Cryptocurrency is an innovative and unique asset class. As such, it has become a key part of the global financial landscape and an important consideration in estate planning. It is critical to update estate planning documents to include cryptocurrency provisions, and The Law Offices of Max J. Paul looks forward to discussing with clients real ways to bequeath virtual currencies.
In an estate plan, cryptocurrency refers to digital assets like Bitcoin and Ethereum, which must be accounted for and included in the distribution of assets upon the owner’s death. Cryptocurrency is a secure and private digital currency that is used primarily for online payments, investment, or a store of value like gold or silver. It does not exist in a physical form, and the online payment platform for cryptocurrency is what’s known as “the blockchain.”
The blockchain is a ledger that records cryptocurrency transactions, keeps track of the cryptocurrency in circulation, and is not controlled by a centralized institution, like a bank. Individual transactions are secured on the blockchain through a digital verification process.
There is no time like the present to protect your wealth through estate planning. Owning crypto requires looking at strategies you can deploy to work around any custody and volatility issues while protecting your assets. Estate plans must communicate where crypto assets are stored and how to access them.
Properly structuring an estate plan when you own cryptocurrency requires planning due to the assets’ decentralized nature and untested regulatory landscape. Smart pre-planning can help mitigate the biggest dangers of leaving crypto assets stranded in an account. Given that crypto is a relatively new and rapidly evolving asset class, it’s essential to discuss your cryptocurrency holdings with an estate planning attorney.
The Law Offices of Max J. Paul will discuss the following considerations regarding cryptocurrency and your estate plan:
- Identify digital assets
- Know where cryptocurrency is held
- Provide access to crypto accounts and wallets
- Decide who will inherit your cryptocurrency
- Facilitate fiduciary’s access in the event of incapacity or death
- Contribute crypto to a trust
- Discuss capital gains taxes and transfer taxes
With proper planning, you can ensure your estate plan is comprehensive and accurately reflects your objectives. As with any type of estate plan, we look forward to discussing with clients the short- and long-term goals of owning digital assets and tailor planning accordingly. If you own or plan to own cryptocurrencies, now is the time to implement the right structures and tools to protect these valuable assets from estate taxes, probate, potential creditors, and unforeseen lawsuits.
The Law Offices of Max J. Paul is your trusted advisor as you navigate estate planning. Call (561) 807-1977 or email max@maxjpaul.com to get started or to update an existing estate plan.