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Don’t take your Bitcoins to the grave

17 March 2020 Capital Legacy

Whether it’s Bitcoin, Ethereum, Ripple, Litecoin or Monero, your cryptocurrency fortune could be lost forever if you pass away without giving your beneficiaries the private ‘keys’ to your digital assets.

“You can’t simply write down the access codes to your crypto-accounts in your Will, since this leaves them open to being stolen,” says CEO of Wills and estate administration company, Alex Simeonides. “But you do need to plan properly to ensure your virtual coins aren’t permanently lost in the cloud.”

Secure your personal keys

Private ‘keys’ are the only way to access your cryptocurrency virtual ‘wallet’. Think of them like bank pins made up of a long string of letters and numbers that are deliberately difficult to remember.

Most people store their personal keys on their desktop, mobile, in the cloud or on a physical device, such as a flash drive. At the extreme, investors may keep their codes on a paper – literally printing out the codes on a piece of paper and storing it somewhere they think is safe. But if your personal key is lost or you don’t tell anyone where your cryptocurrencies are kept, your virtual coins could be lost forever.

“You need to let your loved ones know where you have stored the private keys and how to access them,” says Simeonides. “You might consider, for example, putting them on a flash disk in a safe at home and explaining that in your Will.”

Physical copies, however can be destroyed, misplaced or even accidentally thrown away, as this person learnt the hard way, consider backing up the information elsewhere too. Also keep a record of all your logins, passwords and two-step authentication process, so your beneficiaries can access your crypto-accounts once you’re no longer around.

Accessing your crypto through an online exchange

Online exchanges offer investors a way to buy, sell, trade and store their cryptocurrencies. If you use such a platform, make sure your loved ones know your username and how to use two-factor authentication (usually through your phone) to contact the exchange administrators. Don’t forget to include the password to your phone, to access this.

“After you pass on, accessing your cryptocurrencies can be a complicated process for your loved ones,” says Farzam Ehsani, CEO and co-founder of VALR.com, a platform that bridges the gap between the traditional financial system and the new world of cryptocurrencies. “The onus is on your beneficiaries not only to provide a valid death certificate, but also to prove that they have the right to withdraw the funds.”
You can help by outlining what steps your beneficiaries need to follow in your Last Will and Testament and ensuring the executor of your estate knows who to contact to help transfer your digital assets.

Estate plan with crypto in mind

Your cryptocurrency portfolio should be factored into the value of your estate and may also be taxed should your beneficiaries decide to convert your virtual assets into cash. Be sure to update your Last Will and Testament to specify who you want to leave your digital assets to and who is responsible for tracking them down and withdrawing or transferring them.

“Many people have built up their cryptocurrency assets over years of investing, don’t let them go to waste through poor estate administration,” says Simeonides. “Update your legal documents and Will before it’s too late.”

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