On this blog, we often talk about the merits of cryptocurrency – but today I want to dive deeper into another topic: what happens to your crypto assets if you die, and how can you protect your inheritance?
It is wise to ensure these precious cryptocurrency assets are properly accounted for and protected. As such, it is important to have an estate plan in place. This not only entails having language in every will and trust to ensure proper administration of cryptocurrency in the estate. It also entails attention to the picking of fiduciaries to handle these assets.
Here are two simple steps to safeguard your assets for the next generation.
Step 1: Identify Assets and Create an Inventory
What most people underestimate is the large information gap between you and your next generation. Due to the nature of most cryptocurrencies which rely on blockchain technology, various types of cryptocurrency have so far been treated as property. This is dependent on the various laws in different states and/or countries.
As such, you need to be aware that the transference of such property might incur costs or bring in profits. Further, it may be difficult to locate these assets if your loved ones are not aware of their existence in the first place. Another difficulty that may arise is the failure to disclose the private keys to your crypto wallet. All this misinformation will lead to confusion and possibly loss of your assets.
Luckily, all you require to sidestep this mess is to simply create an inventory for your next generation. This digital inventory should include details of your digital account, instructions to access your private keys, details of any custodian or crypto exchange or 3P provider. These details need to be updated regularly as well.
Needless to say, one must safeguard against the possibility that this inventory falls into the wrong hands. This can be done by storing this inventory in a safe place, with proper passwords.
A possible solution could be to entrust this inventory with your probate attorney. Also remember to have backups in secure places.
Step 2: Have a Carefully Drafted Will
Your Will will play a part to safeguard your future generation’s inheritance. It could contain instructions on how your digital estate should be administered, who should administer it, whether these accounts should be closed or transferred etc.
Essentially, you should develop a plan as to who you want inheriting what type of asset, and how you can make that happen. Given the different nature of each cryptocurrency and the wide variety of digital assets in the market now, you would also need to consider the national and/or state laws. You must ensure that your plan is also legally feasible.
Another interesting way to make your Will secure is to harness blockchain to create a distributed ledger of wills. This would ensure that your after-life decisions are reliably recorded and secured. Academics have touted the benefits of having a blockchain Will – it will serve the true purpose of will formalities to serve as a binding directive for the distribution of your property.
Start Making Plans Now
For investment savvy people, blockchain will become an essential part of your asset collection. While these two simple steps will not be sufficient to safeguard your inheritance completely, it outlines the process to doing so. The hardest part is always the effort in taking time to sit down, processing, and consolidating your assets. The easiest part is that you have the tools to get started right away. Just grab that pen and paper, start recording, store it in a secure place, and take heart that your children and loved ones have a roadmap to your treasures.
If you are keen to obtain more detailed advice on how to protect your assets for the next generation, you should find a probate attorney. I use a probate attorney near me that has walked me through the intricacies of planning my Will and provided an in-depth analysis of my estate – I would highly recommend you do the same.
A probate attorney will also be able to explain the laws governing your state and/or country, and help you develop a plan for this. This could include a testamentary trust to hold your assets and provide a roadmap for the distribution of your wealth, even if you are not using cryptocurrency.
It is never too early to plan. If you are young and passionate about crypto, then you should start your digital asset planning now. A good estate plan is not about keeping your assets in a vault for your descendants. It is about leaving them a legacy to work for and to pass down the family tree.
I hope that this piece gave you some food for thought on how you can protect your assets so that your children and loved ones will never have to go through the pain of losing their inheritance. You’ve worked hard, don’t let it go to waste!