Overlooking This Basic Part of Your Estate Plan Can Be Tragic

The recent death of the CEO of QuadrigaCX, a major cryptocurrency exchange in Canada, demonstrates a basic, yet often-overlooked, principal of effective estate planning:

If you become incapacitated or die, if your heirs don’t know how to find or access your assets, those assets are as good as gone. Indeed, it’s as if those assets never existed at all.

In the case of QuadrigaCX’s owner Gerald Cotten, the lost assets were purportedly worth $145 million. That represented the vast majority of the company’s crypto holdings.

The hefty sum effectively vanished after Cotten died without leaving instructions for how to access the digital currency’s security passcodes. The crypto holdings were owned by some 115,000 clients, who used the exchange to buy and store their digital coins.

An untimely death and a cold wallet

Cotten, age 30, died suddenly while traveling in India during December 2018. In January 2019, QuardigaCX filed for bankruptcy to protect itself from creditors, including all of the customers with crypto stored in the company’s electronic vault.

Ironically, the digital assets were lost in part because Cotten followed a security practice designed for protection. Most of the company’s cryptocurrency holdings were stored in a “cold wallet,” or one that isn’t connected to the Internet. The use of a cold wallet is a common practice, since “hot wallets,” or those connected to the internet, are a frequent target of hackers.

This typically would’ve been a smart move, but Cotten reportedly stored the cold wallet on an encrypted laptop that only he knew how to get into.

According to Cotten’s widow, Jennifer Roberston, following multiple searches, she has been unable to find the passwords that will open the laptop and provide access to the company’s cold wallet. QuadrigaCX even brought in IT experts to get into Cotten’s laptop, but so far, all attempts have been unsuccessful.

Canadian financial authorities and independent auditors are currently investigating the case. Some have even speculated that Cotten’s death was faked as part of a nefarious scheme connected to QuadrigaCX. Whether it ultimately turns out to be a simple case of carelessness or something more malicious, the lesson remains the same:

From cryptocurrency to safety deposit boxes and everything in between, your family must know how to find and access every asset you own, otherwise it could be lost forever.

In fact, there’s a total of more than $58 billion of unclaimed assets from across the country held by the State Department of Unclaimed Property. Much of that massive sum got there because someone died and their family didn’t know they owned the asset.

Incomplete estate planning

Another puzzling fact is that upon first glance, Cotten was diligent in his estate planning. Indeed, Cotten named Roberston as his estate’s executor and left her instructions for the complete distribution of his assets, including a private jet and multiple properties in Canada.

He even left behind $100,000 for the care of his dogs. But he forgot to forget to include the passcodes that would unlock his company’s vast crypto assets. Most people holding crypto assets haven’t taken the proper steps to ensure their heirs will know how to access these assets upon their incapacity or death.

Given this, if you own any digital currency like Bitcoin, be sure to call us to make certain these assets have been correctly included in your estate plan. Indeed, if you have any assets that might potentially be overlooked in the event of your incapacity or death, contact us now.

Easily avoidable

What makes this loss so tragic is that it could have been so easily avoided. Whether you own a lot (or very little), your plan must include a comprehensive inventory all of your assets. And as Cotten’s case shows, this inventory must also include a detailed instructions for how your heirs can find and access every asset.

At our firm, a comprehensive asset inventory like this is a standard part of every estate plan we create. And whether it’s cryptocurrency, social media accounts, or online payment platforms like PayPal, this inventory will include detailed instructions for accessing all of your digital assets and their passcodes. Contact us today to get started with a Planning Session.

Attorney Myrna Serrano Setty doesn’t just draft documents, she helps you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why our firm offers a Planning Session. The Planning Session helps you get more financially organized than ever and helps you make the best choices for the people you love.  Start by calling us today to schedule a Planning Session and mention this article to learn how to get this $500 session for free.

Part 2: Estate Planning Must-Haves for Unmarried Couples

In Part 1 of this series, we discussed the estate planning tools all unmarried couples should have in place. Here, we’ll look at the final two must-have planning tools.

Most people see estate planning as something only married couples need to worry about. But estate planning can be even more critical for for unmarried couples in committed relationships.

Because your relationship with one another is usually not legally recognized, if one of you becomes incapacitated or when one of you dies, not having any planning can be devastating. Your age, income level, and marital status makes no difference. Every adult needs to have some fundamental planning strategies in place to keep loved ones out of court and conflict.

Health Care Directives

In addition to naming someone to manage your finances in the event of your incapacity, you also need to name someone who can make health-care decisions for you. If you want your partner to have any say in how your health care is handled during your incapacity, you should get Health Care Directives in place.

This gives your partner the ability to make health-care decisions for you if you’re incapacitated and unable to do so yourself. This is particularly important if you’re unmarried, seeing that your family could leave your partner totally out of the medical decision-making process, and even deny your him or her the right to visit you in the hospital.

Don’t forget to provide your partner with HIPAA authorization within the health care directives,  so he or she will have access to your medical records to make educated decisions about your care.

Living will

While your Health Care Directives names who can make health-care decisions in the event of  your incapacity, a living will explains how your care should be handled, particularly at the end of life. If you want your partner to have control over how your end-of-life care is managed, you should name them as your agent in a living will.

A living will explains how you’d like important medical decisions made, including if and when you want life support removed, whether you would want hydration and nutrition, and even what kind of food you want and who can visit you.

Without a valid living will, doctors will most likely rely entirely on the decisions of your family or the named medical power of attorney holder when determining what course of treatment to pursue. Without a living will, those choices may not be the choices you—or your partner—would want.


We can help

If you’re involved in a committed relationship—married or not—or you just want to make sure that the people you choose are making your most important life-and-death decisions, consult with us to put these essential estate planning tools in place.

With our help, we can support you in identifying the best planning strategies for your unique needs and situation. Contact us today to get started with a Planning Session.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s our firm offers a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Start by calling our office today to schedule a Planning Session and mention this article to find out how to get this $500 session for free!