Planning with Cryptocurrency
Many individuals nowadays, have cryptocurrency that they want to protect. The individuals keep their cryptocurrencies in a digital wallet, which is assigned a blockchain address that allows users to send and receive crypto assets. The wallet is secured by a private key that must be input before any transaction can occur within the wallet. Furthermore, unlike traditional assets, there is no personal identifying information associated with the crypto assets, and the wallet can only be accessed through the private key.
This nature of cryptocurrencies creates many challenges for estate planning. Given that cryptocurrencies are stored in a wallet that does not have personally identifying information, assets will essentially die with the decedent if they fail to communicate such assets exist. Even if the assets are identified, people with cryptocurrency must provide detailed instructions on how to access the wallet. Moreover, they must consider passing down assets to heirs with a baseline knowledge of using and managing cryptocurrencies.
Given the challenging features of cryptocurrencies, careful consideration must be given to ensuring such assets are accessible after the individual passes away. It must also be transferred to those with a baseline understanding of how to manage crypto assets. Additionally, the substantial appreciation in the value of cryptocurrencies over the last few years has made advance planning to minimize gift and estate taxes even more of a priority for investors.
This is why incorporating your digital assets and cryptocurrency into your estate planning is crucial. Most estate planning lawyers do not even know what crypto is or how it works, so it is likely they don't know how to create a plan that protects it! Be sure to contact a lawyer who knows how to plan for these assets.