What Happens to Your Crypto Assets in the Event of Your Death?
What happens to your crypto assets in the event of your death? How can you make sure your loved ones are inheriting cryptocurrency correctly? It is a hard topic to talk about but it is a necessary one that you should not leave until later. When we talk about wealth creation mechanisms, like crypto, we need to talk about offence and defence.
Offence and Defence in Wealth Creation
In this section, we will discuss how to play offence and defence when it comes to wealth creation.
Everyone is probably familiar with the offence already. This is the things that continue to make you money. Your investments strategies and vehicles are the main avenues for your wealth creation offence. One is them is probably crypto.
The defence is a whole other ball game. This is the things we do to protect that wealth. We diversify our wealth so it is more risk-averse. That is to say, we make savings and retirement accounts to live off later. These are a lot of things specifically that most people are already doing when it comes to protecting your wealth. What most people neglect to do however is to arrange their wishes in the unlikely case of their passing.
Why did you build wealth in the first place beside for just yourself? After yourself, you want wealth for your family and loved ones, to make sure that they can take care of themselves once you pass. With the complexities and security of cryptocurrencies, if you do not make plans for them, they will probably never be able to access the funds that you wish to leave to them. All of this work would be for nothing.
In this article, we will quickly go over what the most important things you need to account for in your digital will. We will go over how you need to present this information to your heirs. First, let’s talk about exchanges like iCE3X.
Inheriting Cryptocurrency from Exchanges
The majority of exchanges are centralised and allows you to have an account on their platform where you can trade between fiat and cryptocurrencies. You are trusting in the exchange to have temporary custodial control over your funds to be able to make trades.
We always advise that you should not keep your funds on any exchange, even ours. Your funds should only be on the exchange when you want to trade. After that, you should put it back into a wallet where you control the private keys to. Remember, if it is not your keys, it is not your money.
Even so, there are times when you may have funds in the process of making orders. For example, you could have affiliate income coming into your account. There are many cases where it would be helpful to your heirs to know which exchanges you have an account for.
They should be able to access a list of the exchanges that you use. List it out for them. They are not able to figure out which exchanges you use just by using your bank statements. It is often hard to figure out, even for the technically minded. In the case of your passing, many of those who need to know would be in mourning too. Make it easier on them and leave a list.
You cannot rely on an exchange to be able to contact your family either. They will not have known you have passed or would have instructions on how to distribute the wealth in your account. Your family should be able to contact them with a death certificate and your will stating exactly how your account should be processed.
Inheriting Cryptocurrency from Wallets
There may be some confusion here about wallets. We want to talk about non-custodial wallets where you own the private keys of. These funds are yours and only you own the means to access them.
Most people actually use a custodial wallet, an account given to them by an exchange which is really like hosting a wallet with that exchange. You never actually move the funds into a place that you control, it is still on the exchange basically. We always advise that you withdraw to a wallet you control like above. If this is where you store your funds, please do move them to a safer place.
Now, assuming you have done this, let’s continue. The biggest thing you need to ensure is that there is a backup of your wallet. Get in writing the name of your wallet software and any backup information like recovery keys to pass to your heirs when needed. If you have not got a backup, stop reading this and do it now. We will wait for you.
The backup information should be stored somewhere safe like in a bank deposit box which will be willed to your inheritors in the event that you have passed. Be very secure with this information as it is the keys to your current wealth.
Inheriting Cryptocurrency from Devices
You have plenty of devices that you use for accessing your crypto. Either your computer or phone to access your accounts or wallets, or even a hardware wallet. You need to make it explicitly clear to your heirs what these devices are and how they should handle them.
We definitely do not want them to throw away or destroy your hardware wallet, not knowing what it actually is as that would be a disaster. You need to attach photos of these devices to your will so that these items may be easy to identify by your inheritors. Most importantly, you need to remember that just because you are savvy with this technology does not mean the ones you love will be.
Instructions on how they can use and access them can be better left for your will but they should be informed of what is important and keep them safe from being taken from them.
In conclusion, these are just the important first steps to list out to assure your loved ones are inheriting cryptocurrency correctly. You spent so much time working to earn wealth, therefore, you have to defend it too. Decide exactly who it should go to. Save your family and loved ones the confusion of working it out themselves.
We would advise you to put a will in place (or a testament or legal trust) to ensure that your wishes are carried out. If you have someone that you trust to help your family access your funds, you can name them in the will to execute the process. If you only trust yourself, put out the process to access your funds in a place that can only be accessed after your will has been enforced. Use something like a safety deposit box to safely store these instructions and passwords. Do not make these available anywhere else.
Have you thought about where your crypto will go? Make sure it doesn’t get lost and look after your loved ones. Do not put it off, make a list of everything today.