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The Most Expensive Lesson on Password Management

Cryptocurrency executive Gerald Cotten died recently at the age of 30.  His death provides a sad lesson about the importance of thoughtful estate planning.  Although Cotten apparently executed a Will shortly before his death, he did not share his digital wallet password.  In his case, this could mean that Bitcoin worth approximately $150 million cannot be accessed.  This is not the first major case of loss of digital assets. Matthew Moody died in a plane crash in 2013.  His father has spent years trying to reclaim his Bitcoin funds worth millions.

Passwords can be stored in a secure password manager, safe, or with a trusted estate planning attorney.  The most secure way to guard against the loss of digital assets is to use a “multisignature” key.  A multi-signature key means several different keys, given to different people or entities, must be assembled in order to reveal the final code to unlock the digital wallet.  Other options available include a “dead man’s switch” system, which requires the customer to regularly check in to prove they are still alive.  If they stop triggering the system, then their virtual assets are transferred to whomever they designate.

Another important factor to consider is that it is a crime to obtain unauthorized access to someone’s digital accounts.  What counts as “authorized” is determined by the terms of use set by the entity or website. In the absence of state laws that grant certain people access after you pass away, someone who accesses your accounts could be breaking the law.  Therefore, it is important to address this issue in your estate planning.  You should also review the terms and conditions of the companies and websites where you store digital assets.

If you have any questions about this post or any other related matters, please email me at ssiegel@norris-law.com.