The global financial crisis of 2008 motivated the elusive Satoshi Nakamoto to create cryptocurrency as a safer alternative to federal monies that remain in the hands of governments, banks and companies. In the ensuing years, individuals made non-fungible tokens (NFTs) as another tradable data unit.
After more than a decade of existence, these new forms of currency show no signs of disappearing. What does a person need to know to preserve NFTS or cryptocurrency for a beneficiary?
Acquiring and protecting new forms of currency
Cryptocurrency exchanges are online platforms that facilitate the buying and selling of various cryptocurrencies. The cryptocurrency market surpassed $3 trillion in 2021 and has attracted once skeptical investors.
Since cryptocurrency exists to circumvent traditional means of storing finances, like banks and other wealth management firms, owners may use a hardware wallet (also called “cold storage”), a physical device to hold the currency data. A PIN secures the wallet, which erases itself after multiple failed access attempts.
Some people also use a digital wallet to hold cryptocurrency. Digital wallets are easier to use and provide quick access to funds but do not provide the security of hardware wallets. A person can also store NFTs with either method.
Transferring NFTs and cryptocurrency to inheritors
A person can leave any valuables to a named beneficiary in a will. An estate plan should include all cryptocurrency assets and instructions to find a hardware wallet, related PINs, passwords and keys.
Suppose the deceased holds an account at an exchange (a digital wallet). In that case, the person should determine the steps required to ensure an heir can assume control of the account since few exchanges have processes to name a beneficiary for funds.
No matter the valuables involved, individuals can take prudent steps to safeguard an inheritance for their heirs.