How to Bequeath Your Digital Assets to Your Descendants

How to Bequeath Your Digital Assets to Your Descendants

Depending on your belief system, death is either the endgame or the next level. Whatever lies on the other side, your bitcoins are no good there. Just as we entered this world with nothing, we are destined to leave it with nothing. All those years spent stacking sats neednít be in vain, however. New and improved tools have made it easier to bequeath your crypto to your next of kin.

Digital Inheritance Demands Modern Solutions

According to John Milton, ďDeath is the golden key that opens the palace of eternity.Ē That may be, but that key wonít unlock your crypto wallet when youíre gone. Itís a task that calls for a private key Ė a 256-bit number that enables your coins to be spent. You could just hand a copy of this key to your next of kin, or leave it in a safe deposit box with strict instructions for the executor of your estate, but to do so would be to place your trust in the goodwill and competence of others. Safe deposit boxes arenít safe at all, while family canít necessarily be relied on to resist touching your tokens until the appointed time.

The solution, for a growing number of cryptocurrency users, has been to utilize purpose-built digital inheritance software that promises to automate the process on your behalf. TrustVerse is a protocol for handling digital assets, including the management and ownership of digital identities. Pluto is its legacy planning service for cryptocurrency owners. After selecting an inheritance design that dictates the conditions under which the assets can be bequeathed, a smart contract is set up to administer the process. Should the owner pass away suddenly, the inheritor can submit a certificate of death to gain access to the assets locked into Plutoís smart contract. There are also provisions to cover multiple beneficiaries, who must reach consensus before funds can be unlocked.

Other Ways to Bequeath Your Crypto

The crypto space is surprisingly light on other turnkey digital inheritance solutions. Safe Haven appears close to finally shipping its product. It allows you to add a verified legal entity to your inheritance plan, but there is also the option to enable a fully automated solution that uses smart contracts to trigger a so-called dead manís switch after a certain period of time.

Similar technology is utilized in Last Will, a BCH inheritance solution that news.Bitcoin.com covered in April. It too contains a dead manís switch with a six-month trigger that will make the coins available to the inheritor unless the owner refreshes the Last Will agreement. Itís not a foolproof solution by any means, but itís an effective way of preparing for the unexpected. If youíre planning a solo trek to the North Pole, locking your coins into Last Will might make sense. It also benefits from being a fully non-custodial solution, whose code can be inspected on Github. The value of a decentralized inheritance solution is significant: one project that sought to tackle this challenge, Digipulse, died before anyone could use it.

Italian startup Crypto360 has devised a secure off-chain back-up service for wallet seeds and private keys thatís specifically designed for digital inheritance. Its website doesnít exactly inspire confidence, however, and bitcoiners may conclude that they would be better off stashing a hardware wallet in a safe place and leaving instructions to its whereabouts in a sealed will.

Crypto and Inheritance Tax

Where thereís death, thereís taxes, and crypto assets are no exception. In both the U.K. and the U.S., cryptocurrency is treated as property, which means inheritance tax is technically due on any digital currencies your descendants receive.

Koinly founder Robin Singh told news.Bitcoin.com: ďCrypto is basically property, so the inheritance tax applies but the tax-free limit for it is so high that very few people are ever going to be hit by it. Itís been dubbed the ĎParis Hilton taxí for a reason.Ē The tax software specialist is referring to Americaís inheritance tax which is only due on estates worth more than $5.4 million. As a result, only 0.2% of U.S. estates are estimated to be liable for the tax. Unless youíve been building up bitcoin since 2011, youíre probably excused.

Take Care of Your Crypto and Your Crypto Will Care of You and Yours

Bitcoin is self-sovereign money. It demands that its owner takes action to preserve it, without the safety net of state-built protections in the event of loss through theft or carelessness. As a result, most cryptocurrency owners are already proactive when it comes to safeguarding their assets. Caring for the things you hold dear extends this obligation to finding a way to pass them on to your nearest and dearest when the time comes.

Planning for the worst while hoping for the best means ensuring thereís a way for your heirs to inherit your digital assets without being forced to guess passwords, piece together recovery phrases, or track down 2FA codes. Making your crypto secure enough to survive this life, while making it easily transferable once you pass on to the next life is harder than it sounds. Get it right, though, and you can relax in the knowledge that your coin-accumulating efforts wonít be in vain Ė whatever the future may hold.

Hal Finney

As Hal Finney wrote, a little over a year before his death in 2014:

Discussions about inheriting your 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 theyíre safe enough. Iím comfortable with my legacy.

The post How to Bequeath Your Digital Assets to Your Descendants appeared first on Bitcoin News.

19.08.2019 / 20:40 23
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