As more investors start to accumulate digital assets like cryptocurrencies and NFTs, a practical (if not slightly morbid) consideration is how to “preserve” them in event of death.
Given the secure and sometimes secretive nature of these assets, it is imaginable that access to them could be forever lost should a sudden accident occur. Indeed, a 2020 survey revealed that 89% of respondents worried about what would happen to their cryptocurrency after they died. Even so, only 23% had plans in place.
If you hold digital assets, it would therefore be sensible to prepare for worst-case scenarios so that your precious BTC, ETH, and 8-bit JPEGs do not waste away in oblivion.
Centralized Platforms (Category A)
Assets on centralized mediums such as exchanges and borrowing-lending platforms appear to be at relatively less risk. Most of them will likely recognize and follow the applicable probate and intestacy laws of the relevant jurisdictions.
For example, Crypto.com, Coinbase, and Hodlnaut have support pages addressing this issue. The executor (or administrator) of your estate would simply need to reach out to the platform to kickstart the relevant processes.
Decentralized Platforms, Hot and Cold Wallets (Category B)
Assets on decentralized platforms would be trickier since there will likely be no “controlling party” on the platform’s end to process an executor’s requests. This would mean that someone would have to personally deal with the assets on your behalf.
Also, when it comes to decentralized exchanges (e.g. SushiSwap), hot wallets (e.g. Metamask), and cold wallets, no other person can access your assets without the relevant seed phrases or private keys. The sharing of these details is certainly a prickly affair, and creative yet safe ways will be required to navigate this delicate problem.
Practical Preparations
For assets in both Categories A and B, it would be sensible to inform at least one trusted person what digital assets you have, and where they are located. You may or may not wish to disclose the quantity of assets, but at the minimum a brief description of your holdings would be helpful. This way, the executor of your estate will know who they have to approach (e.g. a certain exchange), if any.
Assets in Category B require more careful planning since your seed phrases and private keys will need to be shared. Disclosure will be based on your own discretion (e.g. how much you trust the person). Maybe two or more people can hold different parts of a seed phrase, preferably on paper.
If you have access to a secure third party service (e.g. safes in a bank), perhaps physical copies of seed phrases and private keys could be stored there for your executor to gain eventual access to, along with whatever instructions you may wish to leave (e.g. your computer, phone, or email passwords, cold wallet locations, etc.).
As digital asset portfolios grow, the above considerations are certainly necessary, and prudent arrangements should be made. After all, whilst your beneficiaries may well be able to save a copy of your NFT artwork onto their laptops, who knows how much more that actual CryptoPunk would be worth in future.
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Disclaimer: Contents of this article are the author’s personal views on the subject. This article does not constitute professional, financial, or any other form of advice, and should not be construed as the same.