What happens to cryptocurrency when we die? - Birchall Blackburn (2024)

FAQs

How do you pass crypto when you die? ›

How to leave cryptocurrency in your will. The first piece of your emergency plan should be a will and power of attorney documents. Most crypto exchanges and digital asset platforms require a copy of a will or POA document before they will confirm that your assets exist and allow your executor to access them.

Coinbase currently does not support naming a beneficiary for individual accounts. Like most other assets in your estate, the ownership of your Coinbase account will be transferred according to your estate planning documents or state's intestate laws.

"Burning" a cryptocurrency refers to the act of sending a token to an inaccessible address. Wallet addresses used for burning cryptocurrency are called "burner" or "eater" addresses. The act of burning effectively removes tokens from the available supply, which decreases the number in circulation.

Just like with any other type of asset, executors are responsible for assessing the value of any and all cryptocurrencies held by an estate. They will then need to distribute these as per the terms of the Will, or per intestacy rules if there is no valid Will.

How Is Cryptocurrency Treated in Estate Planning? Cryptocurrency is not treated as traditional money in terms of estate planning. Typically, you could have a beneficiary designation on a bank account or insurance policy, and upon your death, the assets go to your designated beneficiaries.

A separate “private key” allows the owner access to the wallet's contents. If a Bitcoin owner dies without passing on the private key, then their Executor can never gain access. What this means is, without this private key, the cryptocurrency can never be accessed and it dies with the deceased.

If your Coinbase account has been shut down due to violations of the user agreement, your remaining balance must be withdrawn from your account. When you sign in, you'll be prompted to withdraw all funds from your account. Coinbase can no longer provide you with currency conversion services.

Cryptocurrencies are assets, so they're subject to probate just like anything else. If there is a will, when a person dies, their cryptocurrency is passed on to their designated beneficiaries.

Coinbase is GDPR compliant and a safe exchange trusted by millions of crypto users. Compared to many other cryptocurrency exchanges, Coinbase is one of the safest as the platform prioritises security to protect user assets.

Coin burn is the deliberate destruction of cryptocurrency coins by sending them to an unrecoverable wallet address. It helps maintain scarcity of the cryptocurrency and can increase its value.

Can burned crypto be recovered? ›

Once the tokens are burned, they cannot be retrieved or used, and the supply of USDT is permanently reduced.

Increase scarcity

By reducing the circulating supply, coin burning creates scarcity, which can potentially contribute to price appreciation. While this strategy attempts to attract investors, there are many factors that affect the price of a token, such as market dynamics and the health of the overall crypto ecosystem.

Crypto Exchanges

If you hold crypto on a platform like Coinbase or Gemini, your heirs will have to go through probate — a lengthy (and often costly) legal process — to get the money out.

Digital Assets That Can Pass Through Your Will or Living Trust. As a general rule, all digital assets that you own and that are transferrable will be included in your estate when you die.

“The dead still remain within their social networks, and, in large part, their data is still connected to the data of the living. Through messages, likes, and other interactions, it can tell you a lot of valuable information that companies can utilise.”

Use a trust for digital assets. It may be best to name the trust as your beneficiary for cryptocurrency assets, so they do not go through probate and pass directly to beneficiaries named in the trust. Name a digital executor or trustee responsible for managing your digital assets after your death.

Most times, the beneficiary only has to contact the custodian and prove that the owner is deceased to inherit the Bitcoin. Setting up a custodial inheritance is quite simple; the most important part is selecting the custodian. You want to choose a reputable and secure custodian for your planning.

Including any cryptocurrency you own into your estate plan, such as a Will or Trust, is the only surefire way to ensure your beneficiaries will have access. This holds true for any other type of digital asset as well.