according to Cremation Institute (opens in new tab)Nearly 90% of cryptocurrency owners worry about what will happen to their digital assets after they die. It turns out they have good reason to be concerned.
There are now over 12,000 different cryptocurrencies in the world, and they are difficult to track, especially if their owners are disabled or dead. There are currently over 83 million users of blockchain wallets, according to. That number is expected to grow, making it more likely than ever that you or your family have digital currency.
What are crypto assets?
Cryptocurrency A type of digital currency that uses cryptography for added security. In addition to Bitcoin (BTC), cryptocurrencies you may have heard of include Ethereum (ETH), Litecoin (LTC), Cardano (ADA) and Dogecoin (DOGE), to name a few.
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The first half of 2022 was volatile for cryptocurrencies. Bitcoin barely holds him above $19,000, but investors don’t expect its price to fall in the long term. According to a recent survey by Deutsche Bank, about a quarter of Bitcoin investors believe the price of the cryptocurrency will exceed $110,000 in his five years. Over 70% of those interviewed said they plan to increase their cryptocurrency activity within the next 12 months.
Crypto assets offer challenges when owner dies
As these assets grow in popularity and value, one area struggling to keep up is the real estate planning sector, as digital currencies and assets create unique challenges at death. Instead, they are considered assets. However, these assets exist only in virtual form and are encrypted, making them nearly impossible for the surviving heirs to find.
According to Marc Zimmerman, an experienced trust, real estate, and tax attorney at The Law Office of Michael A. Zimmerman, “You draft a will and expect a named executor to find all your assets. Traditional methods don’t work with Bitcoin and other digital currencies.While you’re still alive, one of the biggest advantages of a crypto wallet is that no one can get into it. Once dead, this is not so great.
Cryptocurrencies are stored using virtual wallets, which require a private key to open. This private key is a random string of characters, essentially a password to access the contents of your wallet. It’s like a physical key that opens a safe. Of course, if you lose your physical key, your bank will eventually give you access to your safe deposit box, but that’s not the case for wallets where your virtual key is lost.
“If you die without leaving your private key details to anyone, it will be nearly impossible for your loved ones to access your cryptocurrencies,” Zimmerman explains. It is estimated that around 4 million Bitcoins have been lost due to owner deaths and loss of private keys. That’s over $240 billion today.
Be considerate of those you ultimately leave behind by giving your heirs access to your crypto assets. Many experts recommend that investors write down their private keys on documents. However, Zimmerman cautions that doing so isn’t always safe or feasible. “A will is an official document, and sharing a secret cryptographic key in it is not ideal. Leaving a small piece of paper with the key creates additional risks. A family member may take away the private key without anyone knowing that the cryptocurrency exists, or you can help a well-meaning friend clean up the house and throw out a piece of paper.”
“One option is to move cryptocurrencies to exchanges.” Francis Financial (opens in new tab)Exchanges and custodians like Coinbase offer a more traditional alternative, offering vaults, which are essentially physical safes for private cryptographic keys.
Additionally, Coinbase offers joint accounts so that inherited crypto assets can be smoothly transferred to heirs. If your custodian does not offer a joint account, set up a beneficiary on the exchange that holds your cryptocurrency investment. Ramnani told investors, “Custodian Services Review his policies to understand how custodians plan to handle post-mortem account management so that loved ones can easily inherit their assets. It warns you to
a trusted account is also an option. Zimmerman works with clients to create accounts that own virtual currency. Zimmerman explains: The only problem with trusts that own cryptocurrencies is that real estate attorneys need to put language into the documents to allow trustees to buy and sell “risky” investments such as cryptocurrencies. “
Other digital assets
Cryptocurrencies may be an extreme example, but Ramnani recommends providing direction and access. Whole digital life to your beneficiaries. “Please include information on how to access your online bank account, frequent flyer miles, other reward points, PayPal, Venmo, Google Wallet, Apple Wallet, and prepaid cards such as Starbucks and Uber.
Each of these accounts can contain significant sums of money and it is important to ensure that these dollars are passed on to the family. ” password manager like that keeper (opens in new tab), last pass (opens in new tab) Also dash lane (opens in new tab) You can create strong passwords and share them with family members as needed.