It is said that the golden key will open any door, and that is certainly true for cryptocurrency. Cryptocurrency is a virtual or digital currency that relies on complex math to provide security and is not issued or backed by any government or bank. Its popularity has grown and with it, the need to include it in estate planning. If you have crypto, it should be included with other assets in your estate plan – failing to do so could lead to costly court proceedings or even the loss of crypto.
The security of crypto is like an unbreakable vault full of gold, with the private key acting as the key to open the vault. The private key is stored in a wallet, which can be digital or physical. Many people use a hot wallet, which is connected to the internet, while some opt for a cold wallet, which is a small, portable electronic device. Writing your private key on paper or having it etched into a metal coin or card is also an option.
Your estate plan can help you pass on your crypto just as easily as other assets. The first step is to make a will, and a trust can give your trustee access to crypto-assets. It is important to designate a beneficiary or agent in the event of your death, as most services do not allow you to do this.
Using a password or information manager service is not recommended, as they are prone to data breaches and unauthorized people can get access to your account information. Brain wallets are also not recommended, as memories cannot be shared.
Creating an estate plan is the best way to ensure that your crypto is properly transferred when you die. Your estate plan should tell your family where to find your crypto and what to do with it. With a proper plan, your trustee can actively manage your crypto during your absence, rather than risk it suffering catastrophic losses.
Albert Einstein said, “You don’t have to know everything. You just have to know where to find it.” When planning for your cryptocurrency, your family doesn’t need to know everything, but your estate plan should tell them how to find it.