If you have any cryptocurrency, it’s essential to understand how this asset fits in your comprehensive estate plan.
How is the cryptocurrency stored?
Cryptocurrency can generally be held two ways. It can be held online (also called a “hot wallet”) or on a storage device such as a thumb drive or hard drive (also called “cold wallet”). The distinction can make a difference in how the asset is allocated when it comes to estate planning. Crypto in a hot wallet may be considered intangible personal property, which includes things like investment accounts and stock certificates. If cryptocurrency is held in a 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 can cryptocurrency be passed along after death?
Unlike traditional financial assets like a checking account or retirement account, cryptocurrency doesn’t have the option to name a “pay on death” beneficiary. Therefore, if a cryptocurrency holder passes away without providing someone with all the information necessary to access the account, the cryptocurrency is lost. Including cryptocurrency information in an estate plan with complete access credentials is probably the best way to pass along cryptocurrency.
How will your estate plan administrator access your cryptocurrency?
Access is a critical factor when it comes to including cryptocurrency in an estate plan. Without including all the necessary digital keys and passwords as well as the physical location of any cold storage devices, an estate plan administrator cannot access the cryptocurrency. Detailed and current instructions in your estate plan are essential.
The Role of an Estate-Planning Maintenance Program.
As we’ve seen, when it comes to estate planning, classifying items as either tangible or intangible assets can result in different allocations. If your cryptocurrency gains significant value over time, the impact of this distinction will also grow in significance. In addition, ensuring your estate will have access to your cryptocurrency is critical. So, if your estate includes cryptocurrency, keep in contact with your attorney about any changes. An ongoing maintenance plan may be essential to ensure your estate plan is kept current with any changes you make to your cryptocurrency holdings and any newly passed legislation.
Work with a Florida 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’d 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. Call our office at 561-395-6800 or fill out our contact form to schedule a meeting and we will be in touch to get that scheduled.