Giving NFTs to your children during your lifetime is relatively easy and can even be tax-free. If the tax page doesn’t yet mention NFT on its donation page, it will. In the meantime, you can make a donation during your lifetime or by will to your children: money, material goods (car, jewelry, etc.), buildings and securities (stocks, shares, etc.), NFTs or cryptos.
If you’ve made it this far, you already know what an NFT is. If this is not the case, do not hesitate to consult this article, which explains everything for you.
What does the tax man say about donations?
You may not know it, but you are probably liable for tax when you give something to your children (if you give to charity, on the other hand, you can get a tax deduction. You will find the rules precise and complicated on the tax website). However, there are exceptions: each parent can give up to €100,000 to their child. A couple can therefore transfer €200,000 to each of their children every 15 years in one or more installments.
Children can declare this donation by logging into their place on the tax website: there is a tab ” You have received a donation, declare it“. They can also submit Form 2735 in duplicate to the IRS.
Donate NFTs (or cryptos) while alive?
As we have seen, you can give whatever you want, cash, cryptos, jewelry… As long as what you give is legal of course. To be less taxed, make donations with allowances, otherwise you will go through the tax box. The prices of your NFTs are easy to prove. On the other hand, if you bought them by making a capital gain on your cryptos, there will probably be a scientific calculation to estimate flat tax. You can donate your NFTs by making a transfer to wallets of your children or, if you have only one child, you give him the private keys of said wallet.
Your notary will not be able to do anything for your heirs if he does not have your private keyswallet. You can entrust him with the management of the private keys: he keeps them in his “real” safe on a physical medium or in his electronic safe. This custodial service has a cost and entails risks, but the notary has insurance. If the study is broken into or the system hacked, find out the amount of compensation provided. The cost of a holographic will, i.e. simply registered with a notary, is currently less than 30 euros. You can also write where you have saved your private keys. If you are a gambler, think some riddles: but if your heirs cannot find your keys, then it will complicate the work of the notary. How do you create the balance sheet?
If you have chosen a safety deposit box, this safe will no longer be available upon your death without formalities. Also for people with power of attorney.
Of course, investing in NFTs is not without risk: digital art is completely random. Jack Dorsey’s first tweet sold as an NFT for $2.9 million in 2021 is worth next to nothing today. The “Bored Ape Yacht Club (BAYC)” monkeys have a rather uncertain future. So instead of bequeathing works that may no longer have any value, why not simply invest in bitcoins (BTC)? Maybe your children will then be able to consider vacationing in El Salvador or even settling there? (Spending your bitcoins won’t make you forget your disappearance, but at least they’ll be used for something…)
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Subprimes, financial crises, galloping inflation, tax havens… Bitcoin was designed for more transparency and maybe finally change the game. I try to understand this new environment and try to explain it myself. The road is undoubtedly long, but it is worth it.