What will happen to your crypto investment once you meet impending death? Your crypto assets can be inherited by your family members or relatives as far as British inheritance laws are concerned.
Hal Finney secured the keys to his cryptocurrency savings in a safe deposit box for future access by his family members once he passes away, “Those discussions about inheriting bitcoins are of more than academic interest. My bitcoins are stored in our safe deposit box, and my son and daughter are tech savvy. I think they’re safe enough. I’m comfortable with my legacy.”
According to lawyer and partner at British firm McDermott Will & Emery Simon Goldring, family members or relatives who will inherit a person’s cryptocurrency are permitted to pay tax. One way to manage your inheritance is by using privacy coins.
“The best advice lies in the old adage, prevention is better than cure. It may be that a specific gift of the digital asset is contained within the Will itself or a Letter of Wishes is prepared, to sit alongside the Will, detailing instructions on how to access the funds or the private key itself. Inactivity can be a significant indicator of a change in circumstance. Certain platforms have made use of Application Programming Interface (API) integrations, which measures activity signals. Users are able to predefine a period of inactivity, e.g., three years, which on elapsing will trigger the transfer of digital assets to select beneficiaries.”
Another way to disguise your crypto inheritance is by storing it in a “hardware wallet” or computer as part of your Will. This reduces the amount of inheritance tax added by the value of your inherited cryptocurrency.
“It is important to take precautionary steps to avoid once’s cryptocurrency being inaccessible at a time when it may be needed the most and including clauses relating to digital assets either within a Will itself or as part of an ancillary Letter of Wishes is becoming increasingly popular. Though digital currency exchanges are beginning to explore varying uses of the blockchain to prevent lost tokens and ensure greater certainty in matters of bequest, the best strategy is risk mitigation and for token owners to take action now to ensure their crypto assets are inherited by their intended beneficiaries,” Goldring added.
The future of cryptocurrency does not only include the value it brings to the future but also the ways on which it is passed on through each generation.