The average crypto investor probably isn’t planning on dying of old age anytime soon, but that doesn’t mean they shouldn’t have a plan in place to pass on their crypto in case they meet an unlikely death, lawyers warn .
Speaking to Cointelegraph, Dubai-based crypto lawyer Irina Heaver estimates that “billions” of Bitcoin (BTC) was lost due to a lack of proper death-related planning by the hodlers.
She noted that many families have not been able to access their loved one’s crypto assets due to private keys being taken to the grave, and stressed the importance of discussing crypto assets with family and keeping them safe. include in their will.
Heaver said the typical crypto investor is a “millennium man” between the ages of 27 and 42, which is the age range where arranging his financial affairs in the event of death is the “last thing” to come up in conversation.
However, the lawyer believes it is “essential” to confirm that the administrator of his will is adept at using cold and hot wallets in order to properly distribute its assets.
Digital assets lawyer Liam Hennessy, a partner at Australian law firm Gadens, says crypto investors should know that the “vanilla first step” to protecting their family’s future is to prepare a will – but they should. also keep in mind that crypto is a complicated asset. and that the will must include really specific instructions on where the crypto is and how the keys can be accessed.
Heaver observed “huge problems” in the crypto inheritance process, including a case where a family approached her asking for help accessing the crypto assets of a deceased loved one.
Digital asset lawyer Krish Gosai, managing partner of Gosai law, believes educating beneficiaries about crypto is especially important due to the lack of understanding surrounding digital assets.
Gosai believes it is important to notify the executor or relatives of the existence of crypto assets, but advises against sharing sensitive login information or seed phrases, saying it is not necessary.
He suggested that, if necessary, the seed phrase could be split between four family members.
Crypto inheritance can also be complex due to differences in tax structures between jurisdictions.
Heaver added that in some jurisdictions there are inheritance taxes. For example, UKcrypto-assets will be “subject” to inheritance tax on the death of the holder and to capital gains tax on a valid disposal.
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.
She noted that there are then jurisdictions where there are no taxes, such as the United Arab Emeriti.
Digital asset lawyer Liam Hennessy, a partner at Gadens, added that realizing digital assets at the best price can be another complication, due to factors such as price fluctuations and smart execution protocols.