Cryptocurrency and Estate Planning
Cryptocurrency may or may not be here to stay, but if you have any, it is essential to understand how this asset fits in your comprehensive estate plan.
How do you manage your cryptocurrency?
For estate planning purposes, there are two different ways to hold cryptocurrency and the distinction is important. Cryptocurrency held online (also called a “hot wallet”) may be considered intangible personal property. This generally includes things like investment accounts and stock certificates. If cryptocurrency is held on a storage device such as a thumb drive or hard drive (also called “cold wallet”), it may be considered tangible personal property and handled the same way as jewelry, automobiles, family heirlooms, and other physical assets. Because it is so new and the rules and regulations surrounding cryptocurrency are unsettled, there is some ambiguity surrounding how it would be classified.
How do you pass along cryptocurrency after your death?
Unlike traditional financial holdings like a bank account or retirement account, cryptocurrency does not allow you to name a “transfer on death” beneficiary. Therefore, if you pass away and haven’t provided someone with all the information necessary to access your account, your cryptocurrency will be lost. By including your cryptocurrency in your estate plan and providing proper access credentials and directions, you can ensure that your cryptocurrency will be passed on to your designated beneficiaries.
How will your trustee or executor access your cryptocurrency?
One critical factor in including cryptocurrency in your estate plan is access. Without providing all the required digital keys and passwords as well as the physical location of any cold storage devices you are using, your cryptocurrency will be inaccessible to your estate administrator. It is important to leave detailed instructions in your estate plan and to keep them up to date.
Consider Ongoing Estate-Planning Maintenance.
When it comes to estate planning, classifying items as either tangible or intangible assets can result in different distributions. The higher the value of the item, the more significant the impact may be. Furthermore, ensuring your estate will have access to your cryptocurrency is paramount. If your estate includes cryptocurrency, work with your attorney and keep communications open. If your estate includes a significant amount of cryptocurrency, an ongoing maintenance plan will be essential to ensure your estate plan is coordinated with any changes you make to your cryptocurrency holdings and any newly passed legislation.
Work with an experienced Virginia Estate Planning Attorney
Estate planning attorneys must keep up with the ever-changing laws that affect estate planning, including those emerging to address cryptocurrency. We would be happy to work with you to ensure that your digital assets, as well as your traditional assets, are properly included in your estate plan and keep that plan updated through our maintenance program. Contact Wilson Law PLC today at 866-603-5976 to set up a meeting or fill out our contact form and we will call you to schedule your meeting.
