It isn't as simple as bequeathing cash or other property.
No one knows how long cryptocurrencies will last, but it’s a decent bet they might outlast you. Passing your digital holdings on to loved ones after your death isn’t as simple as bequeathing cash or other property, though, particularly since wills aren’t designed for confidential information.
Because a private key is all that’s necessary to transfer funds from a wallet, including it in your will might be a terrible idea. “I would strongly advise against anyone putting any information they consider private into their will,” says estate planning attorney Gordon Fischer. “Wills, after your death, become court documents and are generally public documents, accessible by anyone.”
A private key is like an unchangeable password, which is generated when you create a new cryptocurrency wallet. It should always be kept as safe and secure as possible.
Although a will might not enter public records immediately, it’s unwise to risk exposing the keys to your crypto wallets at all. Your family might not recognize the significance of a private key right away, and by the time they do, your digital wealth could be pilfered by crafty crooks or other unsavory characters. Fischer notes that trusts, however, are “generally private documents.”
With conventional assets, there’s an established procedure for claiming them through probate court, but with cryptocurrencies the process is less certain. Complicating matters is that many cryptocurrency exchanges don’t let their customers name beneficiaries. Coinbase, the largest trading platform, puts the burden on the heirs to claim any assets left by the deceased (so, hopefully your family knows which exchange you use). Another major bourse, Gemini, declined to comment for this story.
Of course, the problem isn’t confined to the cryptocurrency world: Popular stock trading app Robinhood, which recently began offering crypto trading, doesn’t offer basic beneficiary support. Sadly, as a result, proving that heirs are entitled to crypto inheritance could quickly become a protracted legal nightmare.
There’s no perfect solution for delivering crypto from the crypt. On the bitcoin subreddit, some have suggested dividing portions of your private key among trusted advisors and loved ones. After your passing, they can piece them together to access the associated wallet. (Just make sure not to cross them while you’re still alive!)
It’s still a mystery how many bitcoins have been lost due to people passing away without a plan in place for their cryptocurrency. Overall, industry experts say that between 2.3 million and 3.7 million bitcoins have been lost for a variety of reasons—at current prices, that’s worth between $15 billion to $24 billion.
Although cryptocurrencies are often championed as a tool for financial self-sufficiency, the challenge of bequeathing bitcoin demonstrates how much we must trust one another, in life and death. Just plan ahead, so you can share your bitcoin from the beyond.
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