The average crypto investor probably isn’t planning to die of old age anytime soon, but that doesn’t mean you shouldn’t have a plan for passing on your crypto should you meet an unlikely death, lawyers warn.
Speaking with Cointelegraph, Dubai-based crypto lawyer Irina Heaver believes that “billions” worth of Bitcoin (BTC) have been lost due to a lack of proper death-related planning by hodlers.
He noted that many families have been unable to access their loved ones’ crypto assets due to private keys being taken to the grave, and stressed the importance of discussing crypto assets with family and including them in your will.
Heaver said the typical crypto investor is a “male millennial” between the ages of 27 to 42, which is the age range at which fixing one’s financial affairs in the event of death is the “last” thing to come up in the conversation. .
However, the attorney believes it is “essential” to confirm that your will administrator is competent in using hot and cold wallets to properly distribute one’s property.
Digital asset lawyer Liam Hennessy, a partner at Australian law firm Gadens, believes crypto investors should know that the “basic first step” in safeguarding their families’ future is to prepare a will, but they should also keep in mind that cryptocurrencies they are a complicated asset. and that the will needs to include really specific instructions on where the crypto is and how the keys are accessed.
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Heaver has observed “enormous problems” in the process of inheriting crypto, including a case in which a family approached her for help accessing the crypto assets of a deceased loved one.
Digital asset lawyer Krish Gosai, Managing Partner at Gosai Law, believes it is especially important to educate beneficiaries about cryptocurrencies due to a lack of understanding of digital assets.
Gosai believes it is important to inform the executor of the will or loved ones about the existence of crypto assets, but advised against sharing sensitive login information or seed phrases, saying it is not necessary.
He suggested that the seed phrase could be divided among four family members if necessary.
Inheriting cryptocurrency can also be complex due to differences in tax structures between jurisdictions.
Heaver added that in some jurisdictions there are inheritance taxes. For example, in the UK, crypto assets will be “subject” to inheritance tax on the death of the holder and capital gains tax on valid disposal.
Related: Answering a morbid question: What happens to your Bitcoin when you die?
In Australia, there is no inheritance tax, but Heaver noted that there is a capital gains tax if one disposes of an asset inherited from a deceased estate.
He pointed out that then there are jurisdictions where there are no taxes, such as the United Arab Emeritus.
Digital asset lawyer Liam Hennessy, a partner at Gadens, added that getting digital assets at the best price can be another complication, due to factors such as price fluctuations and smart execution protocols.
This post How to pass on your crypto when you die
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