Can one inherit digital currencies? If yes, then how easy is the process, and what are the legal implications and how is estate planning done? Well, those are some common questions that pop up in our minds when one talks about the inheritance of digital currencies.
Every year, millions of dollars in digital currency get stuck in highly encrypted devices each year when buyers pass away without leaving behind a plan to pass on their digital assets. Though robust password protection is a must, creating a digital inheritance plan can resolve the problem. There are some established progressive estate planning services online that provide useful services and essential guidance regarding digital currencies inheritance.
With more and more investors and traders turning towards digital currencies, there is no denying the growth in popularity of these digital assets. Still, questions pertaining to digital currencies exist in the real world. What is unique about digital currencies is that they are digital assets and internet properties. As of today, there is limited knowledge and experience among investors regarding the likelihood of inheriting those assets and related legal issues. There are still many questions and doubts regarding investing and inheriting digital assets.
Some of the most common questions that surface around inheriting digital currencies are about the inheritance itself, the safety against unauthorized access, and the laws regarding digital currency inheritance. Interestingly, laws in most countries prohibit access to a person’s online account, which could include crypto wallets, even after they are gone. In other words, retrieving private information about a cryptocurrency wallet does not mean that the beneficiaries can access the funds straight away without the required legal authorization.
Inheritance in the digital sense
Inheritance has been a prominent practice in human societies and plays an important role. Societies are accustomed to the natural process of inheritance, where individuals bestow their possessions and heritage to their children or the next generation. While most of us are aware of traditional inheritance, little is known about the inheritance of digital assets such as cryptocurrencies while estate planning.
When one looks at inheritance in the digital currency, it is essential to understand first that it is different from traditional instruments of investment and inheritance. The owner of the digital assets has a special electronic wallet that he can use to carry out any transactions. Unlike the traditional inheritance procedure, there are no archives of crypto investors, and as it is not possible to determine who owns the digital currency, it is possible to obtain any documentary proof of the ownership. However, it is the unique features of digital currencies that make them attractive to investors.
The covert and anonymous nature of digital currencies
It has been reported that almost four million bitcoins have been lost for a variety of reasons, and losses due to the death of the asset holder account for about 30% of the bitcoin market. There have been numerous cases where the relatives were unable to access the online wallets of their deceased relative as they did not have the private key for identifying information required. In other cases, millions worth of cryptocurrencies have been lost forever, and families are now left with the intimidating task of investigating the missing funds and wondering about the gaps in their estate planning.
There are some countries that have evolved significantly in the past three decades regarding digital inheritance law. European countries such as Estonia, Poland, Netherlands, Italy, and Croatia are taking the lead when it comes to addressing the numerous concerns of digital inheritance and security. However, United States is much more advanced than the European countries when it comes to digital assets and inheritance. China has passed a new law that allows its citizens to inherit internet assets such as digital currencies, internet assets, and virtual gaming items. It is important to note that many countries such as India still do not have a dedicated law on digital inheritance or give it due importance in online estate planning. It is challenging to formulate a harmonious digital inheritance law because of constant expansion and evolvement due to the unique nature of cryptocurrency.
Here are some major hurdles regarding digital inheritance:
- Federal and State Laws govern unauthorized access, and just having the password doesn’t mean you have the legal authority to access an account.
- With growing incidents of data breaches and hacking attempts, it can be difficult to safeguard online assets from unauthorized access and prying eyes.
- Lack of uniform and transparent regulation brings with it certain difficulties, and it means that investment and inheritance of digital currencies do not come without some risks.
Handling the pitfalls
There are concerns about how the virtual assets will get accessed, especially after death. The complexity behind digital currencies and the intangible nature of these assets indeed makes it extremely difficult to identify the owner and ascertain the true value of the asset. Even if one is able to retrieve personal information and get access to digital assets, the digital funds of the deceased may still not be available to their beneficiaries. Many governments regulate digital assets and currencies to make them more transparent, but there are no concrete results yet due to the lack of central management.
How does one guard against the possible pitfalls and avoid losses related to the inheritance of digital currencies?
Solutions for managing digital inheritance
The digital assets and currencies of the dead must be granted to the beneficiaries securely and safely. Estimates differ, but experts believe that millions in Bitcoins must have already vanished due to loss of private keys, online fraud, and poor planning. Here are some steps one can take to make digital inheritance simpler.
- Write a will- Get professional help to formulate the will document and ensure that all laws pertaining to virtual currencies are followed. One can get help from an experienced attorney if they decide to place their cryptocurrency into a trust and to ensure that their cryptocurrencies are fully retrievable to your loved ones after their death.
- Secure digital wallet info– It is a good idea to store the digital wallet information, its number, and password on a memory card or paper and keep it safe in a blank cell. Only the owner can have access to it, and after his death, his beneficiaries can access the information as per his will.
- Focus on the value of digital currencies – Instead of leaving digital currencies; it would be a lot better if one left the value of that digital investment for their beneficiaries. This is because, even if instructed, the beneficiaries can still face difficulties navigating the inheritance process of cryptocurrency.
Digital inheritance is an important subject and process that should be simplified to ensure that the rightful can get the digital assets. Fortunately, further risks can be averted even if the least of the safety precautions detailed above can be adhered to without risking public exposure. Get all the necessary information pertaining to digital inheritance in your country and include digital inheritance in estate planning.
Think about your cryptocurrency investments and their digital existence after your death. As your loved ones and other beneficiaries have a right to access these accounts without any issues, you need to plan ahead for the future and take some steps right away!
