Everyone should name a beneficiary in their Crypto will and add a document to their estate plan showing their crypto assets as well as the passwords, PINs, keys, and instructions so that their loved ones can find their crypto wallet. In case you are an account holder at a cryptocurrency exchange, the person you will name as a crypto beneficiary will be able to contact customer support to inform them about your death after you bid goodbye to the world.
Transfer on Death (TOD) Beneficiaries provide you more power to control who should inherit your digital assets after you pass away. Beneficiaries can hold onto your stock and other equity, liquidate, or transfer them to another brokerage. If you do not set a beneficiary designation, you will find that your assets are sent to probate court before it gets handed over to your next generation.
If you want a smoother transition of assets, you must include beneficiaries in your investment accounts. It is essential to consult with your estate, tax, financial, and (or) legal advisors when assigning beneficiaries to ensure it aligns with your estate plan. This post will give you a detailed description of how to leave crypto to your Will.
Know how your Cryptocurrency is stored
If you have bought Cryptocurrency, you must store it safely to prevent it from getting hacked or stolen. Crypto wallets are digital wallets or online software that help to keep the private keys to the cryptocurrencies very safely.
There are a lot of exchanges that offer wallet services. With this, you can easily store your Crypto legacy through the platform. But you should know that only some exchanges or brokers offer wallet services automatically. While selecting wallet providers or types of wallets for your cryptos, there are two types of wallets to choose from:
Hot wallet storage
“Hot wallets” signifies the crypto storage that uses online software to keep the private keys securely to your assets. The hot wallet is easy to handle. As it’s always available online, you don’t have to shift again and again from offline to online. In this contemporary era, more people use the hot mobile wallet for sudden trading. Hot wallets are free. Anyone can use this wallet without any hassle.
Cold wallet storage
Cold wallets, also called hardware wallets, are offline electronic devices that securely store your private keys. Cold wallets will charge fees, but hot wallets do not do so. As cold wallets are snugger and secured, stealing the currencies from this wallet is quite impossible.
Keep your Cryptocurrency secure yet accessible
Cryptocurrencies are generally developed by using blockchain technology. Blockchain depicts how transactions get reported into “blocks” and time punched. It is a relatively complicated, technical procedure, but the outcome is a digital ledger of cryptocurrency transactions that is difficult for hackers to intrude with.
Moreover, the transactions require a two-factor authentication process. For example, you must provide a username and password to begin your transaction. Then, you will need to enter an authentication or verification code that will get sent to your cell phone as an SMS text.
Though Cryptocurrency is a safe transaction method, it does not mean it cannot get hacked. If you plan to keep your Cryptocurrency safe and yet accessible to your beneficiaries, you need to follow the tips given below:
- Trade on famous and secure exchanges.
- Store your crypto in a lot of cold wallets.
- Use a secured internet connection.
- Use two-factor authentication and multiple passwords.
One of the riskiest factors in the world of Cryptocurrency is scams. As a beginner, you will never know how you will be treated. The hackers are always waiting to catch their prey. Therefore you should always trade on some well-known and secure exchanges. If you choose a well-known exchange for trading, you can easily be well-familiar with the base and all legal information. But you need to know the base to step forward with any exchange platform. In that case, if your account gets hacked, it is possible to recover it by analyzing the base of that exchange.
The second best thing is a cold wallet. You must store your cryptocurrencies in a cold wallet hardware wallet. The size of the cold wallet is similar to the USB. The cold wallet has a private key to permanently lock your cryptocurrencies. It is better to keep the cryptocurrencies in a cold wallet offline. In any emergency, if you have to do an online transaction with your currency, you can use the wallet temporarily online.
The fact that online service providers often have access to your private key poses a risk when you keep the majority of your bitcoin there; You could lose your investment if a breach occurs if, by any chance, the data gets lost. You might need to keep multiple cryptocurrency wallets to spread risk even more. This way, even if one private key gets stolen, the others will still be safe. It requires one to keep multiple private keys, which come with their own set of pros and challenges.
Earlier, the time hacking and data breach were common. People, who have an online website related to finance or Cryptocurrency, always feel insecure in the online world of the internet. Whenever a person is going to open an account online, on the other hand, another person is waiting to prepare himself for hacking those accounts. You have already heard about the hacking of Yahoo, Facebook, Marriott, etc., brands.
Every single user uses a password and an email to manage their accounts. The hackers can quickly grab the weak passwords along with that email with the support of their knowledge. In that case, you must secure your online presence using the most complicated password. Plenty of people are now using VPNs to access the online world. But each person has no necessity to use VPNs, as it applies to public networks only.
In this 21st century, every individual willing to open an online account should maintain two-step authentication. Recently, financial sectors like banks and gigantic social networks have also preferred to offer two-step authentication for their clients. Let’s say you’ll log in to your Facebook account for a better understanding. Facebook will allow you to log in first when you can enter the correct email id and password. And secondly, Facebook will send you a code in the form of an OTP. By entering the exact code number, you can access the login option. This process is called two-step authentication.
The last thing is that whether you are – a beginner or an experienced one, you must always be aware of scams. Avail of all the protections as soon as possible. You can use a second device to access the crypto and trade only. You must keep this device safe and inaccessible to outsiders.
Make a detailed plan for loved ones
You must name a beneficiary while you add Crypto to your Will and add a document to their estate plan that documents their Crypto assets, passwords, PINs, keys, and instructions so they can find their cold wallet. In case you are an account holder at a cryptocurrency exchange, the person you will name as a beneficiary will be able to contact customer support to inform them about your death.
It is essential to ensure that your dependents have access to your Cryptocurrency. In this section, we will go over a few steps you can take to help your loved ones access your crypto holdings after you pass away while also keeping the holdings safe from malicious parties.
Creating copies of privileged information
It simply means documenting your cryptocurrency holdings. An evaluation of the specific equipment used in the crypto industry follows as each requires different considerations.
Exchanges
Exchanges are unlikely to contact your family in the event of your death because they will be unaware of your passing. Thus, write down the trading platforms where you have an account to ensure your loved ones know where to begin. It will include a simple list of your trading platforms and the amounts they hold.
Wallets
If you are utilizing a custodial wallet, the process is the same as for centralized exchanges. If, on the other hand, you use a non-custodial wallet, the first task is to back up your wallet. If you haven’t already, write down the name of your wallet and the twelve-word recovery phrase on paper. Place this in an envelope and keep it safe.
Devices
Your loved ones must understand not to discard any devices thinking it is just an old machine or USB stick. List the devices you use without revealing any specifics. It is simply to notify them that your Cryptocurrency is stored there.
Using trusted third-party solutions
Another approach to crypto estate planning is to use trusted third-party solutions.
A Crypto Will
You can work with your lawyer for leaving Crypto to your Will to ensure your dependents have access to your assets. It is also important to note that if you choose this route, you will need to consider tax implications so that your loved ones can minimize the potential tax burden.
Crypto Inheritance Firms
You can also use cryptocurrency asset inheritance firms. Third Key Solutions, DigiPulse, and Safe Haven, are a few examples. It is vital to research these Crypto inheritance firms and the specific tools they utilize to ensure that your holdings don’t get stolen.
How to add a crypto beneficiary?
We all know that Cryptocurrency is an entirely new thing, and that is why leaving Cryptocurrency in a Crypto will is less prevalent. In case you have purchased Bitcoin, Ethereum, Binance, and more like this, you might be thinking of how to create your estate plan with it. You have to make it precise so your beneficiaries can know how to get and use the Cryptocurrency you left for them.
A cryptocurrency is a group of digital money conserved by blockchain technology. Blockchain is a decentralized system that stocks financial transaction data so that it cannot be changed, hacked, or cheated. Cryptocurrency is self-sufficient from any central bank or authority.
If you want to add a crypto beneficiary, you have to follow the steps given below:
- Go to account settings.
- Select the beneficiaries section to start the process.
- You will be able to add the beneficiaries.
Conclusion
Now you know how to leave crypto to a loved one. You need to update your plan and wallet to make it clear that your Crypto legacy is going to the right people. You must provide the most accessible instructions so the beneficiaries can access your Crypto inheritance after your death. Having wallets for your crypto holdings will help you reduce the burden of your near and dear ones and avoid fights when settling your estate after your death.
