For centuries, inheritance has been a part of human culture. From land and money to titles, we’ve always given the things that we value to those who come after us, and it has never been a completely straightforward affair. From messy court battles over shares of estates to paternity scandals and even murder, inheritance and the process of passing down valuables has been as complex as humans themselves. Over the years, the things passed down have evolved and changed with the times. Yes, we still pass down money and property, but seeing as we live in a digital world, there are more ‘intangible’ things that we can inherit. These include our social media accounts, our cryptocurrency, and yes, our NFTs. So, let’s take a look at everything you need to know about NFT inheritance!
NFTs to be Passed Down
Among the many valuables that people have inherited over the centuries is art, and this comes as no surprise; a single piece of art can be worth millions of dollars. Everything from 500-year-old pieces to modern masterpieces have been bought and inherited, but in the last decade, art has gone digital.
While there is still controversy about its ‘legitimacy’ within the art world, NFT and digital art have become increasingly sought-after. Take the highest-selling NFTs of all time, an art piece by Beeple or even a Bored Ape piece. One of these can set collectors back millions, and it comes as no surprise that celebrities and art collectors have been adding them to their portfolios.
If someone owns any valuable NFT art, they will probably need to make some plans around how to pass it down in the event of an untimely death. The good news is that there are already solutions within the market to help with this.
On the custody side, there are existing NFT solutions that will handle the storage and security of an NFT. Just as there are services for storing and moving fine art, digital assets can also be kept safe. When signing up for such services, collectors must specify a next of kin and other details that will help with the process of passing down valuables.
There are also more options in terms of legal support. The rest of the world took a while to catch up with blockchain developments but now, we have lawyers and law firms that specialise in NFT-related issues and can make the process of passing down or inheriting NFTs much easier. So, anyone thinking of doing either should speak to a lawyer and see what the process will entail.
One thing collectors must absolutely keep in mind is setting up proper access to the NFTs for future recipients of the tokens. This is because NFTs are not physical assets but digital ones. We have all heard the stories of people putting crypto or NFTs in wallets, forgetting their password and recovery phrase and never being able to get it back. As such, there is no point in passing an NFT to a beneficiary and not having the means to access them made available (this is also where NFT custodian services would come in). So having wallet passwords and recovery phrases safely stored, but easily available is of the utmost importance.
In addition, inheritance will also come with its own tax implications. In virtually every part of the world, people must pay tax on whatever they inherit. At the same time, legal recognition and treatment of NFTs is tricky and varies around the world. It has been suggested that inherited NFTs would be treated as a capital asset and no tax would be applicable unless they were sold.
However, just like with inheritance laws as a whole, this depends on where people live and it is best to check with the local authorities to be sure.
How NFTs Could Change Inheritance Laws
Given how popular NFTs are currently (especially among younger people), we could see a spike in NFT inheritance in a few generations. Soon, NFTs could be listed alongside houses, stock, and cars in wills.
This is good news not just for the gen Alphas that will inherit them but also for the development of NFT-related laws. Remember how crypto was barely acknowledged by regulators years ago partially until the financial incentive was obvious? The same might must be true for NFTs. Inheritance laws might not focus too much on the asset class right now but if they are being widely inherited, laws will have to catch up.
This sort of development will only benefit the industry as better laws will mean more protection for stakeholders and this is a net positive.
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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.
Tokoni Uti has written extensively on blockchain and cryptocurrency for years. Her work has appeared on sites like BTCmanager and Blockchain Reporter. She has a degree in Corporate Communications.