What Happens To Your Crypto When You Die?
According to Exploding Topics, about 106 million people owned cryptocurrency as of 2021, and that number continues to grow. They expect to see 39 billion dollars invested in crypto projects by 2025. As exciting as that is for both new and experienced investors, there is an issue that not many people have likely addressed - what happens to your crypto after you die?
We always take the time to educate people on crypto safety and security. You know the drill but here are a few safety reminders:
- Never share seed phrases
- Record seed phrases in multiple locations
- Don’t save seed phrases on your phone
- Use different passwords for different exchanges
- Consider using cold storage when possible
However, now is also the time that everyone should be considering plans for after they are gone. Many people are simply planning to hand over seed phrases and passwords to loved ones. While this will likely work at this stage of Crypto in most cases, it is not the best process in the event that accounts become frozen. Not to mention that people who are new to crypto could easily make a transfer mistake or become the victim of a scam. Think back to the first time that you ever made a cryptocurrency transaction. It can be scary while you wait to see if it goes through correctly.
Coinbase has their own procedures for handing over accounts to beneficiaries so it is best to address this with whomever that may be. They let you know in advance that they will ask for the following documents:
- Death Certificate
- Last Will and Testament AND/OR Probate Documents (either Probate, Letters Testamentary, Letters of Administration,
- Affidavit for Collection or Small Estate Affidavit)
- Current, valid government-issued photo identification of the person(s) named in the Letters Issued
- A letter signed by the person(s) named in the Probate Documents instructing Coinbase on what to do with the balance of - the Coinbase account
Even though this all looks like a formality, it is best to make sure you have the correct documents in place so your loved ones can have peace of mind during an already difficult moment of life.
Another option that could make your decision easier is using a crypto company like Safe Haven. They launched Ineriti which “is a DeFi application for safely managing, storing and transferring your crypto or other digital assets like NFTs, passwords, pictures and documents. Even after your death.” If you decide to use a company, please make sure that you DYOR to ensure that the company is strong and will last for the foreseeable future. Make sure that your assets are protected in the event that they walk away from their project.
One final option to consider is hiring a legal specialist. Inheritance lawyers are quickly learning how to deal with crypto inheritance. Roll Call discovered that “One of the big advantages of using cryptocurrencies in estate planning is the ease of transference, attorneys say.” This will likely become mainstream for inheritance lawyers over the next few years.
Also, keep in mind that the IRS in the United States will consider cryptocurrency an inheritance, which means that you will need to pay taxes on your new crypto. With so many factors to consider, now is the time to have important discussions and make plans for your future. Tomorrow is never guaranteed, but the security of your crypto portfolio can be.
