Headline: What happens to your cryptocurrency investment when you die?
Body: OK, this one will be a little tough, but it is interesting and worthy of thought. We are going to talk about death.
No, I swear, this will be interesting. The facet we will be focused upon is: What happens to all of your social media posts and webpages when you die? I spend an inordinate amount of time each week updating my website with new blog entries, announcing them on LinkedIn and Facebook, and then (for fun) watching TikTok videos. (No, I don’t make any videos there… yet.) Point is, we have spent a vast amount of time and energy curating the digital face we show to the world. Some spend thousands or millions of dollars on NFTs like the Bored Apes. So, it seems logical and interesting to ask, what is their “end” when we meet ours?
My great Aunt’s tea set is awful. Why would I want to inherit her digital assets?
Well, digital assets are becoming more and more valuable. Between cryptocurrencies and NFTs alone, we could be speaking of millions of dollars, easily. And, it is important to note that all of these thing CAN be inherited, assuming that they are in the Estate Plan. If not, they become consigned to the digital flotsam of the Internet. Please note that the Estate Plan should define these digital assets as precisely as possible, including URLs and passwords. But, the reasons for doing this management are easy to understand. For instance, let’s assume that there was a man, who died while committing a bank robbery. Thing is, before that, he was a 20-year Navy veteran, and the only reason he did this thing is because he could not afford the cancer treatment that his long-time wife needed. How is he remembered? Was he a gun-toting thug who terrorized dozens of people? Or, was he a loving family man, who did everything he could to support his family? I am guessing that remaining members of his family would tell one story, and a very different one could be found in the press. The family would want to do everything they could to ensure that he was remembered… for the right reasons.
Are there different types of digital assets?
Good question. There are 2 major flavors of digital assets, transferrable and non-transferrable. The non-transferrable assets most often encountered include e-mail accounts, social media accounts and subscriptions. Plus, there are some that within the governing contract, spell out that they are non-transferrable. (This is most often the case with domain names.) So, when I shuffle off this mortal coil, my adglibenterprises domain cannot be transferred to any of my writer friends. But, please note that trusted people should have access to these sites and accounts if only to formally close them or send out a final e-mail that no more traffic is coming from them.
So, what’s so different about digital assets?
In short, not much separates your great aunt’s tea set from the Bitcoin that you own. They are both assets, and when listed on a Will, they can both be bequeathed to whomever you choose. The difference is that tea sets have been around for millenia, and we know that we have to account for them, and we are good at doing this. Digital assets are a different kettle of fish entirely. They are very new, and many people don’t think about them at all, and they can be VERY valuable. The key here is specificity. With digital assets, you need to delineate carefully which assets go to which person or group. Further, your instrument must have some reminder of usernames and passwords so that your heirs can gain the access they are entitled to. Many people just forget to do this, and the digital assets then just… sit. This is painful when it involves money like cryptocurrency, but it can be devastating if it includes family pictures or videos that live on the Web. For this reason, it is a very good idea to share your private key with at least one other person you trust implicitly.
Are there any examples of this kind of digital asset planning?
Yes, there is a great example, even now. Facebook has something called the “legacy contract” where somebody else can manage your account. Once it has been “memorialized” that person can manage the account as they see fit, or delete it altogether.
So, ok, I have some planning to do. What if my attorney doesn’t ask about digital assets, and I forget to list them in my Will?
Your legal advisor should have access to something like “Safe Haven” to help this information stay secure. It transfers the details in “shards” and by themselves, each shard is useless. Each heavily encrypted piece of data is sent to a “cold wallet” which is pretty secure too. If your attorney does not ask about your digital assets, make sure that you initiate the conversation, and if not comfortable, you might want to select a different lawyer.
The Verdict
For most people, this is not a huge deal. If you die, the pictures of you at the office Christmas party or nana’s secret recipe for lemon bars could fall into somebody’s clutches. No big deal. But, what if you are a public figure ? Perhaps it is very important to you and your family that your memory remain positive within the public realm. Maybe you are the only one with the complete formula for Coke syrup? This would be a digital asset that you would very seriously want to consider passing on carefully. The point is, in the Information Age, some of the most important and valuable assets we have are digital. There have to be plans for what happens to these assets in case of our death. Because, you could be involved in a car accident tomorrow that kills you, and you have no way to know, in advance. This is made even more acute when you consider that the Baby Boom generation is getting into the later stages of their lives. In short, our laws must catch up to our circumstances as a society.
REFERENCES
https://trustandwill.com/learn/digital-inheritance
https://finance.yahoo.com/news/why-estate-planning-attorneys-worrying-152255583.html
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.