The average crypto investor probably isn’t planning to die of old age any time soon, but that doesn’t mean they shouldn’t be planning to transfer their cryptocurrency in the face of an unlikely death. No, lawyers warn.
Speaking to Cointelegraph, Dubai-based cryptocurrency attorney Irina Heber believes that “billions” worth of Bitcoin (BTC) was lost due to Hodler’s lack of proper death-related planning. ing.
She pointed out that many families have lost access to their loved ones’ crypto assets because private keys were taken to the grave, stressing the importance of discussing crypto assets with family members and including them in their wills. .
Heber said the typical cryptocurrency investor is a “Millennial Male” between the ages of 27 and 42, who “finally” have to sort out their financial affairs in the event of their death. This is the age group that matters.
However, lawyers believe it is “essential” to ensure that the custodian of the will is proficient in using cold and hot wallets to properly distribute his holdings.
Liam Hennessy, a digital asset attorney who is a partner at Australian law firm Gadens, said cryptocurrency investors should prepare a will as a “vanilla first step” to protect their family’s future. We think you should know, but you should also keep in mind that cryptocurrencies are complex assets. And the will should contain really specific instructions as to where the ciphers are and how the keys are to be accessed.
Heber has observed “big problems” in the process of inheriting crypto assets. Examples include cases where her family approached her seeking help in accessing the crypto assets of her deceased loved ones.
Digital asset attorney Krish Gosai believes it is particularly important to inform beneficiaries about cryptocurrencies due to the lack of understanding surrounding digital assets.
Gosai said he believes it’s important to let executors and loved ones know about the existence of crypto assets, but that sharing critical login information or seed phrases is not necessary.
He suggested that seed phrases could be divided among the four family members if desired.
Tax impact
Crypto inheritance can also be complicated by differences in tax structures between jurisdictions.
Heber added that some jurisdictions have inheritance taxes. For example, in the UK, crypto assets are “liable” for inheritance tax on the death of the owner and capital gains tax on effective disposal.
Related: Answering the Morbid Question: What Happens to Bitcoin When You Die?
There is no inheritance tax in Australia, but Heber pointed out that there is a capital gains tax when disposing of assets inherited from a deceased estate.
She pointed out that there are tax-free jurisdictions, like the United Arab Emirates.
Gadens partner digital asset attorney Liam Hennessy added that getting the best price for digital assets could be another issue due to factors such as price volatility and smart execution protocols. I was.