Can You include Cryptocurrency In Your Last Will and Testament?
“Can you include cryptocurrency in your last will and testament?” This question gets asked by crypto investors more often than you can imagine. And it makes sense. Because crypto assets are quite different from traditional assets and they could disappear forever when you pass away.
To answer this question, all forms of cryptocurrencies (e.g. Bitcoin, Litecoin, Ethereum, etc.) can be included in a will. However, simply gifting a digital currency to a loved one isn’t enough. You need to make sure your beneficiary knows how and where to find crypto assets after receiving them from you.
In this guide, we explain how best to handle cryptocurrency assets in your will. Let’s dive right in.
Best Practices When Adding Cryptocurrency and NFTs to Your Last Will and Testament
Even if someone is explicitly named in the will, it’s impossible for them to access a digital wallet unless they’re in possession of the private key. As such, in the event of your death, your beneficiary should be able to locate and access the private key, which may also compromise your privacy and security when you’re still alive.
For that reason, there are a number of steps you must take when bequeathing your crypto assets to your loved ones. Take the following measures when including digital assets in a will.
Find a Crypto Lawyer
The first step is to secure an attorney that has a general background and understanding of the blockchain and cryptocurrency space. There are many crypto lawyers who are dedicated to helping investors navigate the legal intricacies of cryptocurrency.
The idea is to seek the guidance of a qualified law firm to ensure your crypto assets are securely inherited by your beneficiaries when you’re gone.
Where possible, choose a law firm that uses the smart contracts offered by blockchains to expedite some litigation procedures. Some of the best ones will even help you write a will online.
List Cryptocurrency in Your Will
With the help of an attorney, list your cryptocurrency in your will so that your beneficiaries will have access after your passing.
Crypto assets can fall into the “residue” or “remainder” of your estate if not listed in the will. That means they will be considered as the aggregate of all your estate’s probate assets that weren’t accounted for in the will.
Because blockchain technology leaves no paper trail, it’s important to clearly describe your digital asset and where your beneficiaries can find it in your will. By doing so, your cryptocurrency will be safely transferred into the ownership of your beneficiaries when you die.
Include Your Digital Wallets in Your Will
As well as listing all your cryptocurrencies in your will, it’s advisable to let your loved ones know which digital currency exchange (e.g. Coinbase, eToro, Gemini, etc.) holds your digital assets.
With so many digital wallets and online exchanges, it would be practically impossible for your loved ones to find your blockchain-based asset unless you make it clear where it is stored.
Worth noting is that digital wallets may be stored on a computer, smartphone or a similar device. Common examples of digital wallets include Google Pay, Alipay, and PayPal.
Make sure your will contains all devices holding the key elements of your digital wallet. It’s also important to include any wallet backups in your will for your beneficiary’s eventual access in case something happens to the original.
Formulate Your Cryptocurrency Access Guide
Don’t assume that your beneficiaries are familiar with digital currencies. You will need to formulate a detailed guide that includes all the information a cryptocurrency novice needs to access your wallets, buy and sell crypto coins for fiat money, and more.
When writing a crypto access guide, use a simple language so there is no confusion to your loved ones. By leaving a detailed guide with plain language instructions to your beneficiaries, you allow for little guesswork and remove frustration of trying to navigate the crypto landscape on their own.
Test the guide once it is complete to ensure that it’s foolproof for when your loved ones use it. You can update the guide as often as necessary and store it with your memorandum.
Just because cryptocurrencies are intangible assets doesn’t mean you can’t pass them down to your loved ones after your death. However, given the decentralized nature of crypto, and the fact that it leaves no paper trail, specific measures must be taken to ensure that the assets are actually distributed to intended people after the owner’s death.
Including cryptocurrency in your last will and testament can be a delicate and technical process. Because sharing your private key directly could compromise your security, it takes more planning and creativity than traditional assets.
You can simplify the whole process by finding a crypto lawyer or estate planning attorney well-versed in cryptocurrencies and digital asset protection.
An experienced attorney will walk you through the process to ensure that the assets do not get lost or fall on the wrong hands after you pass away.