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What happens when your estate is cryptocurrency?

What happens when your estate is cryptocurrency?

Last updated 23rd Sep 2022

Cryptocurrency is a major force now, but there are still some discrepancies in relation to the overall impact of it, as a currency.

Of course, cryptocurrency is invisible, so there is, arguably, a lot of secrecy surrounding it. But what if you have a lot of cryptocurrency at your disposal, and what happens to it after you shuffle off this mortal coil? And what if your main assets are cryptocurrency, and you don’t have something like real estate, or physical money?

Put it in your will

With a cryptocurrency like Bitcoin, they are stored in virtual wallets. Each wallet has a string of random characters called a “public key” which is visible to anyone, and this is the address for sending or receiving the currency. There is another key, called the “private key,” and this is the equivalent of a password like you would use to access your emails.

So, if a cryptocurrency owner was to pass on without divulging the details of their “private key”, this could leave your next of kin struggling to access the funds. In fact, they would never access it.

It’s vital, when in the midst of your estate planning, that you put your “private key” details into your will. Some simply make a note of it somewhere, but in doing this, it could easily be discarded as garbage, meaning the potential cryptocurrency fortune will be forever trapped.

But of course, your other option would be to put the “private key” on a flash drive, so it’s in physical form at least. But of course, there are risks with these, such as the “private key” being deleted.

Use a third-party service

If you have a fortune of Bitcoin, it can feel a bit like storing money under your bed, but there are third-party exchanges many Bitcoin investors use now, such as Kraken and Coinbase exchange. These third-party services act like banks, and they keep the “private key” for the customer.

Tell your family

And it’s important that your family know that you have cryptocurrency in a wallet. These third-party services do not announce to your next of kin that you have cryptocurrency stockpiled in the vaults. This is why it’s important for you to entrust a family member with this information.

However, if you don’t feel comfortable telling them this, some services can inform them once you have passed on. LegacyArmour is one such service that allows users to store certain encrypted emails. These can be sent out once you have passed on, especially if there were details you didn’t want to release in your lifetime.

Handling your estate when you only have cryptocurrency can be a tricky beast. But now, there are ways and means for you to do it. If you are sitting on a fortune a Bitcoin, just waiting for it to increase in value, it’s important that somebody knows you have this and that you plan your estate accordingly, much like you would with physical money.

Regardless of whether it’s physical or not, you still have an estate to maintain.

News Desk

News Desk

The latest news, comment and analysis from our crypto news desk.