What happens to your cryptocurrency when you die?

What happens to your cryptocurrency when you die?

Group News posted in on 31 May 2018| comments
audience: The Boston Foundation | last updated: 31 May 2018
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With the introduction of blockchain technology and the surge in cryptocurrency offerings, peer-to-peer transactions are streamlining the pathways of commerce. Cutting out the middleman (such as a bank or investment firm) by using this new platform might just leave a hole in the ability to identify your ownership of crypto assets at your death. 

Without a middleman to help identify your holdings, cryptocurrency owners must take measures during their lifetime so the account’s existence is known. 

Scenario: An investment in a cryptocurrency is made but not discussed with any family members and the nominated executor. Unlike traditional assets, no account statements are issued for cryptocurrency accounts making it unlikely that the account will be discovered. 

Safeguarding measures: During life, owners of crypto assets should prepare, and maintain, an inventory of crypto-asset accounts and the exchanges used, including account login, password and private key information, which is kept in a secure location. 

A cryptocurrency wallet is a method of storing private and public keys and interacts with various blockchain networks to enable users to send and receive digital currency and monitor their balance. Diversified holdings often require that you use multiple wallets. 

Scenario: The existence of a crypto asset is known but the executor does not have the cryptocurrency wallet information. 

Safeguarding measures: Wallets may be online, mobile, desktop, hardware, paper or a combination of these types. Each wallet has a unique protocol used to gain access to its contents. Executors not only need information on the existence of your crypto assets, but also how to access your cryptocurrency wallet(s) as well. 

Anyone with knowledge of your crypto-account access information is free to access and transfer the assets.

Scenario: Cryptocurrency wallet, account and private key information is left in an easily accessible location.

Safeguarding measures: If your crypto-asset account information is easily accessible by other persons, they may be able gain access to and withdraw funds from your cryptocurrency account without proper authorization. Accordingly, your account information and private keys should be stored in a location, or separate locations for account login codes and passwords or private keys, which are accessible only to entrusted individuals.

What else should be done to protect crypto assets. 

Let your estate planning attorney know that you own crypto assets as this ownership may affect your estate plan. 

Engage a third-party company that provides services to help consumers manage their crypto assets. As the use of blockchain technology expands to more industries, these companies may become the middleman that currently does not exist.

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The Boston Foundation
75 Arlington Street 10th Floor
Boston, MA 02116
United States
Phone: 1 617-338-1700
Fax: 1 617-338-1605

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