Estate Planning And Cryptocurrency
Posted by smith clea on October 1st, 2022
While many people are familiar with how to prepare an estate plan and include their assets in the plan, many fail to include cryptocurrency.
While not all cryptocurrencies have legal ownership, there are still ways to ensure that you have a transferrable digital asset when you die.
Here are some tips on how to do that!
Why it’s important to include cryptocurrency in estate planning:
- Cryptocurrency is a new type of asset class.
- Cryptocurrency has real value.
- The price of cryptocurrencies can fluctuate and be volatile, like stocks or bonds.
- Cryptocurrency is not FDIC insured.
This means that if you sell your cryptocurrency and it loses all its value, you won't get any money back from the bank where it was held in an account.
If you own an investment property or other assets such as gold coins or paintings valued at millions of dollars each (worth more than 0k today).
Then these could also fall into this category due to their high value compared to current market prices for cryptocurrencies.
This could result in losses when selling off those assets at current market rates.
But, because they are not FDIC insured, there will be no guarantee that either scenario will happen!
How To Ensure The Cryptocurrency You Leave Is Transferable?
Create a will or trust. If you have the option to leave cryptocurrency in your living will, this is the best way to ensure that it’s transferable when you die
Include instructions for accessing and transferring the cryptocurrency (if possible).
You may want to include information about what type of account it is held on and how much cash has already been put into that account.
So, that there isn't confusion later on if someone tries to access your money without realizing what they're doing.
Provide instructions for how long after death before funds can be accessed by beneficiaries who receive them via inheritance tax credits or probate fees.
The Next Steps For Including Your Cryptocurrency In Your Estate Plan Are:
1: Sign Up For A Cryptocurrency Wallet
If you already have an account, great! log in and confirm the ownership of all your holdings in this new digital space.
If not, consider creating one now.
So, that you can keep track of all the coins you own later on.
2: Create A Will Or Trust That Outlines How Much Money Each Person Gets When You Die (or at least how much inheritance tax should be paid).
It’s important to make sure everyone knows what they are entitled to when it comes time for them to inherit their parent’s fortune.
Otherwise, things could get messy.
If someone tries to take advantage of another member's death without letting everyone else know first!
3: Choose An Executor/Trustee Who Will Oversee Everything After Someone Dies.
This person should also be able to handle any questions about taxes or probate court proceedings related to cryptocurrencies like Bitcoin.
Choose beneficiaries from among all heirs listed in the original document (this includes both spouses).
Whether those heirs are listed as joint tenants or life tenants.
It Is Important To Include Your Cryptocurrency Investments In Your Estate Plan.
If you are interested in cryptocurrency, it’s important to have an estate plan that includes your cryptocurrency investments.
Cryptocurrency is still new and has no rules yet.
You can pass on this type of digital asset to your heirs, transfer it to another person or trust, or donate it to charity.
If you have more than one wallet for different cryptocurrencies like bitcoin and Ethereum, then each wallet must be included in the same document.
So, that they will remain unified when needed later on (if something happens).
In conclusion, it is important to include your cryptocurrency investments in your estate planning.
As with any asset, your cryptocurrency will likely become more valuable as time goes on and the market grows.
By ensuring that you transfer your cryptocurrency to a trustworthy third-party custodian who can manage it until you die.
If or are no longer able to do so yourself then you can ensure that these assets will be safe and secure.
About The Author
Smith Clea is a USA-based author on Legal issues related to estate planning, will and trust, business law, and elder law. Smith Clea does her best writing on these topics that help users to find the best solutions to their FAQ on estate planning attorney, probate, living trust vs will, and more about legal family issues.