3 Ways to Protect Your NFT
2. How did you purchase your NFT?
Since we are talking about cryptocurrencies, how you purchased your NFT is important. Regardless, if you bought it with cryptocurrency or cash, the government wants to ensure that you are properly taxed. Remember that death and taxes are the two unavoidable things in life. Also, an NFT is considered property not money. It is property of art, documents, a restaurant, and more. Therefore, it is important to keep track of your potential capital gains and losses. How much did you pay for the cute cyber kitty?
The government also wants to make sure that everyone is playing fair as well. This is to protect the customer and ensure the authenticity of the NFT. For example, New York and Louisiana have passed laws that show the list of activities in order to obtain a license or charter to ensure the protection of the customers[1]. Cybercriminals are going to try to separate you from your investment. Governments worldwide are keeping a very close eye on all of this to try and minimize your risk of being a victim.
3. Can I include an NFT in my estate or will?
A will transfers property after your death under the direction of the probate court in which the will is being probated. As previously mentioned, an NFT is property and therefore can be transferred to another person through your will. A will can help facilitate all your assets to be distributed the way you want them to be. A quick word of warning, the probate process exists to allow your creditors to be paid before your beneficiaries.
However, a will is not needed to safeguard your NFT. You can name a “digital executor” to your NFT but why would you only want to protect one piece of your property? You don’t insure just the driver’s side of your car, right? There should be at least one person that has knowledge of the details of your NFT. It should be an individual that has an unbiased opinion and knows how you want the NFT to be handled in the future. It would be truly unfortunate to see your digital property be lost forever because you did not include this noteworthy property in your estate planning.
You have taken the time to buy the right NFT, but how will it be protected for the future? An estate planner will help protect your physical and digital assets for your future. There are numerous intricacies of the law regarding digital documents that it is best to leave it up to the experts. Call (305-702-8250) or email us to set up a consultation to find out how to best protect your digital future with Yolofsky Law.
Didn’t catch part 1? Click here to read part 1.
[1] New York and Louisiana are two examples. Each state has a list of activities it deems under its laws to constitute virtual currency business activities, which can include for example: exchanging, transferring, controlling, administering, or issuing virtual currency. Both states require companies that engage in such activities to obtain a license or charter and post surety bonds or fund an account for the protection of customers. https://www.jonesday.com/en/insights/2021/04/nfts-key-us-legal-considerations-for-an-emerging-asset-class