Mistakes That Happen in Cryptocurrency Inheritance

Source: DigitalToday Original Title: Mistakes Made in Cryptocurrency Inheritance Original Link: Cryptocurrencies are now a part of many investment portfolios, but they are often excluded from estate planning. If access to digital assets is not provided, families may find themselves unable to locate the cryptocurrency.

If cryptocurrency inheritance issues are not addressed, there is a risk that digital assets could be lost forever. While it has become easier to invest in cryptocurrencies, mistakes in inheritance planning are still common among crypto owners.

A Will Alone Is Not Enough

Legal experts warn that “if access rights to cryptocurrency are not specified in a will, families will have to go through legal procedures, which can be time-consuming and costly.”

A simple will is not sufficient. Attorneys recommend using a revocable trust(revocable trust) to include cryptocurrency. This can reduce the legal procedures involved in inheritance and allow for immediate response to market fluctuations.

Managing Access Rights and Private Keys

It is also important to clearly inform family members of how to access the cryptocurrency. In one inheritance case, tens of millions of dollars’ worth of cryptocurrency was lost because the family did not know the private key.

Private keys should not be included in the will, as they risk being exposed during legal proceedings.

The Importance of Choosing an Executor

It is crucial to carefully choose the person responsible for handling cryptocurrency inheritance. Not everyone understands cryptocurrency transactions, and a poor choice can lead to significant losses. Some institutional trust managers may even refuse to handle cryptocurrency. Therefore, inheritance plans must be thoroughly reviewed.

Tax Considerations

Cryptocurrency can carry significant value, so tax implications must be considered. The federal estate tax exemption is $13.99 million, but there are also state and local tax regulations.

Establishing a Comprehensive Plan

Cryptocurrency inheritance cannot be resolved with a simple will. Due to the nature of digital assets, access and security issues are complex and intertwined. Investors should work with legal professionals to create an inheritance plan that is regularly updated and supplemented as needed.