Cryptocurrencies and Your Estate Plan
Cryptocurrencies are relatively new assets which, if you own them, need to be part of your estate plan. The best-known cryptocurrency is Bitcoin, but there are many others. They are in digital form and are only accessed through a computer and a personal passcode.
Detailed information on your cryptocurrencies needs to be included in your will, otherwise your beneficiaries will not be able to inherit them. There is no physical record of these assets. You need to make this physical record by listing your cryptocurrencies in your will and informing your personal representative (executor) about them. Your will should also contain information on your digital wallets. You should have a memorandum to your will with your cryptocurrency passwords and PINs as well as detailed instructions on how to access your cryptocurrency. This is the one asset that is neither a physical object nor has a paper trail.
Your cryptocurrency is stored in your digital wallet. So your beneficiaries can find your digital wallet you need to describe where it is. Include the devices your wallet is on in your will so the vital components of your digital wallet remain together, including any wallet backups.
A memorandum to your will does not become part of public record and is therefore a secure location for your passwords and PINs. This separate document can be updated as often as necessary without having to update your will. In your memorandum list the type of digital wallet you have, what device you have stored your cryptocurrencies on, links for relevant online exchanges or password managers, and any needed login information for the various links or wallets. It is imperative that your personal representative knows the location of your memorandum.
Cryptocurrencies are a new asset which many people are not comfortable using. This is why detailed instructions on how to access your cryptocurrency are so important. Explain in very plain language how to access your wallet and to how to exchange the cryptocurrency for traditional currency. You may include these instructions with your PINs and passwords or in a separate document. You can update these instructions whenever necessary.
There are some who may never be comfortable using cryptocurrencies. If this applies to your beneficiaries, it may be best for your personal representative to exchange the cryptocurrency to traditional cash for them. Additionally, some people are more comfortable having their digital assets in a trust, which provides for more privacy and control.
If you own cryptocurrencies, their existence, location, and access need to be detailed in your estate plan. They can be a significant part of your assets and you want to ensure that they are passed on to your beneficiaries. Consult with an estate planning attorney to make your digital assets part of your estate plan. Contact Shoffner & Associates to make sure your plan is up to date and works optimally for you and your circumstances.
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Shoffner & Associates
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