Death isn’t a happy topic to discuss, but it’s important to plan every scenario in advance, especially inheritance planning, also known as Estate planning to ensure that all your assets – physical, financial and online – are inherited and transferred to your loved ones, after your demise.

Whether it is gold, cash or a house, typically someone inherits it after it was put somewhere in a will by the deceased. But, what happens to crypto-assets after a person dies? The answer to that is not as simple.

With cryptocurrencies, the risk of losing assets or misplacing them is higher than with traditional assets. In this week’s column, we explain what happens to your crypto and non-fungible-tokens (NFTs) when you die, and how to set up your digital wallets so your loved ones can access them securely.

No keys, no crypto assets

About 4 million Bitcoins have been out of circulation forever, as a result of people dying and not revealing their private keys. A private key is like a password. It is a string of letters and numbers that give you access to your crypto wallet—where your crypto coins and NFTs are stored securely.

Billions of dollars worth of cryptocurrencies have been lost forever, due to the owners dying and their family members or close ones not being able to retrieve the crypto assets from their wallets.

In 2018, Matthew Mellon, a Ripple investor who held $1 billion worth of XRP died and it was lost forever. In 2019, Gerald cotton, the CEO of a Canadian exchange QuadrigaCX, died and he was the only one that had access to $190 million worth of Aetherium.

The bottom line is, in both of these cases, only the deceased had access to the cryptocurrency, and with them, their assets are lost forever.

Cryptocurrencies are stored in your crypto wallets built on blockchain technology— that stores digital assets cryptographically, making it impossible for someone to hack your private keys.

Without the private keys, you cannot claim ownership to any crypto assets. Court orders or any other legal document won’t be worth it, if you don’t have private keys.

Crypto Estate planning

Before we delve into the details of securing your crypto assets, it’s important to plan whom you give access to your digital assets.

Remember, choosing the right person to give access to your crypto wallet is not just about trust, it’s about choosing someone who is technologically savvy and understands how to retrieve a crypto wallet.

For instance, say Raj has 2 Bitcoins that he wishes to leave for his brother Sham, in the unfortunate event he dies. However, Sham has no idea how to use a cryptocurrency wallet or an exchange. In this scenario, Sham would most likely employ someone to help him access the cryptocurrency and then liquidate it. This can pose a significant risk. The employed person could transfer all the funds in their wallet—and we are familiar that such crypto scams are quite prevalent in the crypto universe.

This is only one such scenario. Even if Sham learns how to use crypto-wallets, there are other risks associated: sending crypto to the wrong address, getting locked out of devices or withdrawing assets using the wrong token standards.

Another factor to consider is how much information should you give out? Obviously, you’d have to give out your private keys, but can you trust only …….

Source: https://indianexpress.com/article/technology/crypto/what-happens-to-our-cryptocurrency-and-nfts-when-you-die-preplan-or-lose-it-forever-7883455/

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