How do you tie in NFTs with your estate planning in Malaysia?
As NFT is becoming more and more popular, more Malaysians are investing in NFTs every day. However, NFTs are relatively new in the Malaysian market, therefore not many know about what they can do with it, especially whether it can be inherited.
If you have NFTs to your name and have earned a sizable income from it, can you put it in your wills? Can it be part of your estate planning? Find out more in this article.
What is NFT?
NFY can include digital and online assets such as photos, videos, audios, artwork, gaming tokens, or any sort of digital files. So how are these digital assets created?
NFTs are created on a blockchain, which is a growing list of records. These records are called blocks, which are linked together using cryptography.
Each block has a cryptographic hash of its previous block, a timestamp, and a transaction data. The timestamps are used to prove that the transaction data exists when the block is published in order to get into its hash.
NFT does not contain the intellectual property, photo, videos, etc. It’s referred to the intellectual property. The original creator promises that work is either unique or they are only going to create a limited amount of it.
For example, a creator says they will create only 10 of the artwork. You buy one from this creator and own, let’s say the 7th piece in the 10 piece artwork. Each of these NFTs have its own address. If you have the address and access to it, then you own the NFT. NFTs also contain a smart contract. That means when the artwork is sold, they will get a certain cut of the profit when their NFT has been sold.
Why do people create, sell, and/or own NFTs then?
It does get very confusing when it comes to NFT ownership and creation. However, let’s put this in an analogy so everyone can understand it better.
Take rare collectible cards and autographs for example. Items such as these are rare and close to inaccessible worldwide. Only a few people have them in physical copies. That means these items will fetch a high price if whoever have them want to sell them.
However, with NFTs being around, it means it can take this concept of uniqueness and apply it to digital works. It gives NFT owners a great way and method to sell and monetise their digital works.
The scarcity that was created through the NFT makes the digital work even more valuable. It can easily lead to more profits for the people who have created it. It’s the same for people who buy and sell NFTs.
How do NFTs and estate planning tie in together then?
Having said all of that above, I think you’d have a clear basic understanding of how NFT works. You may or may not own many valuable NFT assets in your lifetime. If you do, then this is for you and you should start seeing how you can protect it. You can also see how you can leave it behind for your next-of-kin when you are no longer around.
The first thing you should do is to have your NFTs placed in your wills and trusts. Update them periodically if you have to. In your will, mention how it will be divided up between your beneficiaries. Say how many percent your beneficiaries will get from the proceeds generated from your NFTs.
When you are done updating your wills and trusts for your NFTs, your next obvious step is to mention how to access your NFTs. You can put in place a list of locations where you have stored your NFTs. Then list the login details and keys to your NFT accounts.
If it makes anything easier you can also include a step-by-step guide to help your beneficiaries access your NFT accounts. Get a lawyer to help if you need any guidance too, if that makes things easier for you and yourself.
If you need any assistance in NFTs and will planning, feel free to talk to us. We can help you with estate planning and wills. If you own NFTs and wish to put it in your will, we are here to assist you.