Money never sleeps. Yet, money never dies. Humans do. This motivates us to make life meaningful, create, and leave a legacy.Society has well-established systems to pass on riches and other items.Estate planning has been inadequate since digital assets like bitcoins appeared. Investor portfolios include more such assets.
The novelty of enormous money complicates succession planning. Most people don’t want to confront death. Thus, will-writing procrastination is typical.
For most of our lives, we think our last hour is far in the future, so procrastination doesn’t seem like it.Many people don’t know what to do or who to consult until events abruptly jolt them. Then comes the tricky issue of who gets what and in what amounts.
After addressing these issues, the technological challenge of estate planning for cryptocurrencies remains. Many have died at this final step, losing large digital hordes.
One noteworthy example was Andrew Mellon of the Mellon banking family. Someone with such a financial background should have a plan to pass on his wealth to his heirs. Unfortunately, his demise left $200 million in cryptocurrency in cold storage wallets.
Many digital artifacts are irretrievable when their owners die, albeit not all are as stunning as this case.
Study shows that four million Bitcoins—worth $95 billion at current prices—have been irreparably lost. This is not completely attributable to legacy provision loss. It shows how easily this new asset can be lost.
Many countries allow digital asset wills. Since they lack personal information, they provide distinct issues.
Like in the Mellon case, successors must get all current access details to the digital wallets containing the assets. 23% of investors have an estate plan for their crypto fortune, according to 2020 study.The estate planning attorney needs specific information to ensure beneficiaries receive cryptocurrencies after death.Next comes the issue of updating all of this information, which may be a regular occurrence for traders and investors who change their passwords and holdings.
Use the technologies to solve these issues. Blockchains power decentralized cryptocurrencies. So, one’s estate beneficiaries can become “peers” without an attorney.
A decentralized and secure blockchain testament can transfer assets to one’s descendants’ digital wallets after death.The multisig system secures the user’s transfer amounts and wallet addresses, which are incorporated into a DAO (decentralized autonomous organization).
The user’s passwords and seed phrases are never shared with anyone. Blockchain smart contracts encrypt all data.
The user indicates the wallets of the heirs, interest, and trustees, who vote in DAO to execute the blockchain testament.
In case of error or fraud, the user can stop the transfer several months before it is made.
Crypto aficionados will love this option because of the technology’s decentralization, anonymity, and lack of banks, attorneys, and other intermediaries.
This technical solution makes amending details easy by updating the DAO without contacting attorneys.