Points to note when creating an estate plan for crypto holdings
According to industry estimates, around 15 million people in India are already actively investing in digital currencies such as bitcoin, ether, and dogecoin. One of the easiest ways to make sure your family has access to your holdings is the nominee option on crypto exchanges.
ZebPay offers this feature via email, where a customer can share details like candidate name, cell phone number, address and PAN number, among others. After the client disappears, the trust and crypto funds are transferred to the candidate’s account. However, not all crypto exchanges in India offer this option at this time, and investors have urged them to include this option.
“Although we do not yet have an appointment function, our support team is equipped to handle such cases effectively. We have dealt with such issues in the past. In such cases, we help the next of kin of the deceased to obtain custody of their assets, ”said Nischal Shetty, CEO and founder of WazirX, which plans to integrate the nominee function on its platform soon. form.
Another crypto exchange, BuyUcoin, is also working on a candidate as well as a boost option.
“Once this feature is active, users who have not nominated a candidate will be prompted to do so each time they log in,” said Shivam Thakral, CEO of BuyUcoin. In the meantime, a family member of the deceased can apply to the exchange.
Much like other asset classes such as bank accounts, a nominee is the person who has custody of the assets and protects them in the meantime. However, according to experts, the actual legal title to the asset (in this case, crypto) will belong to the person named in a will, or as decided by intestate law, depending on religion.
Therefore, anyone using the option of a nominee should also ideally ensure that the will defines exactly the same person as the legal heir to the crypto assets.
“A will helps to properly account for digital assets and instructions for accessing them for family members. If you don’t write a will, everything you own will be shared in a standard way, as defined by law, which may not always be the way you want it to be, ”said Nitin Rao, CEO of InCred Wealth .
A will for crypto assets
As cryptocurrencies are not traditional assets such as stocks or bank accounts, the laws surrounding the management of these assets are still at a very nascent stage in India.
“Since the Supreme Court overturned the 2018 RBI Circular, it appears that cryptocurrency occupies a ‘gray’ area. Until the government decides otherwise, crypto holdings will be considered legal assets in India and therefore these assets can be included in a testator’s last will and will, “said Rishabh Shroff, partner, Cyril Amarchand Mangaldas A testator is a person who has drawn up a will.
Points to consider
Since cryptocurrencies are similar to any other property, they can be owned, offered and inherited by an individual.
Since the laws relating to cryptocurrencies in India are still unclear, an individual should list all cryptocurrencies owned by them in the will, as well as details of the digital wallets through which such investments have been made. .
“As the cryptocurrencies are saved on blockchain technology, the testator could also execute a memorandum to the will with the details of the passwords of these digital wallets and a copy of these can be made available to the executor. testamentary. This would help ensure that passwords and personal identification details are not made public in the event of a dispute with a will, ”said Shroff.
Many people hold cryptocurrencies through physical hardware, which functions as a master key for your crypto wallets. If these hardware wallets are misplaced or stolen, the cryptocurrency is lost forever. Therefore, the physical custody and legal ownership of this material wallet is important and should be treated with care in a will.
Experts are awaiting further clarification and details from the Reserve Bank of India, the Union government and the courts on the final say on the legal status of cryptocurrencies.
The Union government is considering introducing a cryptocurrency bill, which could clarify the status of cryptocurrencies.
Indian investors can also have crypto assets outside of India. This, in turn, presents a layer of cross-border planning to perform, including exposure to offshore taxes and disclosure requirements.
While drafting a will is easy, it is important to get the help of a specialist so that the document is not open to interpretation and that all Indian regulations and laws are followed when it comes to currencies. virtual.
Private keys and public keys
A cryptocurrency is digitally encrypted and decentralized, which is not bound or regulated by a government or central bank. While fiat currency can be represented by coins and banknotes, cryptocurrency is represented by private and public pieces of alphanumeric strings. These are called public and private keys.
These are important when you store cryptocurrency in an offline wallet like a hardware wallet or paper wallet. If you hold cryptocurrency with an exchange, the private key is shared with the exchange. This reduces the risk of losing the cryptocurrency due to the loss of the private key, but puts you at greater risk of being hacked.
A private key is a large, random number. It works like a password and determines ownership of the asset. Usually, crypto wallets generate a private key for users. Owning crypto basically means having a private key. A public key is an address that anyone can see and is used by other people to send you crypto assets.
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