Potential Usage of Smart Contracts for Inheritance Planning
When people want to make a will, they have to write by hand or make a contract that involves all parties and is hard to amend afterward. What if there could be a digital possibility that will be executed automatically after the testator's decreasing? This thesis would elaborate on the opportunity.
Martina Schellenberg, 2021
Bachelor Thesis, Bank Julius Baer & Co. Ltd.
Betreuende Dozierende: Galia Kondova
Keywords: This Bachelor Thesis elaborates the possibility of implementing Smart Contracts for inheritance planning while following the respective laws.
A part of wealth planning is succession planning. As of today, wills or inheritance contracts are drawn up. People may still be concerned that their testament will not be carried out according to their wishes. The risk that their testimony will be recognized as invalid, misinterpreted, or that an objection will be filed is high. The testator's last will could be implemented with a smart contract and not be manipulated thanks to blockchain. Banks could maybe offer smart contracts as an additional service in inheritance planning. This thesis shows the advantages for banks as well as for clients.
An explanatory research method is used at the beginning to gather the current knowledge about the topic. This includes the explanation about Blockchain, Smart Contracts, current inheritance law in Switzerland and Russia, & the recent academic research about smart contracts for succession planning. Besides that, an interview with a jurist from a bank and a survey among client advisors at the bank will be conducted as self-conducted research. The results from the study & interview, together with the literature review, will be analyzed, compared, & discussed.
The main benefits of Smart Contracts are automated settlement of succession & fewer disputes between heirs due to the automatic distribution. Smart Contracts can digitize the current traditional & highly manual inheritance law worldwide too. The disadvantages are that currently, Smart Contracts can only regulate simple processes. Complex situations like estate planning are, with the current technology, impossible to implement. It still needs to evolve so that complex instruction can be entered & executed. Legal requirements are also a must. If this is not given, Smart Contracts cannot be used for inheritance planning. Returning to the research question, one can say that Smart Contracts are impossible to implement with the current law. Therefore, maybe a law update with the allowance of digital contracts would be there within the next years or decades. In this time, the technology can further evolve & may be able to implement complex structures into Smart Contracts. In the future, it may be an alternative for inheritance planning. When that time comes, further research will be required for an updated analysis.
Studiengang: Business Administration International Management (Bachelor)
Fachbereich der Arbeit: Accounting, Banking, Controlling and Finance