Creating an estate plan is a smart and responsible step to take. However, if you own cryptocurrency, it is important to understand that it is not the same as your other assets.
Cryptographic keys are used to secure cryptocurrency instead of keeping the asset in a bank account or a tangible item. Therefore, passing these digital assets to heirs requires careful planning to ensure they don’t get lost forever.
Create a digital will
Consider creating a digital will that specifically addresses your crypto assets. Traditional wills might not sufficiently cover the nuances of digital currencies, so it’s essential to be explicit about your wishes and provide clear instructions.
Store your private keys securely
The most critical information your heirs will need is the private key (or recovery seed) to your cryptocurrency wallets. Without it, funds could be irretrievable. Store this key in a safe deposit box with a trusted attorney or a specialized service designed for this purpose. It’s essential never to store it in easily accessible or public places.
Use hardware wallets
For added security, consider transferring your cryptocurrency to a hardware wallet. This is a physical device that stores your private keys offline. This minimizes the risk of online hacks. Once transferred, ensure your heirs know the location of this hardware wallet and its password.
Use third-party services
Several companies specialize in posthumous cryptocurrency transfers. These entities can act as intermediaries, ensuring your heirs receive your digital assets when the time comes. However, always thoroughly research and vet these services to ensure they’re reputable.
Leaving cryptocurrency to your heirs is not as straightforward as traditional assets. But with proper planning, education and security measures, you can ensure your digital wealth is passed on seamlessly. You should also become familiar with the legal aspects of leaving cryptocurrency to your heirs to ensure you don’t make mistakes.