Monday, August 10, 2020
Cryptocurrency has become a vital financial tool for individuals and businesses, since U.S. Congress has held hearings discussing the digitization of the dollar. Cryptocurrency planning has been neglected and cryptocurrency has been lost. "This has generated tales of people, who discarded their computer hard drives containing thousands of bitcoins now worth millions, sifting through mountains of garbage."
Cryptocurrency can be difficult to understand, so there are steps you should take to integrate cryptocurrency in your estate plan to ensure that your heirs and beneficiaries will avoid the associated risks.
First, you should preserve the benefits of cryptocurrency. One of the best properties of Cryptocurrency is that it is highly secure. However, if you carelessly record the private key or seed phrase, that security is at risk. You should ensure that your planning procedures include how to secure this information.
Next, avoid the risks of cryptocurrency. Since crypto can fluctuate even during the course of the day, so in a sense, it should be treated like stock. Also, crypto exists outside of government regulation, so no one is responsible for losses due to scams or theft.
It is also important to note that without specific language, your trust will not be able to hold cryptocurrency. You must be extra careful if you are drafting your trust to include cryptocurrency, so that your heirs will be able to access it in the event of your death.
You should ensure that if you or your business own any type of crypto that your estate, business succession and financial plans reflect that.
See Matthew Erskine, Estate Planning When You Own Cryptocurrency, Forbes, July 30, 2020.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.