Cryptocurrencies may not be something you understand, but they are assets that need to be included in your estate plan should you choose to invest in them. For context, there are now over 800 digital currencies available and each one operates a bit differently and with a different purpose, Bitcoin being the most prominent example. What they all have in common is that they are digital currencies, in the form of “tokens” that you can now buy or invest in. In some cases you can use them to exchange for goods and services.
For example, more and more providers of goods and services are accepting Bitcoin as a payment method, just as they would cash or credit. There are even a few accepting the lesser-known currency called Ripple (XRP). However, as of this writing, there are no providers we’ve heard of accepting, for example, the lesser-known cryptocurrency of ProCoin (PROC), a coin based on shopping rewards. Despite this, the coin is tradeable on the open coin market, currently at $.12, though it’s been traded as high as $.38.
With the foundation of cryptocurrencies laid out, let’s begin building on our understanding of how these assets intersect with estate planning.
If you have not planned for the transfer of your digital currency at the time of your incapacity or death, it could literally be lost forever. If you invested in Bitcoin back in the days before it got popular, that could potentially be millions of dollars lost to your loved ones. Here is how to keep this from happening: Tell whomever you would want to inherit your cryptocurrency what kinds of cryptocurrency you have and tell how to find, access, and manage the cryptocurrencies, or at least where to find that information if you don’t want them to have access to it until it is time for them to inherit.
If you are holding your currency in an exchange, such as coinbase, with 2-factor authentication, it could be very difficult for your loved ones to access your currency. It would be the best practice to transfer your cryptocurrency into a “paper wallet”, which is kind of ironic given that it’s a digital currency. A paper wallet basically involves storing codes offline that allow you to access your currency. If you lose those codes, or your loved ones can’t find them, it’s the same as all of your currency being gone. You can read more about the different storage options for cryptocurrency here.
Bottom line: if you have cryptocurrency and you want your loved ones to have it after you are gone, you should probably call us so we can make sure it’s not lost upon your incapacity or death. As a new technology, cryptocurrency can be a bit confusing and not many lawyers are even thinking about this issue yet. But we are, so give us a call and let’s have a Family Wealth Planning Session, during which we can help you to protect and preserve what matters most.
This article is a service of Levi Alexander, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
Photo by Alesia Kozik: https://www.pexels.com/photo/close-up-photo-of-gold-coins-6764227/