Investors in South Africa Need to Account for Crypto in their Estate Planning
A wealth-management firm is encouraging crypto holders in South Africa to ensure that their digital wealth is protected when they pass on.
A volatile socio-economic climate is a big incentive for people to pay even closer attention to their money. This seems to be especially true in South Africa. The country is in a technical recession, there’s the land expropriation without compensation issue and more political strife with ongoing state capture investigations.
It’s no wonder then that citizens are so interested in cryptocurrencies. However, as more and more of the rainbow nation fill their digital wallets, the lack of regulations in the country means that the onus is on them when it comes to protecting their wealth.
Investors in South Africa Need to do Their Research
According to BusinessTech, Stonehage Fleming believes that a part of this is ensuring that your crypto is correctly allocated to your beneficiaries or heirs in the event of your death. The international wealth management firm is calling for more investor responsibility when it comes to looking after your crypto.
Eran Brill, who is a director in the Investment Management division at the firm’s South African branch, said:
As a young industry, with no steadfast rules or regulation, it is crucial for investors to become more responsible in their attitude towards cryptocurrency investing.
Brill added that understanding this type of wealth protection is essential:
The crypto market has experienced rapid, colossal growth. Although the initial hype may have eased slightly, there are many wealthy families who have not fully grasped that cryptocurrencies form part of their estate or how complicated it can be for beneficiaries to access this wealth in the event of death. Ongoing support and guidance from a trusted relationship manager is imperative to ensure that any wealth derived from alternative currencies stays alive after one’s demise.
Roping in a Professional
Bequeathing your crypto involves hardware wallets, private keys, seed phrases and so much more. Investors may not be aware of this when planning their estate. Then you have the tax implications associated with virtual currencies. This is why it is so important to discuss what your duties are when it comes to looking after your digital wealth for your heirs. Brill explained:
Within our standard investment framework, the range of outcomes within cryptocurrencies is too wide and binary in nature for us to consider including a position in portfolios, even if the potential pay-off may be very significant. That said, as a responsible custodian of our clients’ estates, it is our fiduciary duty to manage all aspects of our client families’ wealth. Using all our practical experience, in combination with our technical and legal expertise, we help to establish a clear governance strategy wherever possible.
Investors who do not consider the intricacies of cryptocurrencies and the consequence of keeping crypto investing secret in life, should be prepared to wave goodbye to any wealth derived from such investments at death.
This is obviously a scary thought for parents or caregivers. Just as with traditional fiat, you’ve worked hard for the crypto wealth that you have accumulated. You’ve taken risks, anxiously experienced the highs and lows of the market and perhaps even invested in your fair share of ICOs. It would be devastating to lose it due to a lack of research as to how to properly protect it.
This is, of course, not just reserved for South African investors. Anyone who trades in crypto, and even holders, need to ensure that their funds will go to the right person when the time comes.
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