What is cryptocurrency
A cryptocurrency is a virtual or digital currency that is secured by cryptography. This makes it nearly impossible to double-spend or counterfeit. Another way to see it is that cryptocurrency is digital assets based on decentralized systems that allow for secure online transactions.
Cryptocurrency is minted on the blockchain, which is a ledger of transactions that cannot be erased or refuted. All transactions that have taken place on the blockchain are public and can be verified.
Types of cryptocurrency
At the time of writing this article, there are 17,685 cryptocurrencies. The most popular of these are Bitcoin, Ethereum, Tether, Binance coin, XRP.
There is no way to access cryptocurrency unless you have access to the public and private keys of your crypto wallet (a place where cryptocurrencies are stored). Therefore, when you die, no one will be able to access your digital assets unless you leave your keys to someone.
This makes it very difficult to leave your Bitcoin, Ethereum and other currencies to your loved ones at the time of death.
What is a Will
A Will is a legal document that contains your wishes regarding the distribution of your assets upon your death. It is a tool that has been used for centuries. Usually, your executor will keep your Last Will and Testament under lock and key and will manage the distribution of your assets upon your death at a small fee.
Since a Will is a physical document (usually printed, signed and put in a safe) it is difficult to list changing digital assets in it. Additionally, you would not want the access keys to your valuable crypto on your Will for everyone to see. However, you need to leave the keys somewhere.
There is, however, another solution.
Smart contract: a way to leave cryptocurrency in your Will
Blockchain Apparatus is a blockchain-based voting system. It provides a transparent, secure and incorruptible voting system. This company recently announced a new technology that will use smart contracts to execute wills on the blockchain with the use of technology.
Upon your death being registered on a centralized list (which is different in each country) the smart contract will pay out your cryptocurrencies to your beneficiaries. This is done in the ratio that you have specified before the unfortunate event of your death.
The smart contract is minted on the blockchain. Therefore it cannot be destroyed, refuted, or successfully challenged by beneficiaries. Additionally, the blockchain can prove that you signed it and that it is your final will and testament. However, you will still need to pay estate taxes on these cryptocurrencies.
One of the other great benefits of this blockchain will be that you do not need an executor. This is because the software executes your estate. However, in South Africa you will still need an executor to execute your estate.
You will need the help of Blockchain Apparatus to program the smart contract. They will probably also charge a fee for setting up the contract, or they may charge a percentage of your estate at the time of execution.
However, Blockchain Apparatus has only announced their work on this technology and it is not yet operational. The South African law also does not accept a blockchain Will and Testament as a lawful document.
A simpler way of leaving cryptocurrency in your Will
Your cryptocurrency public and private keys may be stored in a password vault on your computer with 2 Factor Authentication set up on your cellphone. You may then leave the access keys to this vault in your will.
This will ensure that no one will have access to your crypto while you are still alive. They will need to break into the safe at your executor’s office, know the password to your computer, be able to access your cell phone, and log in before your devices are shut off remotely.
This simple process, which you can execute mostly on your own, ensures that your crypto is safe in your own hands while you are alive. Additionally, it is safe with your executor upon your death.
If you need help in setting up this simple system, speak with your executors.
People also ask
Can you put crypto in a Will?
Yes, as with any other asset, you can leave crypto in your Will to your heirs.
How do you pass crypto to heirs?
Crypto can be passed to heirs in a two step process. Leaving cryptocurrency in your Will to heirs and leaving the public and private keys to your executor to be distributed upon your death.
Does cryptocurrency go through estate administration?
Yes, whether you leave cryptocurrency in your Will, or whether you make no plan at all, your cryptocurrency will go through estate administration. Your heirs will then only have access to your cryptocurrency once the estate administration process is complete.
Can you inherit cryptocurrency?
Yes, you can inherit basically anything. From movable to immovable assets and cash and even cryptocurrency.