What happens to your Bitcoin when you die?
As Bitcoin and cryptocurrencies are getting more mainstream, long-term and even new crypto investors are left with a question; what happens to their Bitcoin when they die? This time, we will cover some of the ways on how you can pass on your digital assets when you die.
Since Bitcoin and other cryptocurrencies are intangible and have no form, they are kept in a digital wallet. And the owner has a private password, or key, that allows secure access to their digital wallet. Cryptocurrencies use blockchain technology, and therefore, it isn’t backed by any government regulator. There are many cases around the world with millions of dollars in crypto is being lost each year through the deaths of its owners. So, can you pass on your digital assets? The short answer is yes. And there are some options to do so.
Share your private keys with your loved ones
As mentioned earlier, if you are planning to pass on your digital assets to your family members/loved ones, sharing your private keys to your digital wallet can be a solution. Wallets often use two keys to allow the owner access: a public key that anyone can see and a private key. This is the most common method for crypto owners to ensure their Bitcoin gets passed on.
Write your cryptos as a will
It is important that you specifically list your cryptos in your will. If you don’t, it will fall into the ‘residue’ of your estate. ‘Residue’ is a catchall term for assets that are not specifically listed in your Will.
If cryptocurrency falls into the residue, then it can be difficult to identify, particularly if you don’t know where to look. Unlike traditional assets like shares or bank account, cryptocurrency does not leave an obvious paper trail. For that reason, you should ensure your cryptocurrency is clearly identified.
Through an exchange
Some exchanges like Coinbase allow family members of a deceased client to access their crypto assets. To make sure the assets are passed on to a legal heir, the Coinbase team asks for numerous documents. For instance, the death certificate of the owner, his/her will, government-issued ID proof of the heir, etc. That is why writing your digital assets in your will is essential.
If you’re making a long-term investments in cryptos, you need to have a plan for what will happen to it, when you die. Leaving cryptocurrency to your loved ones after your death requires more planning than traditional assets. But with a little work now, you can simplify the process for your beneficiaries and ensure that they inherit your coins.