeah.

Also, my CTO has a lot of other things that he likes to do. He's got a lot of other work happening. For those of you who don't know, Andreas, agreed to be the CTO of third-key solutions. And so I promise you he would much rather be writing books like mastering Ethereum, which is, I think, what he's doing right now, instead of kind of working on these projects. So we both have a lot of outside interests. I also spend a lot of time training lawyers around the world because I love to teach. And so I teach lawyers about this technology and what they need to know.

So neither one of us really want third key solutions to be kind of full-time 100%. Well, I'd love to actually hear more about that point. So you mentioned that also before the show. So you do a lot of teaching of lawyers and that there was a lot of misconceptions that lawyers have about, you know, cryptocurrencies and crypto assets. Like, what are those misconceptions? There is a fun. There are many, many, many, many.

illustrations of how much misinformation is out there. But let me give you an example. So I've been training lawyers now in this technology, giving legal workshops around the world for about two and a half years. And my legal workshops don't involve teaching lawyers about the law because they're lawyers. They understand what the law is, right? What they need to understand is how this technology actually works, how it's working today and kind of understand like what questions they need to ask,

how can they tell what's quote unquote hype versus, you know, kind of what shows some promise. And so let me give you an example of the kind of other training programs that are available out there for lawyers. So I want to say this is like December of this past year. I get an email and it says continuing legal education, Bitcoin and taxes in the U.S. And I'm like, all right, I need continuing legal education credits.

For those of you that don't know, many jurisdictions require lawyers to continue their education so that they learn new things. And I'm licensed in one jurisdiction that does require CLE and one that doesn't. So CLE is continuing legal education. So I was like, all right, I need these credits. I'm not a tax expert. let's see what this person has to say. And as I'm listening, it's becoming painfully obvious

that this person has zero experience with cryptocurrency. Like not the way that they're speaking, what they're saying. It's all highly suspect. So we get to the question part. And I just pose a very simple question. I said, do you currently or have you ever owned Bitcoin? Because your entire program is based upon the premise that you're going to tell us. You know where this is going, right? So he sheepishly looks up at the camera

and is like, I was hoping no one would ask this question. No, I've never owned Bitcoin. And I was like, oh my gosh, this is the current state. This is what is happening. This is the education for lawyers that is going on out there. And it's just, I mean, I can't even. Like, I can't even. I don't even. I don't even know what it takes to hold yourself out as an expert in a particular area when you actually have zero experience with it. But that's just one of the ways that lawyers are being completely misinformed. I recently read an article, very recently actually, and it was written for lawyers about the blockchain. And it was riddled with misinformation, including but not limited to how, you know, blockchains all have encrypted information and they're all immutable always and forever once you

put your data on a blockchain any blockchain apparently there's no way to change it and i'm like okay again we have a big misunderstanding of what this technology actually is so i wrote to the author which is something that i do um my colleagues were horrified they were like wait so you wrote to the author who said something wrong on the internet And I was like, yes, I did because I care. And if this person is taking the time to try to educate people and lawyers, I want them to have good information. So I did it really nicely, like as nicely as possible. And like, obviously, you care about this.

Anyway, turns out that the author was super happy to hear from me and wants to do a collaboration in the future. So, and they're going to try to get the article fixed. So this is a good, this is a warm, fun. ending. Unfortunately, most of them do not end that way. Cool. Yeah, I mean, I can, I can, I can, I have some experience also, if, you know, the challenges of trying to work with lawyers on, on these topics. Do you think this is going to improve? I do. I hope. I mean, I, I, I think we need it to improve. I think that, you know, there are a lot of lawyers out there who are tired of the status quo. I think there are a lot of lawyers who recognize the inefficiencies that are out there

and who, like me, want to actually make a difference and kind of want to build new systems that serve people in new ways. I don't know if they solve all the problems. In fact, I would argue that they don't, right? As we change systems, there are new problems that are introduced. but I'm very interested in kind of changing the power and balances that are out there and seeing what happens when we actually have control of our money. What happens when we actually have real control over our data?

What is our society look like? What does human interaction look like? Because that's what I actually care about. And I think that there are a lot of lawyers who do care about that stuff too. Now that said, there are a lot of lawyers who care about making money and only about making money. And so, you know, there is this balance, just like, corporate America or corporations around the world, right? There's this balance between how does the technology that we're building and how do the systems around this technology that we're

building empower people versus, you know, to what level is it just about making money? And I think that you can do both, right? I don't think making money is a bad thing. I just think for the projects that I work on, I don't want it to be the only thing. And I think that there are, again, there are a lot of lawyers out there who share those values. They might not be the most vocal. And You know, I'm working to build that community. Fantastic. Well, now let's move on from lawyers to sort of the regular crypto users that, you know, have actual experience. They hold some, you know, Bitcoin or Ether or any other assets.

Like, what are the most common mistakes that you see people make when it comes to holding, managing their assets? So I think the number one mistake is leaving your money on an exchange. And I know that, you know, we've all heard this over and over again, right? Not your keys, not your money. But I think that the danger of leaving your money on an exchange is underappreciated. And I think one of the reasons for that is because we trust banks with our money. And so to trust a third party with our crypto from many people seems like a natural thing, especially if they have warm, fuzzy things like insurance, right?

If they say that your deposit is insured or if they're a well-funded company, you know, people tend to kind of model that because guess what? They don't have time to do this full-time, right? I mean, most people that own crypto are not going to spend their days and nights doing what I do, which is nerding out about the security and how do people hold keys and all of that sort of stuff. You know, people have other lives. And so, you know, in order to get people to stop holding their funds, on exchanges or with third parties, we have to do better at providing services that allow people

to hold their keys directly, like hardware wallets. But we also have to do better at educating people on how to use them and making people understand that, like, guess what? Most of you actually can hold your own keys. Like, it sounds scary. And when I talk to people who are, you know, less technical in the way that they self-describe, you know, they're terrified about hold up their keys. They think they're going to mess it up. And so they think that their funds are more secure with a third party than they would be with them. And so I think that's the number one issue, at least in my opinion, on the dangers of how people are not holding their own keys. And yeah, I want to see that change. That's an interesting point. I mean, obviously over the history of Bitcoin

or history of blockchain, right? There has been a lot of exchange hacks with enormous amounts and a lot of people have lost money doing that. But it seems like, you know, the quality of exchanges has improved and so the security has improved as well.

And then at the same time, there is, of course, when you manage your own money, also the risk of, I mean, I remember years ago, there was a story of this British guy who had 8,000 bitcoins or something like that on a hard disk.

threw it away and now it was in this giant trash bin. Yeah. So that's also a risk. So do you have like data or like can you kind of quantify, you know, how how those two risks compare and has that changed in the last years? I wish that I had data for that. I don't have data for that. One of the things that I want to point out that is an under understood risk.

in other words, a risk that we don't often recognize withholding our money on exchanges, is that it's not just about the exchange getting hacked. In the U.S. at least, the exchanges have to run the sender of coins through some sort of K-Y-C-A-M-L. And you can get your exchange account frozen if the coins can't be traced or if the person who's sending them to you, if they're quote unquote dirty coins, naughty coins, bad coins, in whatever way. And the exchanges are doing this. They're holding funds because they have to in order to remain compliant with U.S. banking law. That said, very few people think, hey, I'm going to send my money to this exchange, and there's a chance of it getting frozen, right? Becoming inaccessible.

And not just the coins that were sent to you. No, no. All of it. your whole account. And so then you have to try and sort it out with the exchange and like, how do you prove that someone sent you okay coins, right? Like how do you prove that these, that you're on the up and up? So what I'm getting at is the same issues that we see in traditional banking systems are now rearing their ugly heads in our exchanges because they have to abide by the same laws. And so the risk isn't limited to simply, you know, the exchange getting hacked, although that is a risk. And I will agree with you. I think that exchanges have come a long way in developing, you know, cold storage systems and internal processes. And like, one of the things

I like to say in my legal training programs is like, we sometimes forget that this is like toddler technology, right? Like if you actually look at the grand scheme of things, Bitcoin was born in early 2009, right? It's not even a 10-year-old yet. And so I don't think it's unreasonable that in the early days, there were, you know, we were just still trying to figure things out. And I think we still are trying to figure things out. I'm a big believer in holding your own keys, obviously, because I think that that's part of the promise. I think that's part of the magic of Bitcoin and other cryptocurrencies that you control. This episode of Episunner is brought to you by DabCon Berlin. Dapcon is a non-profit, two-day developer conference that brings together

the Ethereum community to learn, build, and think big around the topic of decentralized applications, tooling, and scaling solutions for Ethereum. The conference organized diagnosis is taking place on July 19th, 20th in Berlin. So put that in your calendar now, July 19th and 20th in Berlin. There will be panel discussions, talks, workshops, and topics like governance mechanisms, usability, or the next generation of decentralized exchanges. So this is a conference organized by developers and for developers, and that's good news for you because it means there will be all useful content and none of the fluff that you see at other conferences.

And they have a fantastic roster of speakers. I counted, and there's actually 11 former episode of guests among the speakers and one host. And those include people like Hypernet Eric founder, Lloyd Liu, the founder of Gollum, Julian Zabwisdowski, the co-founder of Status, Jared Hope, or of the Web 3 Foundation, Peter Saban, and they even have Ethereum co-founder and Consensus CEO Joe Lubin. So don't miss out, get your ticket, you'll be joining a fantastic crowd and be part of people who really can take this technology to the next level.

So go to DAPCON.io, so that's d-A-P-P-C-O-O. get your ticket now, and Berlin's calling, and we hope to see you there in Berlin in July. Now, of course, I know what another mistake is going to be, which is just the whole inheritance stuff. So let's go to that in a second. But can you give us one more mistake that you commonly see besides holding money on an exchange? As far as it comes to holding your own security? Yeah, like security and securely holding crypto assets. Yeah. So, and this kind of rolls into inheritance, but rolling your own crypto. So when people

want to back up their seeds, often what they do is they get paranoid because they don't want to write all of their seed words or their private keys down because they're afraid if someone finds them, they're going to steal all of their crypto. So one of the issues with that is that, A, they would have to know what it was. B, they would actually have to. have to understand how to steal it and see, they would have to do it before you were actually able to recognize that that had been breached. And any of those things may or may not be true.

But so people get nervous about writing down their seeds. And so instead of using something like advanced security encryption, passwords, or a pass phrase, for example, on a hardware wallet device, instead of using those, they're like, I'm going to take my seed and I'm going to cut it. I'm going to divide my seed words into, if I've got 24, I'm going to do 12 and 12, and I'm going to give 12 to this person, and I'm going to give 12 to that person. And then, yes, I have successfully protected my crypto. And the problem with that is that you're actually not successfully protecting your crypto.

In fact, it becomes significantly more risky when someone has 12. And also, there's a much better way to do it. You know, like I mentioned earlier, you could encrypt your password, you could use a passphrase. There are other ways to do it securely. If you really, really, really have your heart set on splitting it and moving it into, you know, different different configurations, you should use something like Shamir's Secret Sharing, which is intended to do this. And so there are ways to do it, but one of the most common, you know, errors is that people don't

understand those ways. And so they just start doing it on their own. Hiding seeds, cutting them up. In the book, I talk about my friend who I didn't know that she was going to get into Bitcoin. She had contacted me after a long time and said, oh, hey, you know, what are you doing? And I said, I'm into Bitcoin and cryptocurrencies. That's what I'm working in. And so unbeknownst to me, she went and bought some Bitcoin. And then some time went by and I asked her, we were chatting and she's like, oh yeah, I bought Bitcoin. And I was like, what?

Oh, okay. So of course I'm like, how are you storing this? And she's like, oh, yeah. And she was so proud of herself. She's like, yeah, I got the seed. Like, I've been reading your stuff. But I put the seed in a poem and I put the book on my shelf. And I was like, oh my God, no.

So, you know, even my friend is just like, she thinks that the most secure way to store the Bitcoin is to like put it in a poem so no one will know. And the problem with that, obviously, is A, the likelihood is that she'll forget. And B, if something happens to her, nobody is going to take that poem and start running it through and be like, could this be a Bitcoin seed? You know, so basically that Bitcoin is lost forever.

Now, for her, it might not matter, right? It might just be a small amount. Maybe she doesn't care. But if Bitcoin goes to the moon, maybe that small amount all of a sudden represents, you know, a much larger portion of her total net worth. Cool. Yeah, that is a very vivid example. Well, now, let's speak with the thing, the big mistake that you are trying to specifically address, which is inheritance planning and thinking what happens, you know,

if for some reason you cannot, no longer yourself, access those crypto assets. Why is this a hard problem for people? Well, it's a hard problem for a lot of reasons. One, because no, well, very few people that I know are excited about thinking about their own death. Right? Mostly, you want to do anything other than that. I did a poll on Twitter when I was writing the book, and there were four options, right? It said, for my inheritance planning, my current plan is, and it was like tech only, legal only, tech and legal, and then immortality.

And 55% of people were going with the immortality plan. So, you know, the thing is, it's not a subject that we really want to deal with. And then the other big problem is most of us have never had to do inheritance planning before. And so it's this big unknown and it seems like this huge issue when you actually sit down to do it. And then, thirdly, if you go on Reddit and you ask, I love you Reddit, don't think I'm about to slam you. But if you go on Reddit and ask about inheritance planning, which happens about once a week, what you'll hear is, well, duh, you just use a dead man switch. or you just give your keys to your father and it's fine. And so it seems like such a trivial problem, right?

It seems like on its face, it's like, well, I mean, obviously, this is all I have to do. It's not until you actually start doing it that you realize that there's a lot more to it. For example, if you decide that you're just going to give your key to your spouse, right? And something happens to you. How do they actually go about doing anything with that key? What are they going to do? We don't know, right? But chances are they're going to go to either your local meetup.com group

or they're going to go online, maybe Facebook, and say, hey, we need someone to help us with a cryptocurrency. And you don't know who's going to come out. out of the woodwork and help them with it. And so I'm a big believer in helping your family identify some people who might be able to help them. It doesn't mean that you give them your keys. It just means you identify people who might be able to help walk them through the process,

who know what they're doing, who are generally, you know, not jackasses. That's not the criteria in the book, by the way. It's not like not a jackass. That's not. There are a number of different criteria in the book for you to find helpers. But yeah, I mean, it seems like it's not a big deal, like it's not a big issue until you start to sit down and do it. That's interesting. So you basically said right on the one hand, it seems just like big, hairy, really hard to handle thing.

And on the other hand, people are like, oh, this is true. We'll just do it. You know, like no, no need to think about it much. And I guess it's somewhere in the middle in reality. Yeah. I guess another thing that may be, that may be an issue here, and I thought that was very interesting

that you pointed out in your book, there's claimed that, okay, most people, like we tend to overestimate our own technical abilities, and we also tend to overestimate the technical ability of others. Can you explain that and can you provide some, maybe some evidence of some illustrations for how that is the case? Sure. So it kind of goes right back into what we were just talking about.

When we think about our heirs inheriting our keys, we generally impute our knowledge to them. And what I mean by that is we know how easy it is to do a Bitcoin transaction, right? Especially if you're using a hardware wallet, right? You're just like, if you're using treasurer, you just go to the website and plug it in, putting your pin, putting your passphrase, and call it a day, right? easy. And so often we forget what it was like when we're learning new technology. And so we overestimate our air's ability to do all of those things that we kind of do on a daily basis. And the danger in that is not that they can't do it. Of course they can learn it. The danger is that at the time they're learning it, are they going to be grieving? Are they going to be in a terrible

financial position because they don't have money to pay for, you know, the bills that are coming in. How much of your, you know, how much of your crypto assets, you know, represent your net worth? Is this something that your family would actually need in order to make your mortgage payment? And so, you know, they're not, that is not the time that they're going to be like, yeah, I'm about to learn how to use a hardware wallet. No, that is not what's actually going to happen. And so by acknowledging that and understanding that, you know, it doesn't mean that they can't learn and it doesn't mean that in the interim, right, so you make a plan now, you can start working with your loved ones on what is it like to access keys. What is this?

You know, I have some clients who have actually used the book and before the book went through their plan with their spouse and had their spouse write their letter so that they knew. where are these things located? And they could verify, right? Because when the spouse is doing it themselves, then you have confidence that the questions come up then when you're still around to answer them. When I talk about how we overestimate our own technical abilities, I'm kind of referring to the idea of cutting up your seeds

or trying to roll your own crypto, that sort of stuff, in that we don't realize that that's actually making us less secure. We feel like it's more secure. And to be honest, it's cool, right? Like when you're doing that, you feel like, yeah, I got this. I am under control, right? And so at least many of the people that I talk to are very proud of themselves and very excited about the idea that like they can make themselves more secure.

And so that's why I talk about, you know, maybe not having a good understanding of the technology behind it and what actually results in more security and less. Yeah, I can also give an example of, this point. So, you know, years ago, when I started becoming interested in Bitcoin and all my mother also bought some bitcoins. And, you know, they were on some paper wallet exchange. I don't remember. But then I got them a ledger, right? I was like, okay, it should be transferred to this ledger. And then I was basically, first of all, just a transfer, right, from paper wallet to that ledger, it was very complex, right? Because we had to, like, import that in some wallet and then somehow

also get the Bitcoin cash and then its Bitcoin gold and like split that up and then and then you can only do that with another wallet, not that first one. And then even in the ledger, I realized, because I've been used to using it so I kind of understood how to use it. But I was actually incomprehensible because, you know, you open in this Bitcoin wallet and then it says do you want Bitcoin or Bitcoin cash, right? And then the legacy or the segue chain. And then, you know, they were asking me, like, what does that mean? And even to explain this, it was extremely hard.

And I also realized I didn't fully understand actually how it was working on the Eve. And it was just, and that really made very obvious to me just how nightmarish the user experience was of this. Yeah, I'm sorry that you had to experience that, but that's a great story. It really does illustrate many of the problems. And you talked about forks,

but this is one of the dangers of having, you know, just one helper come by or even not designating someone to help your family. Like, okay, they could seem like they're totally on the up and up, right? Oh, yeah, I'll help you get the Bitcoin and then never mention any of the forks and kind of pocket that as a find. finders fee, right? And so you really need to have someone who, A, understands that those

works happened and understands whether or not, you know, those keys entitle you to claiming those. But then also, how do you effectuate that transfer? And that's exactly it, is, you know, and you're in this industry, right? So, yeah, I love that story. Okay, now in the book, you clearly make a lot of attempts, and I think you do a good job in it. showing manageable, pretty short, concise, simple steps that people can do, you know, in the hope that they will actually take some actions. In particular, there's this get it done plan, which I think I guess will take around maybe two hours or something or maybe a bit more to complete that.

Can you walk us through that and maybe it will actually be enough so that some people can take action and actually implement that first step? Absolutely, I'd love to. So this get it done plan actually came out of the work that we've been doing at Third Key Solutions with our clients. And before I wrote the book, I've written a couple of free articles. They're available on Medium, and I think that you'll have links to them. I'm not sure. But one of them is inheritance planning in three minutes. So take three minutes and do this, which I think is a little more doable. then a couple of hours. And then next is a letter to your loved ones. And I actually have the letter to your loved ones

in the book. And that is the essential part of the get it done plan. So the idea is you leave a letter to your loved ones that says, dear loved one, if you're reading this letter, it's because I want you to know that I have crypto assets. These assets are not like other assets. In other words, you don't want to trust anyone to handle them for you.

You need to watch people carefully. et cetera, et cetera. And then basically you, first you identify some helpers who might be able to be there and help your family. And there's a whole process, you know, in the Get It Done plan to kind of help you evaluate who might be a good, who might be good people. I don't advocate having just one person unless, you know, your family situation or your situation is such that you trust this person 100%. And for those who do have those people, I do not want to be a Debbie Downer. when I say this, but relationships and people change over time. In law school, when I was in law school, I was married at the time, and I was getting divorced.

And I went to my law school and I was telling the counselor person about it because I needed a day off and I needed to make sure that everything was okay. And this person said to me, oh, do you have a joint bank account? And I said, yeah, I do. And she said, you need to go to the bank right now and empty all of the funds. And I said, what? And she said, yeah, well, legally this person is entitled to all of those funds. And now it's just a race to the bank to see which one of you are going to go first,

which one of you are going to empty these funds first. And I said, that is a terrible idea. That is a way to drag this out. You know, we know that this is what we want to do. Everything is cool. Like, you know, we're both good with this decision. Like, this is a great way to start a war. This is terrible advice.

And I think that a lot of people get this same, like, this similar advice, right? When your relationship becomes troubled, when, you know, they're told maybe friends and family give people bad advice, like, oh, you should go and take all of Bitcoin. So I'm not saying that you shouldn't trust your spouse. And I'm not saying that, you know, I'm just saying, remember that, relationships change and people change. And so keep that in the back of your mind when you're doing this kind of inheritance and estate planning.

One of the things that you need to do when you're doing these sorts of plans is, unfortunately, it's not like a set it and forget it. It's something that you need to keep fresh. It's something that you need to do, you know, kind of revisit maybe once a year or more often. But all of that to talk about helpers, right? The idea is you need someone there, even if your spouse does know how to access it, you'll really want to have one or more people there to help them kind of walk them through. Because it's not just about them accessing the Bitcoin.

It's about how do they liquidate it? How do they open an exchange account? How much should they open? Where do they put it? Are you separating this into, you know, is more than one person inheriting it? All of these things. And guess what? None of this is anything you have to think about in the Get It Done plan.

All you have to do is designate, you know, who might be around to help what your assets are, like what coins are you currently holding? And, you know, do you have to list every single shit coin that you bought? I'm sorry, alt coin that you bought? No. You know, just list the ones that come to, you know, the front of your mind. List the ones that you really, really care about. And then explain where they're being held.

And when I say where, I don't mean give the address. I mean say, okay, I'm holding this amount on a ledger. I'm holding these coins on a ledger. And the reason is because your helper is going to need that information in order to be able to access all of the assets. Often we think of, you know, these keys as being static, but just think like two years ago, how many alt coins was ledger or treasor or any of the others?

How many were they supporting? Almost none, right? And now they're supporting coin upon coin upon coin, and you have all of these multi-coin assets. They will at some point stop supporting some of these coins, I anticipate. And so you need to kind of have a direction for your helper if you want them to access all of those coins. So the get it done plan is basically just writing your letter. It's telling them who might be able to help, what your basic assets are, and where they can find your seeds.

or your access codes. Right. So then you also had, I think, select a storage location, right? So you have a location where you put this letter, I mean, let's say safe at home. And then you have in that letter a list of people who trustworthy and should presumably know about cryptocurrencies. And then a list of assets where they're held as well as where the backup seats and recover and phrases are.

and those then would be at a different location, maybe a bank safe or something like that, or would you have in mind for that? Yeah, absolutely. I mean, a bank safe is fine. You know, it really, again, I hate being giving like the lawyer answers, right? But it really depends.

It depends on your jurisdiction. You know, what are the banking laws surrounding access? So if you have a bank vault in the U.S., and you don't have someone else as an approving. person on the bank vault with you, there has to be a court process in order for your heirs to get access. And so again, if you're talking about, you know, a time of access, if time matters, if your family needs access to these assets right away, a bank vault might not be the best choice for you because it'll take some time for you to prove that, you know, this person

actually should be able to access this and that, you know, you are deceased, et cetera, et cetera. So there's a legal process that is involved with that. On the other hand, that also makes those storage locations more secure, right? So anyone from the street can't just walk in. So, you know, it's really a balance. It's a balance about whether or not you think your assets are going to be seized. You know, do you want to put someone else on your bank vault with you? You know, all of these are things that you need to think about.

But primarily when you're doing the get it done plan, you want it to be fireproof, waterproof, and, you know, not generally accessible to everyone. You also want to balance that with making it accessible when they need it. So one thing you can do is store it with your will, wherever you're storing your will. And that's one of the common misconceptions is people store like the only copy of their will in the safe deposit box, which becomes problematic because then you have to go through a legal process in order to gain access to the safe deposit box. and often that takes a lot of time and a lot of hassle. So, you know, best practice is that you don't actually store those in a bank vault,

that you would store those, you know, maybe at home in a fireproof safe or at work in a fireproof safe or something like that where, you know, you have access to those documents or your loved ones would have access to those documents when they need them. I think it's also important to say, like, don't put your seeds in this letter. Like, don't write your, you know, your seeds. or your private keys in the letter. You want to keep those separate.

And you don't want to put that in your will either. In a lot of jurisdictions, wills become public record. What I mean by that is when your family wants to effectuate the transfer of your assets, like your other assets outside of crypto, they'll file the will with the court. And then that becomes part of the public record, meaning that anyone who knows how to search that can search it. And so if you put your keys in there, chances are the judge and your lawyer may not understand what that means when you put the private key in, but someone savvy who wants to take advantage

of public records and gets in Bitcoin for themselves might be the first to see it. And by the time your family gets there, the assets are swept and there's nothing your family can do. So don't put your keys in your will. Bad idea. Yeah, no, I can see that. That was, yeah, very interesting. I didn't realize that, you know, wills can then become such,

so publicly accessible often. It depends on the jurisdiction. So in some jurisdictions, they're absolutely private. But generally in the U.S. and in Canada, I believe they're public. Great. Now, there is one thing I would like to speak about

regarding this inheritance thing, right? So the scenario of, I have this letter, and now I'm basically passing control of these assets, to a particular person, you know, maybe a spouse, maybe a sibling, maybe a parent, or something like that. You know, that's, you know, reasonably straightforward. But now let's say I have my will, right?

And then my will it says, okay, 30% go to this person, 20% to that person, some amount to that person. And then does it still make sense or to like pass this all to a particular person who then fully controls it? Or should you think of some different mechanism to actually ensure that that? assets would be distributed according to your will? So this question is awesome. It brings up so many issues.

So let's kind of break it down. Number one, one of the things that a lot of people don't recognize is that how your assets are passed down is actually controlled by your local law. And what I mean by that is, regardless of you. of what you do with your keys, by law, there are some distributions that might have to happen, especially if you don't have a will. So if you do nothing and you have no will, the state doesn't just say, oh, well, we don't know what to do with the assets, right? In every jurisdiction, there is a law, and I guarantee you, whatever jurisdiction you're in, there is a law that says

what happens to your assets, how are they distributed, if you don't say otherwise. And generally in the US, that's called the law of intestacy. You die intestate, meaning without a testimony of where you want your assets to go. So if you die in testate, what will happen is with crypto assets or with other assets, it doesn't actually matter. Whoever the executor of your estate is will take control of those assets, if they can, if they have the keys, and then they will distribute them to the rightful errors according to whatever the loss says. Generally speaking, if you have a spouse, they will get a substantial portion or all of your assets. If you have children, generally they will also take a substantial portion, but not at the exclusion of your spouse. If you don't have a spouse

or children, typically it will go to siblings or parents or things like that. It's all based upon blood relation, meaning that if you wanted to give to your favorite podcast, for example, if you wanted to donate all of your crypto to your favorite podcast, you would not be able to do that unless you write it in a will. Okay? So if you want to do that, you just write it in your will. It's very simple. You may put the address, you may not. I don't really think it's a good practice to put the address in. And the reason is because your favorite podcast might change their donation address. So you want to make sure that, you know, you just very clearly delineate where you want those funds to go. So to get back to your question, you have someone, a helper,

who is going to help your estate access your crypto assets. They, the helper, should never be taking control of those assets directly. What they should be doing is working with whoever the right heirs are or whoever the executor of your estate. And when I say executor, I just mean the person in charge, right? Generally, there's one person who's going to help do everything to close out your estate. They're going to transfer your title to your property, to your car, make sure that, you know, your jewelry or your furniture or whatever happens happens the way that you want it to. And that's the executor. So your helper will help the executor distribute those assets in whatever way is is legal and rightful.

So the helper will help the executor. And then it's the executor's job to distribute those assets the way that it says in the will. Now, with crypto assets, we have a little problem. And that is, often the heirs have no idea how to securely hold crypto assets. And so then we have a situation where we either, if the heirs want to hold the crypto assets,

we can do education and kind of help them and teach them and walk them through the process. I'm sorry to say that right now, what's happening is most of those assets are going to exchanges and the heirs are holding them on exchanges because they don't feel comfortable holding their own keys. Often, the heirs are liquidating a portion, but not all of the crypto assets. So remember, you can't force your heirs to huddle. I mean, unless you do a lock time, but maybe that's beyond the scope. Maybe that's, like advanced planning. But, you know, if someone inherits, you can't force them, just like you can't force them to hold a stock. If they want to liquidate, they're going to liquidate.

And there's very little that you can do to stop that. So the question becomes, how do we do the distribution? If it's just a traditional distribution, the executor will say, okay, these three people are entitled to a third each. Let's open up either an exchange account or let's get them on treasors or ledgers or whatever and we'll have the helper help us move them we'll be able to prove to the court that that's what's happened and the errors will understand hopefully how this process works if you're trying to do it outside of the legal arena that poses some other problems so for example if you wanted to do this directly without an executor you could in theory say okay when i die i want this you know, smart contract to distribute these assets to these three keys? Sounds simple. Sounds easy.

The difficulty is, A, when were those keys generated, are the backups still there? So what happens when the smart contract actually moves assets to keys where the private key is lost or missing or corrupted or et cetera, et cetera, right? And then how are we sure that those errors are actually going to be able to handle those assets. And then, and here's where it all gets ugly, I'm sorry in advance, but if you decided to give your assets, your crypto assets, to three people who weren't legally entitled to them, now you've got a lawsuit. Because your heirs, legal heirs, have a claim against the people who took your crypto assets. And if they find out that, you know, they are entitled to crypto assets, but they didn't get them, especially if they're worth a lot of money,

you may end up creating a situation where all the money spent on lawyers, where your heirs get nothing, where your friends get nothing, and you create a bunch of legal hassle, years worth of problems when you don't actually have to do that. So that's why I'm a big advocate of like figuring out the legal side. And again, it doesn't have to be like a big to do, but figuring out the legal side so that you can avoid those sorts of problems. so that you can avoid dealing with lawyers and having this eat up, you know, the primary value. Cool. That makes a lot of sense. Now, I do want to speak briefly about this trusted third party thing. So recently there was this analysis that genealysis published about your Bitcoin usage. And they said today, around 80% of all transactions in Bitcoin are coming through trusted third parties.

So that could be things like Coinbase, like hosted wallets, or it could be exchange. as well. So obviously they were very popular. Most people use from that usage trust to third parties for transactions or holding their money. And it seems to be going more in that direction even on both on the institutional side where people are looking for this custodians or third parties to manage their assets. But also on an individual side, right, there are services like Zappo that have a lot of usage even among very large crypto holders. So do you think there is, there is a place for that in this? And what do you think is sort of a good way of using some of those trusted third parties to maybe help in this process? But do you think

that's something that people should generally try to avoid? I think that third parties provide a service for some people. And I think third parties are the easy, traditional way to go. And I think that's why we see so many, so many people saying, oh, okay, I'm going to hold my cryptocurrency in these third-party exchanges because we've been taught that we can't manage our own money. We've been taught that we have to trust financial institutions or that, not even that we have to trust, that they are better equipped to hold your money than you are. And that's because we've never had a system like Bitcoin or cryptocurrencies before where we can actually hold our own money in a way that's maybe more secure than having a bunch of cash

underneath our mattress, right? And so I don't think that it's really a surprise that people are doing this because, you know, learning key management is right now kind of tough and it's kind of onerous and, you know, it's kind of a big instance is these hosted wallets or these, you know, institutional players to kind of do it like we've always done it. It makes it less scary. That is not the future that I want to see, though. I'm a big believer in disintermediate. third parties. I'm a big believer in having us learn how to do key management because I think it really represents that the opportunity to have a fundamental shift in the way that we interact with one another. What I mean in English is if we can understand, if we can hold our own keys and we can

hold our own money, we can also hold our own identity. We can also start to take ownership of all of these other things that we've learned that third parties don't always act in our best interest. We've learned, you know, that we should be doing these things. And I think that cryptocurrency is kind of the catalyst for getting people to learn how to securely manage keys and for getting us as an industry to provide better interfaces, to provide better education, to empower people to actually do these. So, you know, when we talk about third parties, they definitely provide a value, right, in the same way that they provide a value in traditional banking.

But I don't think that that represents the big wave of change that I and many other people in the industry are hoping to see. You know, for me, the trusted intermediary, the trusted third party just represents a new person at the head of the old guard. Right? It's new people that are getting rich on the same old model. There's nothing innovative about that. And that's not why I'm in this industry. I'm in this industry to shake shit up. I'm in this industry to, you know, to see what it's like when people are actually empowered.

And so that's why I'm not a big fan of third parties. Now that said, you know, again, third parties do provide some value in some places. And as we start to get rid of them, we have to take a minute and recognize the value that they bring and say, okay, well, what did this third party provide? So in terms of inheritance planning, like they provided access, right? If you die with a bank account, your family can get the money in the bank account because there's a third party to compel. With crypto assets, they can't. And so that party to compel, we have to supplement that with something. And that's why we've been doing inheritance planning.

And that's why it's so important to write your letter to your loved ones. And that's why it's so important because you have to fill that gap. You have to provide that service that was otherwise provided by the third party. Cool. That was very well explained. And I think that actually does provide a nice explanation why crypto asset inheritance planning is such an important and also not trivial task, right? Because really you are actually filling in for the role of the banks and other asset holders that they have today. Exactly.

Well, and I think one of the other things is that, and we touched on this earlier, but I just kind of want to circle back around to it. estate planning and inheritance planning doesn't have to suck. Like, it doesn't have to be terrible. If you change your mindset and you kind of look at it like, hey, I'm going to be giving this amazing gift to my friends, to my family, to a charity, to, you know, political cause, to anyone that I want. And, like, just think right now, if someone were to give you the same amount of Bitcoin or ether or any other crypto asset that you had right now, like, if your holdings just doubled,

Wouldn't you be excited? Be like, yes, this is awesome, right? And you have that ability to give to your friends and family. Like, you're in it early. You're in it so early that there really aren't great processes involved to kind of handle this for you. So I think it's, I think it would be a shame to not have your family take advantage. Also, it's a great way to say, I told you so from the grave.

Yes, that is absolutely true. Well, Pamela, thanks so much for coming on. Maybe before we wrap up, so of course we are going to link in the show notes to, you know, you book a third key website, Empower Law website, as well as the articles you mentioned. But is there, I don't know, some kind of call to action or something else that you want to give to listeners to take away with? Absolutely. So for anyone who's listening right now, if you have crypto assets, even if it's small,

take 15 minutes 15 minutes is all it takes go to medium look at the links do your letter to your loved ones and if you don't have 15 minutes then do the three minute asset inventory like i know you have three minutes and it could really really be the difference for your family it could really or your loved ones your friends it can really make a world of difference for them so i encourage you to just do that um and and like do it now like literally like right now. Just like get out some pen and paper and like make it happen. If you can't do it right now, put a reminder on your calendar to do it. It's not that scary, I promise. And, you know, if you start to get into it and you feel like you need more, obviously the book is available. I've talked about

this issue a lot at different meetups around the world. And if you know a lawyer who needs to be trained, I'm doing another legal workshop, October 26th in Chicago. And your lawyer can, if you If you're like, you know what, I don't want to do any of this. I want my lawyer to help me do it. They can get trained and then they can help you do this. So call to action. Just do your letter, 15 minutes. You won't be sorry.

Cool. Thanks so much, Pamela. And thanks so much for your work and your book. I think it's a very important work you're doing here. Thanks for having me. And of course, thanks so much for our listener for once again tuning in. So again, we're going to have show notes and links to all of this. So if you want to read up, and I totally agree with Pamela.

This is a very important issue that should not be neglected. And of course, you can subscribe to the show on iTunes or you can also watch the video on YouTube.com slash eps and a Bitcoin. And yeah, if you want to support the show, you can leave us an iTunes for you or you can make a donation or you can now a new option, right? As Pam I mentioned, you can gift your crypto to the podcast.

I don't know. You don't need to do that. But okay, so thanks so much and we look forward to being back next week.