Cryptocurrency has seen continuous rises and dips in value since its inception but the human desire to be in total control of financial funds has never let it down in terms of popularity. People now understand that Cryptocurrency is a valuable asset(intangible) and like tangible assets need to be secured for the future.
Individuals are invested to grow their knowledge beyond transactions and are trying to indulge Cryptocurrency with Estate Planning. Exploring the legal and personal side while planning for your Cryptocurrency can blur the original intention of the process which is security of your assets, fast and easy access of Crypto assets to your beneficiary along with mental and financial well being of family members after you’re no more or become incapacitated and instead, draws you into the labyrinth of perplexities by shifting your focus towards the following challenges faced during Estate Planning.
Proving Ownership Of Crypto Accounts
Unlike regular bank accounts, there is no identity proof attached to your Crypto accounts that can prove ownership. With a beneficiary designation system, it’s simple to pass on assets(labeled with your identity) to your beneficiary with Trust or Will but Crypto accounts are held anonymously and accessed with the help of a private key, which is why passing on Cryptocurrency Wallets or Exchange accounts requires more preparations like:
- Making a list of all Cryptocurrency Wallets and accounts on Exchange platforms.
- Creating another list by noting down all passwords, keys, devices used to access Cryptocurrency accounts.
- Updating and storing these lists somewhere safe and at the same time accessible to family members after you’re no more or unable to handle financial matters.
- Storing Cryptocurrency account details is a crucial task that becomes easier with an online locker like Clocr!
Identifying Crypto Assets Is Difficult
Cryptocurrency exists in the digital world and can be stored in devices like USB drives, smartphones, or hard drives which can easily be neglected by your family members in case they are unfamiliar with the content inside.
This issue can be resolved by sharing with family members, the details of these devices and steps to access the Cryptocurrencies stored in them but in most cases, people are reluctant to share details of Crypto funds while they are able to handle the accounts.
If you are one of those people who want the family members to access Crypto accounts only after your death or incapacitation, then you can opt for using a Trust to share login details, a list of devices to be protected, and a guide with all technical steps for accessing the funds.
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Securing Private Key Is Necessary
Private key provides access to your Cryptocurrency accounts and funds and should be kept confidential but at the same time, arrangements should be made for your family to easily access those funds without losing or compromising the private key.
With the requirements contradicting one another, a simpler option would be to create a Digital Estate Plan that will cover every need to provide security to all your Digital Assets. Details of all your online accounts are kept private and shared smoothly with your beneficiaries according to your pre-stated instructions following your demise or disability to run your Cryptocurrency and other digital accounts.