What Happens to Your Crypto When You Die?

Of course, no one expects to die anytime soon, but it's good to have a plan in place to hand over your crypto if something unforeseen happens.

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According to cryptocurrency lawyers, it's important to write detailed instructions in your will, naming the person who will receive your crypto and making sure they know about it.

Crypto lawyer, Irina Heaver, believes that because of a lack of death-related planning, cryptocurrency holders have lost Bitcoin worth "billions."

As a result, she says, many families have not had access to their loved ones' crypto assets after their deaths. She went on to say that it is important to discuss these assets with the family and, most importantly, to include them in the will.

The lawyer further stated that the most common crypto investor is a "male" between the ages of 27 and 42. At this age, the thought of death is "the last thing" you think or talk about with family or loved ones.

Furthermore, it is important that the trustee or notary who will be drafting the eventual will, and who will have the responsibility of distributing the estate in the event of death, has knowledge of cryptocurrencies and is familiar with the use of both hardware and software wallets.

Digital asset lawyer, Liam Hennessy, says cryptocurrency investors should be aware that the "first step" to securing their family's future is to get their wills drawn up correctly. It's important to remember that cryptocurrencies are complicated assets and that a will needs to include really specific instructions about where the cryptocurrencies are located, and how to get to them.

Heaver noted "major problems" in the process of inheriting cryptocurrencies. One case involved the family of the deceased contacting her for help accessing his crypto assets. Another lawyer who argues the need to adequately notify cryptocurrency beneficiaries in the event of a death is Krish Gosai, managing partner of Gosai law.

Gosai points out that it is important to inform the executor of a will or loved ones of the existence of crypto assets, but he does not recommend sharing sensitive login information or seed phrases, as he says it is not necessary. In the case of seed phrases, he recommends splitting the words among multiple family members.

How to tax inherited crypto

Inherited cryptocurrencies are complicated to tax, mainly due to differences in tax structures between jurisdictions.

Heaver notes that some jurisdictions have inheritance taxes. One example is the United Kingdom, where crypto assets are subject to inheritance tax on the death of the holder, as well as capital gains tax.

In contrast, in Australia there is no inheritance tax, but Heaver points out that there is a capital gains tax if someone disposes of an inherited asset.

Then there are jurisdictions such as the United Arab Emirates, where there are no inheritance taxes at all.

Lawyer Liam Hennessy further states that getting digital assets at the best price can be very complicated, due to factors such as price fluctuations and smart execution protocols.

Source: cointelegraph.com