For those that have already done an estate plan or that are in the estate planning process, traditional assets, like our cars and houses, are already in our wills. Including traditional asset classes are relatively simple. As one includes other financial assets though, like stocks, mutual funds, savings accounts, etc., estate planning gets a bit more complicated. This, of course, also includes cryptocurrencies, like Bitcoin, Doge and the like.
Increasing sizes mean increasing problems
There is no way around it, cryptocurrencies are exploding right now, and they have been for about half a decade. They are no longer thought of as Ponzi schemes. Indeed, there are soon to be ETFs that are designed to capture the best performing cryptocurrencies. And, what may have once been a seemingly insignificant part of one’s portfolio may now be their biggest asset. This means, our crypto-wallets need to be in our estate plans.
Most cryptocurrencies are designed to be anonymous, so the first step is ensuring that there is some notice of ownership within a will or other estate plan document. The executor or trustee needs to know that the assets exists and where they are held.
Now that the estate plan lists those assets, the executor or trustee will need to know how to access those cryptocurrencies. Since they are anonymous, to bequeath them, there must be a notation on how to access the coins. And, simply giving one their crypto-wallet password will not be enough. Often, there are third-party authenticator apps that will be needed. Make sure all of this information is included, or those coins may live on forever outside the family’s reach.
Sell or hold?
Cryptocurrency traders are often diehard fans of their favorite coin. This may mean that they do not want their heirs to necessarily sell them immediately. After all, a $100 Bitcoin purchase in 2011 would be worth $4 million today. If all of those coins are transferred on death, the family member may liquidate them immediately. If holding for longer is preferred, a trust can be created to only distribute those coins at intervals.
Of course, for our Geneva, Illinois, readers, this is just a brief primer on cryptocurrency estate planning. There are many other issues to discuss, like taxes, transferability, international issues, etc.