What happens to your NFTs when you die?
When a nonfungible token (NFT) trader dies, their digital collectibles can be lost forever to the blockchain if they don’t have a handover plan. Because of this, lawyers believe that it is best to create a way to transfer one’s assets in the event of death.
From a legal standpoint, it seems like a good approach to create an estate plan, which is simply arranging the management and disposal of assets in preparation for future disability or death. Jaime Herren, a wealth services attorney, told Cointelegraph that this may be the best step NFT owners can take to ensure their NFTs are passed on to their loved ones after death. The Lord explained that:
“If you have a valuable asset, it’s always worth taking steps to ensure it ends up where you want it after you die, whether that’s to your heirs or to a charity. Substantial cryptoassets require planners and trustees with technical knowledge.”
The attorney also explained that if the proper plans are already in place, recipients will not need to take additional affirmative action. All they need to have is a wallet that will receive and hold tokens. Herren explained that if the NFT owner dies while a comprehensive plan is in place, the executor or executor will be the one to ensure that their NFTs are transferred to the beneficiaries. However, this also requires NFT collectors to provide these executors and trustees with instructions to access your wallets.
“Obviously, from an estate planning perspective, the worst thing you can do is keep your blockchain funds in a cold wallet with only a master key. It’s the dreaded situation that confirms stories of lost, permanently lost crypto fortunes,” Herren added.
According to recent data from blockchain analytics firm Glassnode, around 2.7 million Bitcoin (BTC), worth around $76 billion, haven’t been touched in a decade. Crypto influencer Anthony Pompliano believes that it is possible that these assets are either held by disciplined investors or have already been forgotten and lost.
Cointelegraph also asked those working in the NFT space if there is a possibility to automate the transfer of NFTs to specific wallets after death. When asked about this topic, Oscar Franklin Tan, head of legal for NFT platform Enjin, shared that this is still more of a legal than a technical issue. Tan explained that:
“Smart contracts are certainly flexible enough to transfer NFTs upon the owner’s death. However, in the physical world, death is not an on-chain event, and death must be linked to the smart contract through an oracle for it to trigger.”
Tan also added that until government death certificates become available via blockchain oracles, the death still needs to be linked by a trusted third party, such as a lawyer, to confirm the death. “A transfer in the chain on death will, in concept, still trigger legal consequences of death, such as inheritance tax,” he added.
Related: Answering a morbid question: What happens to Bitcoin when you die?
Ajay Prashanth, head of ecosystem growth at NFT insights platform bitsCrunch, echoed Tan’s comments. Prashanth, who is also a software engineer, said that it is “technically possible to set up smart contracts for automatic transfer of NFTs after death.”
However, practical challenges and legal considerations must be taken care of when implementing such a system. He explained that after getting the help of legal personnel to confirm the evidence that the collector passed away, it is necessary to set up the smart contract to connect to the legal documents.
“The process involves defining beneficiaries in the smart contract code or linking the smart contract to another legal document, such as a will, that specifies the desired beneficiaries,” he explained. This will allow the smart contract to find the correct beneficiaries and receive specific instructions on what to do after confirming the death, such as transferring the NFTs.
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