The metaverse represents the next iteration of the internet. As more people engage in this next phase of the digital economy, buying and selling digital assets like cryptocurrency and non-fungible tokens (NFTs), experts are saying the metaverse may be a $10 trillion to $30 trillion opportunity in the next 10 to 15 years.
While much of the discussion remains focused on how to get involved and surprising success stories – one artist made six figures in less than a year by selling NFTs – the pandemic has made all of us aware of the need to have a plan. What happens to my digital assets when I die? It’s an important question to ask yourself if you own NFTs or cryptocurrency.
Related Article: How the COVID-19 Pandemic Has Impacted Estate Planning
If you have a Will when you pass away, it’s relatively easy to transfer physical assets to your heirs. But that’s not the case with digital assets, because of the decentralized nature of this new industry.
Why is it hard to transfer digital assets after someone dies?
There are two distinct factors at play here: the novelty of the industry and the way its economy is structured.
Cryptocurrency is very young. Although some wallet providers like Coinbase clearly outline what an executor or family member can do to retrieve digital assets in case of the death of the account holder, these kinds of policies are nowhere near industry standard. Companies like Apple and Facebook have digital legacy planning features for transferring some social media and digital assets upon the death of an account holder, but what about all of your other accounts?
Related Article: Make Your Digital Legacy Plan in 5 Easy Steps
Cryptocurrency is decentralized. There’s no directory or central body that governs NFTs or cryptocurrency – it’s purposely decentralized, which is great for privacy but can result in a lot of headache for family members who are trying to determine if their deceased loved one held valuable digital assets. The only way to access your crypto is with a private key – typically a 64-digit passcode. If your executor or personal representative doesn’t have the private key or know how to access it when you pass away, they can’t access the virtual currency to transfer it to your beneficiaries.
For now, it’s up to you to make sure your chosen executor (also known as a personal representative) has all of the information they need to inventory your digital assets so they can distribute them to your beneficiaries along with your physical estate.
5 Step Digital Asset Estate Planning Checklist
Our team of estate planning attorneys and experts collaborated to create this checklist, so you can prepare everything your executor and heirs need.
As you prepare your estate plan to accommodate your digital assets, you should also consider updating your Power of Attorney, and ensuring the agent you have chosen is comfortable managing your crypto and NFT assets if something prohibited you from doing it yourself. Like with any other asset, consideration should also be given to how your digital assets would be accessed in the event of mental incapacity.
Gentreo is here for all of life’s events, with the tools and support to help you protect your wealth and build a legacy for your loved ones’ futures.