NFTs are Digital Assets that exist on the Blockchain or on a Centralized 3rd party application. They have unique traits and are not interchangeable. This individuality makes NFTs special and defines the value an NFT (or the asset it represents) holds.
Celebrities like Justin Bieber, Gwyneth Paltrow, and Eminem, have invested substantially in NFTs, particularly through BAYC. The NFT space has a history of new trends popping up, starting with the craze of CryptoKitties and CryptoPunks to BAYC and now Azuki (Anime NFTs that have hit $300 million in sales).
The products of Web 3.0 keep jaws dropping with astonishing events like the Metaverse Wedding or brands integration with NFTs. These continuous commotions often take away people’s attention from the most important thing when it comes to Digital space which is incorporating Digital Assets into Estate Plan!
What is Estate Planning?
When it comes to deciding who among your family members will manage your Estate, how your last days should be, or which Beneficiary will get which assets, then an Estate Plan proves to be the most reliable solution.
The procedure of creating plans for all your assets is called Estate Planning. This procedure includes drafting several Estate Planning documents. But the question which remains is why anyone should add NFTs, Cryptos, or other Digital Assets in their Estate Plan?
Why Add NFTs In Your Estate Plan?
This way, your Beneficaires will not be able to access your Crypto accounts, gaming accounts, Facebook account, or any other social media assets. You can leave one next of kin with your passwords so they can pass on your legacy as you deem fit but appointing anyone as your Digital Executor takes a lot of consideration.
Especially when you desire to transfer different types of assets to different people. For instance, you might want your social media accounts to be handled by a friend (with whom you are comfortable sharing your personal chats and social connections) but your Crypto accounts or NFTs to be handled by a family member (to provide them with financial assistance after you’re no more). Let us have a look at different ways you can plan for NFTs.
Planning For NFTs
- You can create a thorough guide for your Beneficiaries that contains the NFT Marketplaces or platforms used to store, purchase, and sell NFTs, as well as the technical methods used for accessing them.
- Wills and Trusts could be used to specify the ways NFTs should be managed. Trusts have the advantage of removing the possibility of Probate, which is critical when dealing with Digital Assets that can be hacked (if the privacy of access details is compromised).
- You can create a Revocable Living Trust and manage your Digital Assets with it.
- Document the purchase price in cryptocurrency as well as its fair market value at the time of acquisition to make it easier for your personal representative to determine the value of each NFT in your estate.
With the advent of Web 3.0 and DeFi, people will own more assets in the digital realm. Combined planning for Digital and physical assets is only going to make Estate Planning complex (since laws for Digital assets are still catching up with the technological advancements, RUFADAA is an attempt towards regulating the transfer of Digital Assets).
A better way is to divide your Digital and physical assets and create separate plans for them. A Digital Estate Plan with Clocr makes it simple to protect and manage all your Digital Assets which can be transferred smoothly to your family in case of sudden demise or incapacitation.