I wrote previously about five methods that Bitcoin can be lost forever. Among those, Method #5 is:

Not sharing the above information (passwords/private keys, wallet recovery seed phrase) with another person before you die or become incapacitated

If you decided that you need a will, that's excellent news! But to further reduce the risk that your crypto assets do not get lost forever, there are three reasons why you may also need to create a power of attorney with a lawyer.

First of all, what is a Power of Attorney?

A power of attorney (POA) is a legal document that gives an individual (referred to as the agent or attorney-in-fact), the authority to take action on behalf of someone else (referred to as the principal).

The agent can have either extensive or limited authority to make legal decisions about the principal's property, finances, or healthcare, depending on the terms of the POA. Obviously, this includes your crypto assets!

Reason #1 - Great if you want to go into hiding 

Younger people who travel a lot may consider setting up a power of attorney so that someone can handle their affairs in their absence, especially if they have no spouse to do so.

Reason #2 - A will does not come into effect until after you have died

It's important to understand that a will cannot be executed while you are still alive. So what happens if you become incapacitated, but manage to stay alive? It's possible that you slip into a coma after suffering head trauma (from a car accident for instance), and you may be put on life support indefinitely. In situations like these, no one can legally access your crypto assets on your behalf without a power of attorney.

Reason #3 - You have an opportunity to install an agent who you trust without hesitation

To set up a legally binding power of attorney, the principal must have sufficient mental capacity when the document is drawn up. If you are without a power of attorney by the time you are unable to manage your own affairs (if you develop a mental illness such as Alzheimer's Disease, or dementia for instance) a situation may arise where a court would appoint a guardian or conservator, and neither you nor your family would have any control over the appointee. To ensure that your best interests are met, it would be preferable that you assign a power of attorney to a family member, or a close friend who knows you best, over a court-appointed individual. 

Please be aware that every jurisdiction may govern powers of attorney differently. Please consult with a lawyer to ensure you receive proper legal advice specific to your region.

Although planning events after your death is never pleasant, it's an important step in your life. The last thing you should want is for your crypto assets to become lost forever.

Thanks for reading, and stay safe!

Cover art by Eduardo RS from Pixabay