Violet Vallaya
Crypto presents a unique challenge when it comes to passing on assets to the next generation. Unlike physical assets, digital assets like Bitcoin cannot be accessed without the private keys. If those keys are lost, the assets may be irretrievable.
The Complexity of Passing On Crypto
In contrast to traditional financial systems where leftover funds can be retrieved from banks or asset managers, transferring crypto assets involves complexities primarily revolving around self-custody.
There’s a growing trend of individuals purchasing crypto to pass on to their children, so it’s crucial to consider how to ensure these assets are bequeathed effectively to the next generation of HODLers.
Here are some essential steps to consider:
Start with the Will
Similar to designating beneficiaries for traditional assets like money or real estate, crypto beneficiaries must be clearly stated in your will. If you wish to appoint a guardian to access private keys without inheriting the assets, this should also be specified.
However, assigning an attorney as a trustee is not feasible due to legal constraints. Attorneys lack the necessary licenses to be custodians of digital assets, presenting regulatory hurdles.
Avoid Specific Token Listings
To mitigate the risk of potential security breaches, refrain from listing specific cryptocurrencies in your will. Instead, allocate percentages of your estate to each beneficiary. This approach avoids complications stemming from outdated documents and defunct tokens, preventing potential paradoxes and issues in your estate plan.
Keep Good Records and Educate Your Family
If your crypto assets are stored in a wallet, ensure your family understands what they are and how they function. These instructions can be formally documented in your will or shared with your attorney. If your crypto remains on an exchange, treat it like any other bank or brokerage account, ensuring your family knows how to access it.
Remember, crypto assets are a unique asset class, and proper planning is essential to ensure your children inherit your digital wealth smoothly. While you may not be able to take your crypto with you, you can certainly ensure it reaches the right hands after you pass it on.
