If investing in bitcoin is a long-term strategy, why jeopardise your assets after you die? Having solid estate planning in place for the future can ensure that your loved ones get the crypto assets you accumulated over your life after your death. Read on to learn What Happens to Your Crypto When You Die? as well as how to create digital wallets that will allow your family and friends to access them in the future.
When you die, everything you possess stays here; even cryptocurrencies you acquire or retain are gone forever in a cloud-based system. Because not everyone is comfortable telling their relatives or friends that they are active crypto investors or traders, some have made this a personal matter as the popularity of trading in cryptocurrency has grown. As a result, when they die, their crypto assets are lost forever. To date, around 20% of crypto investors’ funds have been lost and are unrecoverable.
Why Plan Well to hold your Crypto?
Because crypto assets are not centralised, they must be included in your estate planning or your loved ones will lose access after your death. A cryptocurrency exchange is a company that handles the buying and selling of various digital currencies.
Recovering lost crypto is almost IMPOSSIBLE
Cryptocurrencies are intended to provide you with complete financial independence and full ownership of your assets. To do this, cryptocurrencies are built on a decentralised network known as the blockchain, which safeguards your valuables. You hold a private key and a recovery phrase on this decentralised network, which makes you the verified owner of your assets and allows you to utilise them.
The only method to access your crypto assets is through the private key and the recovery phrase, and the greatest part is that neither of them is held by any central institution, making you the sole genuine owner of your assets. So, as long as you keep your key and recovery phrase safe, no one else will be able to access your valuables. And this is in stark contrast to fiat currencies held in bank accounts, where banks have complete control over your cash.
The ownership and independence that cryptos provide are thrilling and much-needed, but they come with significant responsibilities. Because no one else has the access to your keys or funds, your cryptos may never be retrieved by your family members if something untoward happens to you.
Where is your crypto stored?
The cryptocurrencies you purchase or trade are held in wallets, either digital or physical. When you begin purchasing big quantities of cryptocurrency, you will want additional storage space. All you need to do is keep a certain amount of money in an online cryptocurrency exchange for trading, selling, buying, and investing. Your family individual or beneficiaries may participate in the trade by simply logging into the platform.
The 3 Crypto Storage options from the least to the most secure are:
- Centralised Crypto Exchange (CoinDCX, WazirX, BitStamp): Log in using your Username and password and Two-step verification and/or contact customer service is required to recover or backup account information.
- Hot Wallets/ Mobile Wallets: Less secure but usually free and convenient to use. You can regularly check the account where the money goes in and out. Log in using the private wallet key and you’ll need a 12- or 24-word secret seed phrase to recover or backup account information.
- Cold Storage/ Hardware Wallet: It is like a savings account used for storing crypto for a longer time. You can log in using the private wallet key and a 12- or 24-word secret seed phrase is required to recover or backup account information.
To restore account information from the cold and hot wallets, you simply need a private wallet key and a 12- or 24-word password. Keep your crypto assets secure, but don’t be too imaginative, as if you were playing a treasure hunt since if you lose one component of your code including the recovery phase, key, or PIN, your assets are lost. Keep your cryptocurrency safe but accessible.
Set a Crypto Estate Plan: Estate planning for your crypto assets
If you do not plan for the future of your crypto assets, they will vanish forever. Unless you leave clear instructions for retrieving your crypto assets, they will be trapped in a cloud and useless to your heirs. The first step in creating a crypto estate plan is to safeguard your cryptocurrency assets.
- Explain everything about your crypto assets to your loved ones or beneficiaries, including how they can access them after your death.
- Do not save or upload any sensitive information to the internet.
- Secure usernames, password information, seed phrases, and security keys as well as detailed instructions for each
- Maintain the safety and security of your cold storage hardware wallet.
- Provide a beneficiary in your will and include a document with your estate plan.
Your Crypto Assets to share with the Right Person
Before you worry about how to effectively safeguard your crypto assets, you must first pick whom you will inform about them. It’s not as simple as you may believe since it’s not simply about whom you trust. The person you notify must also be technically skilled since they will need to know how to access your crypto-based money. You must provide enough information for someone to be able to access your cryptocurrency assets.
Steps You Should Take
Explain the procedure to your Beneficiary: Once you’ve determined who will be the recipient of your crypto assets, the following step is to establish the process for identifying and claiming them.
Your Funds’ Location:
Your instructions should specify the actual location of any hardware wallets you possess, as well as the hot wallets in which your cryptocurrency is held. If you retain your assets in numerous places, such as Defi pools, centralised exchanges, or non-fungible token marketplaces, now could be a good moment to combine them into multi-asset crypto wallets.
Passwords, Private Keys, and Backup Codes:
Make a list of all the important information about your cryptocurrency wallets, email accounts, and exchange accounts that the beneficiaries will need in order to access your cash. If two-factor authentication is enabled, you must additionally give the location and password for the device on which the app is installed.
You may believe that including instructions on how any beneficiaries should manage or liquidate their assets is vital. Platforms can appear and disappear over time. Furthermore, security failures may necessitate the transfer of cash to new wallets. This implies that you must maintain your details up to date.
Copy Down Your Sensitive Crypto Information:
Make numerous copies of the information on paper. Each duplicate should then be kept in a distinct place to eliminate the possibility of a single point of failure. There are firms that supply seed phrases and password storage on metal plates if you want to increase the protection of your important crypto information. This adds further protection against water damage, home fires, and most other things that may harm a paper copy.
One of the most significant advantages of a crypto wallet is that no one can access it while you are still alive. However, once you’re dead, this isn’t so fantastic. Now that you know what procedures to take to guarantee your bitcoin is delivered to the correct individuals, you can rest certain that your loved ones will be taken care of. Before making any investment decisions, do your own research and consult with financial professionals.
What happens when you send cryptocurrency to someone?
The crypto will appear in the recipient’s account once your transaction has been validated and confirmed.
How can you pass crypto along as an inheritance?
If you have a loved one who has invested in cryptocurrencies, they can lawfully leave it to you in their will.
Is crypto possible to be hacked via sending?
It may be hacked if it is connected and an application is used to get your keys.
Is it possible for someone to take my cryptocurrency if they have my address?
It is not feasible to steal digital cash using only a public address. Someone would only be able to access your funds if they gained access to your wallet account or private key.