Indeed, most privacy-conscious Bitcoin investors are accustomed to keeping their private keys completely hidden. However, if the Grim Reaper appears unexpectedly, the family of a crypto millionaire may be denied access to their relative's wealth.

Bitcoin inheritance planning

U.S. investor Matthew Mellon died in 2018, leaving few clues to a crypto fortune worth $500 million, in one of the most widely publicized examples. There are methods available to assist people in keeping their asset information secure while still allowing it to be used for legacy purposes.

Safe (previously known as Gnosis Safe) is an Ethereum multi-signature wallet that specializes in cryptocurrency custody. Users have the option of customizing how they manage their assets, including the addition of multiple devices to confirm transactions.

Similar services are already provided by a few other organizations, such as Casa's Covenant. Private keys could be distributed across multiple heirs using multi-signature wallets to reduce the risk of accidental loss or intrusion. A single person cannot confirm a transaction.

Consider it a six-signature key, as in the case of Casa. Three people must sign a transaction. These keys can be shared or distributed to various parties, such as your spouse, financial advisor, or lawyer, who will all need to confirm a transfer of funds in the event of your death.

Consider it a six-signature key, as in the case of Casa. Three people must sign a transaction. These keys can be shared or distributed to various parties, such as your spouse, financial advisor, or lawyer, who will all need to confirm a transfer of funds in the event of your death.

There are numerous cases around the world of Bitcoin investors who died without leaving their keys to their heirs. In such cases, family members must deal with a "double funeral."

They must grieve the loss of a loved one. At the same time, they must come to terms with the loss of an irreversible fortune that could have been theirs. This demonstrates how Bitcoin's main selling point - its freedom from regulatory oversight and unbreachable privacy - can also be its fatal flaw.

Users may be exempt from high banking fees and taxes. However, they miss out on the benefits of the old system, such as assistance with estate administration. Matthew Mellon's example, in particular, may motivate investors to look beyond their lives. Mellon died in April of this year at the age of 54. He died with up to $500 million in Ripple (XRP).

It was hidden in cold storage wallets with fictitious names in banks across the United States. The mysterious millionaire left his fortune behind. He failed to name heirs to his fortune and did not provide instructions for accessing his cryptocurrency wallets.

When venture capitalists die with private keys to their fortune, death is complicated enough in crypto. However, if the deceased were the CEO of a digital currency exchange in charge of the safekeeping of millions of dollars, the pain would multiply exponentially.

Gerald Cotten, the founder and CEO of cryptocurrency exchange QuadrigaCX died in December 2018, resulting in the loss of $145 million stored in the platform's cold storage. At the time, Quadriga was Canada's largest traded volume exchange.

Laws of succession in crypto inheritance

Cryptocurrency losses will likely become a bigger issue in the coming years. There is reason to believe that investors will continue to value secrecy to protect their wallets.

While death is a possibility, Bitcoin wealth can also be lost due to theft, unintentional deletion, security breaches, and the loss of passwords and hard drives.

This helps to explain why crypto investors keep their transactions private. But there is one bright spot. Implementing new regulations may result in players operating in this decentralized space claiming more excellent protection if the need arises.

Regulators all over the world have begun to recognize Bitcoin formally. It implies that, as with other investments in the estates of deceased individuals, national succession laws may apply to crypto assets.

Nonetheless, it is still the responsibility of investors to identify their heirs in their wills officially. However, having a will does not guarantee that one's Bitcoin wealth will be passed down to loved ones.

To unlock crypto wallets, private keys are still required. This is why people should leave specific instructions on how their successors can access their fortunes.

Simpler methods could include giving third parties copies of private keys on paper or digitally. However, such choices necessitate a certain level of trust.

Investors concerned about the future of their assets

According to the Cremation Institute's 2020 study, only about one-quarter of Bitcoin investors have a documented plan for how their crypto funds will be distributed after they die.

According to the report, approximately 89% of investors are concerned about what will happen to their assets after they die, but few plans appropriately. Younger investors were especially guilty, rarely looking beyond their own lives.

According to the study, younger generations (those between 18 and 40) are ten times more likely to lack a plan than older generations.

Do you think there are risks associated with passing on cryptos to your heirs? Let us know your thoughts by sharing this article on social media.

Posted 
Nov 1, 2022
 in 
Digital Lifestyle
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