The Cost of Inadequate Cryptocurrency Planning
Cryptocurrency has gained significant attention as a digital form of investment and wealth accumulation. Amidst the excitement of this emerging technology, there is an unfortunate side to cryptocurrency: the risk of loss due to poor management and planning.
The exact amount of cryptocurrency that has been lost is difficult to determine, as the decentralized nature of these assets and the lack of regulation make tracking and recovery challenging. A significant portion of cryptocurrency losses result from poor password management. According to a study conducted by the digital security firm, Kaspersky, in 2020, 61% of people who own cryptocurrency admitted to using the same password for multiple accounts, putting their cryptocurrency holdings at risk of being hacked and lost.
Failure to create proper backups of cryptocurrency wallets (including critical information, such as seed phrases) can also result in loss. A survey conducted by the software security company, CyberArk, in 2020, revealed that 23% of cryptocurrency owners have lost access to their digital assets due to technical issues, such as hardware failures or server outages, and lack of proper backups.
Importantly, many cryptocurrency owners neglect to include their digital assets in their estate planning documents, such as wills or trusts. This can result in unintended loss or mismanagement of these assets, as they may not be transferred to intended beneficiaries or may be subject to legal challenges and delays.
The loss of cryptocurrency can have profound financial and emotional consequences for individuals and their families. To mitigate these risks, it is crucial for cryptocurrency owners to prioritize proper management and planning of their digital assets. Our office provides free consultations to all new clients so that you can feel confident and empowered as you establish an estate plan best suited for your needs.
The information provided herein is intended as a general overview and discussion of the subjects dealt with, and we accept no responsibility for any actions taken or not taken based on this publication. It is not intended, and should not be used, as a substitute for taking legal advice in any specific situation.