Like many people, you might not have thought about what would happen to your cryptocurrency if you died. After all, it’s not something most of us like to think about often. However, it’s essential to consider what would happen to your digital assets in the event of your death.
A few ideas could play out if you die without leaving behind any instructions for what to do with your cryptocurrency. If you’re married, your spouse may be able to access your accounts and take control of your digital assets. However, things can get complicated quickly if you don’t have a partner.
A Note About Accounts
The idea of a cryptocurrency account may be misleading. All cryptocurrency ownership ultimately comes down to who controls the public key for the blockchain. That’s the secured file that authorizes transfers. Cryptocurrency trading accounts on exchanges use the company’s keys, not the investor.
With access to the exchange account, money and coins cab get transferred wherever and wherever you wish. However, the safest access is always using a crypto-specific wallet and safeguarding the keys. This point is where having a written estate plan comes in handy. It can articulate who’s in charge of what account and has the legal authority to access and transfer coins.
If you die without instructions for your cryptocurrency, your family and friends will likely have to endure a long and complicated process to access your accounts. That can be very daunting, especially if they’re unfamiliar with cryptocurrency.
Legal Agreements Matter
Among the most proactive ways to ensure that your loved ones can access your cryptocurrency when you pass away is to create a plan ahead of time. In addition, you can create a living will by including your cryptocurrency in your will. By doing these steps, you can rest a little easier knowing that your loved ones can access your digital assets after you’re gone.
Spelling everything out, including specific accounts and protocols, will keep your estate plan orderly. Without written agreements, expect chaos and disagreements.
As with any asset, it’s essential to think about what would happen to your digital assets in your death. Without one, these assets are frozen in time and perpetuated in limbo. They become “stuck” in cryptocurrency wallets, cold storage wallets held in exchanges, or silently stored on a thumb drive.
Keep Track Of Everything
Cryptocurrency management can become overwhelming. Some users can have hundreds of wallets and dozens of exchange accounts. But if they don’t tell anyone they exist, people left behind after their death wouldn’t know anything about it or how to access it.
In the case of coins stored in cold wallets, their existence could go undetected forever.
So, the best estate plans start with a list of all assets, their location, and how to access them. Without these pieces, anyone trying to be an estate executor will run into massive snags. In addition, it’s impossible to retrieve cryptocurrency from a blockchain without proper credentials, so it’s understandable how maintaining a list of all accounts, passwords, seed phases, and public keys demystifies this asset.
It’s impossible to backtrack and find everything later. So the only way to prevent significant issues is by accounting for every last dollar in a cryptocurrency account or wallet as you go. Keeping comprehensive records now can help you avoid missed opportunities later.
Cryptocurrency Lasts Indefinitely
The true nature of cryptocurrency is that it theoretically can remain around for as long as servers running the blockchain exist. That means any crypto can keep going even long after the owner dies. In the case of wallet-held coins, anyone with the correct public key can transfer the currency to exchange and turn it into cash.
As long as the pub key, wallets, and the blockchain are operational, cryptocurrency holders can buy or sell their digital assets if the market supports them.
A proper estate plan makes managing and passing these assets much more straightforward. For example, the cryptocurrency owner can store keys on a USB stick that transfers seamlessly to the beneficiary and pertinent account information. In some cases, this move alone is enough to make necessary transfers to conclude affairs.
Anyone receiving cryptocurrency must learn about how accessing coins works. That knowledge is crucial, and any mistakes with transferring funds may result in a loss. That is such a severe penalty that it makes researching and understanding each transfer imperative. Moreover, that’s the only way to ensure the liquidation of the estate.
This article was brought to you by the professional team of probate lawyers at Heban, Murphree, & Lewandowski, LLC. Proudly serving people in Ohio and nationwide with estate planning.