Here’s what happens to your crypto and non-fungible tokens (NFTs) when you die, as well as how to set up your digital wallets so your loved ones can access them.
Approximately 4 million Bitcoins have been out of circulation forever as a result of people dying and not revealing their private keys. Private keys are like passwords. You need it to access your crypto wallet—where your crypto coins and NFTs are securely stored.
Matthew Mellon, who owned $1 billion worth of XRP, passed away in 2018 and it was lost forever. In 2019, Gerald Cotton, the CEO of Canadian exchange QuadrigaCX, passed away, and he was the only one with access to $190 million in Aetherium.
Crypto assets cannot be claimed without the private keys. In the absence of private keys, court orders or any other legal document will be worthless.
You should carefully choose whom you grant access to your digital assets.
It’s not just about trust, it’s about making sure the person with access to your crypto wallet is technically savvy and knows how to retrieve it.
You should make sure your next-of-kin understands the risks associated with crypto-wallets, such as sending crypto to the wrong address, getting locked out of devices, or withdrawing assets using the wrong standards.
You should also consider how much information you should give out. Of course, you would have to give out your private keys, but can you trust only one person with your crypto assets, or could you share the information among several people?
Listing multiple parties has the drawback of collapsing the whole system if one person omits any piece of information.
Before you make a will, you should transfer all your crypto assets to a hardware wallet. The online wallets are the easiest to set up and use, but they are also the most vulnerable to cyber-attacks. Using a hardware wallet instead of an online wallet can help secure your cryptocurrency.
You can make it easier for your loved ones to find and access your crypto wallet. Describe how to access your cryptocurrency in a step-by-step guide. Make sure the information is stored on a password-encrypted hard disk so it doesn’t fall into the wrong hands.
Consider that your beneficiary knows nothing about cryptocurrency when you write the instructions. Below is an example of the instructions you might give.
#Name of the exchange that hosts your cryptocurrency. (WazirX, Binance, etc)
#Steps to log in: Username and password
#For physical wallets: Private wallet keys
#For account recovery a 12- or 24-word secret seed phrase
#In case you have two-factor authentication (2FA) switched on, provide either the location and password of the device where the Authenticator app is stored.
#If your accounts are set up to receive OTP on mobile phones, include details of the location and password of your current mobile device.
#Password or pin to your hard-disk.
As soon as you’ve protected your cryptocurrencies for your descendants, get yourself a lawyer so that your will clearly states who will own the right to access your crypto assets after you pass away.
Lastly, make sure you mention where your cryptocurrency can be found in the will. Leaving cryptocurrency to your loved ones requires a great deal more planning and effort than any other traditional asset. The earlier you start, the better, before it’s too late.