What happens to your cryptocurrency value when you die? Do you have any idea? Is it included in your beneficiary’s retirement account and personal property? Unless your heirs have clear instructions on accessing crypto assets, the funds will be trapped somewhere in the cloud and of no use to them. Dying with no plan for your cryptocurrency or digital assets is like letting it disappear. In case of death, you should take specific steps to ensure you can leave your cryptocurrency to the people you love in case of death.
Ensure Your Cryptocurrency is Safe and Secure, But Make It Accessible
Cold wallets are small physical storage devices that are easy to lose. Cold wallets require a PIN code and a recovery phrase if the key is lost. It’s good to keep a fireproof safe at home or a safe deposit box at a bank, but don’t keep the key, PIN, and recovery phrase on the same shelf as your cold wallet. If the items are together, Bitcoin is doomed. The most important feature is to create a sensible storage method. Do not make some complicated system that you cannot remember just for the sake of being cute. For example, people have written down their keys and cut them into three pieces, hiding each part separately. “It seems like a good concept, but it’s a bad one. Once you lose one, you lose them all. So now the risk is tripled.”
The Best Way To Protect Your Heirs
To make sure your cryptocurrency is of value to your loved ones after you die, take the following steps:
Updating Legal Documents
Regulation of crypto assets falls under federal laws governing digital currencies. No matter what legal documents you have in place, you can name a beneficiary (or beneficiaries) on your online account, which will prevail over other documents, such as a will, trust, or power of attorney. Say you have a cryptocurrency account that you opened years ago. You were not married and did not have any children, so you named your brother the beneficiary. Since then, you have been married, and your spouse has been named the primary beneficiary. In the absence of updating your beneficiary designation on your crypto account, your brother will still be entitled to the cryptocurrency when you die. It’s essential to make sure the beneficiary on each cryptocurrency account is who you want them to be.
Draw Up a Will
By creating a will, you can give your beneficiaries a legal say over what they get and help protect them. You should make sure the lawyer who writes the choice includes all of your digital assets and names a digital executor. If you have never written a will, the first thing to know is that it is your executor’s responsibility to meet your last financial obligations and distribute the remaining assets to your beneficiaries. The executor and digital executor may be the same person, but that’s up to you. The digital executor is the person who has access to valuable information about your cryptocurrency. As soon as you determine who the digital executor will be, make sure you have a backup who can step in if the initial digital executor cannot serve.
You should notify your digital executor of where they can find information about the cryptocurrency. For example, imagine that you have purchased cryptocurrency on different crypto exchanges. In addition, you should ensure that your digital executor can easily retrieve user names, passwords, digital keys, and any two-factor authentication you’ve selected.