If you fall into the bracket of the average Bitcoin user, you probably have no plans of exiting anytime soon. But, if you own any meaningful amount of digital assets, you should think about what happens to your bitcoin when you die.
What Happens to Your Bitcoin When You Die?
Alright, so it may seem a little bit morbid. But what happens to your bitcoin when you die really depends on you. You need to take action now if you want it to end up with someone you love rather than out of circulation forever.
If you don’t include your bitcoin in your will, it will go with you to your grave–Gerald Cotten style. Of course, being on the blockchain, your crypto assets will live forever. It’s just that no one will ever be able to access them.
Therefore, it’s essential that you list all your cryptocurrencies in your will. If you fail to mention them here, they will fall into what’s known as the “remainder of your estate”. This is basically everything else not mentioned in your will, such as clothing, and other miscellaneous items of personal property.
Unlike tangible items that can be found (or even bank accounts and stocks with paper trails), bitcoin and other cryptocurrencies may be impossible to uncover if it falls into your estate’s remainder.
So, if what happens to your bitcoin when you die is important to you, it needs to be mentioned in your will. Obviously though, you’ll also need to include how and where to find it–and that throws up some serious issues.
You Need More Than Just a Will
Before you start drafting a will with your pin codes, backup seeds, and locations of your bitcoin wallets, beware. According to NOLO.com legal encyclopedia, a will goes through what is known as “probate”. This means that it eventually becomes a public document, which could present a major security issue if you share too much information.
Rather than including such detail in your will then, you need to also create a memorandum to go alongside it.
There are a few advantages to this type of legal document. To start with, it’s a separate document intended to maintain privacy so it doesn’t become part of the public record. You can also update the memorandum as many times as you need without having to enter into the same formalities required when updating your will.
What to Include in Your Memorandum
In your memorandum, you need to include all the information your loved ones need to access your bitcoin. This could be the location of your hardware wallets, your pin, backup seed, etc.
If you use a digital wallet on your smartphone or computer, don’t forget to include login information to these devices. Also, consider whether your beneficiary has a working knowledge of cryptocurrencies or not. You may want to make it easier for them (at this difficult time) by including a step-by-step guide to accessing your crypto-wealth.
What happens to your bitcoin when you die may be a sobering thought. But if you want your grandkids to enjoy your lambo long after you’re gone, it’s worth mulling it over.
Have you made all the necessary preparations to leave your Bitcoin to your loved ones? Let us know in the comments below!
Images via Shutterstock