Figuring out where your assets will go when you die is daunting in nearly all cases. However, if you have cryptocurrency, you are facing a unique challenge. Digital assets aren’t as easy to manage upon death. This is partially because of their highly secure nature. The private keys associated with a digital wallet make it hard for heirs to gain access. Especially since there is no central authority that can provide or reset the key.
This Is What Happens to Your Cryptocurrency When You Die
How you manage your private key has a big impact on what happens to your cryptocurrency after you die. If you don’t leave anyone the key or a way to access your digital wallet, your cryptocurrency is pretty much inaccessible. There essentially isn’t a customer service phone number or company that can give someone else access, even if they can prove you’ve passed on.
Similarly, if you have your key saved somewhere but don’t explain what it is, your heir may not know it is for your digital wallet. It would be a lot like a friend or family member finding a safety deposit box key after your death but not knowing what it is for or which bank you used.
While a bank eventually empties abandoned safety deposit boxes, cryptocurrency usually remains untouched. There is no incentive for anyone to clear your digital wallet. The limited number of each token means some of the coin being lost could actually increase the value of the remaining coins thanks to the perceived scarcity.
However, there are things you can do to make sure your cryptocurrency ends up in the hands of a designated heir.
How to Pass on Your Cryptocurrency in the Event of Your Death
If you want someone to inherit your cryptocurrency, then you need to make sure that they are aware of both the account and how to access it. You can either provide them with your passwords or keys in advance, if you trust them not to touch the account while you are alive, or store the key on a flash drive, in a digital document, or written down, only to be provided after you pass away.
Some third parties do provide options for passing along your key after your death. Coinbase has a “vault” feature that saves your private key, ensuring it isn’t lost at any point. They also have joint accounts, giving your heir access and allowing for a fast transition when they inherit your cryptocurrency.
Leave Clear Instructions In Your Will
Regardless of the option you choose, you need to make sure that there are clear instructions in your will. Not only does this ensure that your final wishes are respected, but it also keeps critical information in one place. Plus, it may allow your heirs to avoid probate, a process that could significantly delay their ability to inherit your assets.
Before you craft a will, you may need to speak to an attorney. Not only do inheritance rules for digital assets vary by state, but each digital wallet and account could also have their own rules. This can make it challenging for your heir to receive your cryptocurrency if things are not set up properly. By speaking with an attorney, they can make sure everything will go smoothly should you die.
Do you have a plan for your cryptocurrency after you pass away? Share it in the comments below.
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Edel is an Editor with a decade of print and digital media experience – specializing in Science, Technology, Finance, Entertainment, and Advertising. He is also a stock and cryptocurrency investor. When Edel is not editing or analyzing charts, you can find him with his DIY lightbox taking timelapses of plants.