Since cryptocurrency came into existence over a decade ago, even the most reluctant of investors have started to consider joining this market. It took some time for Bitcoin and other cryptocurrency to gain widespread believers, but it has happened. More and more people are holding cryptocurrency among their assets. Digital holdings, in particular, are relatively new to the world of estate planning. With the advances in technology and the significance of digital assets, however, it is past time to start accounting for and even prioritizing estate planning for your digital assets, Bitcoin and other cryptos included.
Bitcoin Estate Planning Basics
Bitcoin holders use digital wallets to maintain their Bitcoin investment. These digital wallets are only accessible with a password or private key. A private key is composed of both letters and numbers and is only disclosed to the digital wallet account holder. Without the password or private key, you will be unable to access the Bitcoin holdings. Consider your estate plans and let the consequences of Bitcoin’s unique properties sink in. If you do not let your heirs know that you have Bitcoin holdings and you do not let them know what your password or private key combination is, it is likely that these assets will be lost to the digital void. Considering how substantially vested some people are in Bitcoin, this could be a monumental loss.
Whether your Bitcoin holdings are large or small, it is important for you to consider them in your estate plans. You can do so by developing a digital asset clause for your will or trust. You should also consider documenting your digital assets, noting where they are located, and detailing how they can be accessed. It may be best to write this information down on paper, avoiding the risk of a digital file on your computer being hacked. Store this written document in a very secure place, or multiple secure places. Notify the personal representative of your estate as to where the document can be found and be sure to take the necessary steps to grant your personal representative digital powers which will grant them the power to access and manage your crypto after you pass away. Your digital asset clause should, of course, detail who will inherit your Bitcoin and other digital assets.
There are some unique hurdles to consider when planning for your Bitcoin in your estate plan. For instance, there is a federal law, the Revised Uniform Fiduciary Access to Digital Assets Act, which makes it illegal to log into the account of a deceased individual without proper authorization. The popular cryptocurrency exchanges, such as Coinbase, also have specific terms of use pertaining to how a person can access the digital holdings of a deceased individual. Sometimes, the platform will require the beneficiary to provide the death certificate and will, among other documentation, before providing access to the crypto holdings of the deceased individual.
Estate Planning Attorneys
If you have dipped your toes into the world of cryptocurrency, it is time to address such holdings in your estate plan. The team at Jones, Gregg, Creehan & Gerace can help you do just that. Contact us today.