Legacy planning with digital assets
By Jolene Tan, SingAlliance Pte Ltd
The advent of the digital age has harnessed the rise of digital assets such as cryptocurrencies and nonfungible tokens. As more look to invest in this space, many have yet to consider its inclusion in estate planning. However, it is a critical consideration and some might argue it is more crucial than traditional assets. This is because of its decentralised nature, market volatility, the lack of personal linkage to demonstrate ownership, as well as the issue of how the keys are stored – in an electronic device.
There are further obstacles estate practitioners face, such as the technical accessibility of digital assets, the lack of clarity surrounding digital property rights, and the inadequate attention by practitioners to include language permitting fiduciaries to access, retain and manage them.
What then can one do to ensure the smooth transfer of digital assets to their beneficiaries? Firstly, it is crucial to disclose one’s digital assets to estate planners to devise a secure method of transfer of private keys. One can set up a “deadman” switch that informs the recipients how to access the private keys should the owner die or become incapacitated; or set up a multi-signature structure on devices in different locations. Moreover, one could store two copies of asset records in separate places, or choose to employ the 3-2-1 backup approach:
- 3 copies of private keys (1 on a hardware wallet, 2 backups)
- 2 types of media (e.g., encrypted USB hard drive and crypto steel), and
- 1 at an off-site location.
Alternatively, the owner could transfer their digital assets into a trust – a wealth planning solution that is gaining traction. It allows trusted parties to know the existence of and to be included in the will. It also maximises security with the assets under banks’ global custody, amongst other advantages.
As the regulatory landscape of digital assets remains fluid, it is imperative to take asset security into your own hands and work with trusted providers to keep abreast of the latest developments in this area.
Jolene TanGGI member firm
SingAlliance Pte Ltd
Advisory, Fiduciary and Estate Planning
T: +65 6303 5050
SingAlliance is an independent asset manager with a presence in Singapore, Hong Kong and Geneva, specialising in providing wealth management solutions to HNW individuals, families, and institutions. In Singapore, SingAlliance holds a capital market services licence for fund management issued by the MAS.
Jolene Tan is a managing partner at SingAlliance, with more than 17 years of client advisory and private wealth management experience. She specialises in providing independent advice to HNWIs and their families to build holistic wealth planning solutions.
Published: Trust & Estate Planning Newsletter, No. 09, Spring 2022 l Photo: anekoho - stock.adobe.com