Estate Planning for Cryptocurrencies

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Estate Planning for Cryptocurrency

Cryptocurrency is quite the misnomer because it is not recognized as currency, at all. Instead, cryptocurrency is treated the same way as collectible cars, artwork or antiques. Due to the unique treatment of cryptocurrency assets, there is no ability to use a beneficiary designation form or checkbook to transfer them to your loved ones. The lack of comprehensive estate planning knowledge and options has led to a number of tragic instances where cryptocurrencies are accidentally disposed of. We might remember the story of James Howells, who lost a hard drive with almost $300 million worth of Bitcoin on it. Mathew Mellon, considered to be a cryptocurrency icon, died without leaving access to his estimated $500 million in cryptocurrency. In fact, 20% of all previously mined Bitcoin is lost, probably forever.

When thinking about estate planning, it is imperative to include information on any cryptocurrency held, where it is being held, and to include language in the estate planning documents that permits the Trustee to manage the cryptocurrency without liability. Estate planning documents should also allow Trustees to access digital assets, such as laptops and cell phones, which may have information about any cryptocurrencies owned by the decedent at death. Even if a person provides their Trustee with the cryptocurrency passcodes during life, the Trustee’s use of the passcodes after death without the proper permissions in the decedent’s estate planning documents and related laws could cause the Trustee to violate federal or state privacy laws, terms of service agreements, or computer fraud and data protection laws.

To ensure your loved ones can inherit your cryptocurrency assets after your death:

Always reference your cryptocurrency assets in your Trust Agreement.
Be sure to include information about your digital wallets in your Trust (the type of digital wallet(s) you have; any computer, smartphone, or device on which you’ve stored your cryptocurrency; website links for any needed online exchanges or password managers, and any login and password information needed for each of these wallets, accounts, and websites.)
Create a memorandum to your will with passwords and PINs, and
Include a step-by-step guide to explain how your beneficiaries can access your cryptocurrency.

Most importantly, be certain that your estate planning attorney is familiar with cryptocurrency succession and is implementing the correct document for each type of investment. For more information on successful techniques for the protection of your cryptocurrency assets, creating estate plans for the succession of cryptocurrency assets, or the probate administration of any cryptocurrency assets not already held in Trust, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation. It’s a Wild world. Are you protected?

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