Unless you’ve been living under a rock, you’ve probably heard about Bitcoin. What you may not know is what “cryptocurrency” means, and how it affects your estate planning. Maybe you’ve even got yourself some Bitcoin, but haven’t given thought to what would happen to your digital currency in the event of your death or incapacity. As a new technology, cryptocurrency can be a bit confusing, and few law firms are talking about this yet. But we are!
Today’s article will dive in with some initial thoughts, and then we’ll get deeper in future articles.
- If you had purchased $100 of Bitcoin in 2010, you would have over $4,000,000 today. Let that sink in.
- There are now over 800 digital currencies available, though Bitcoin is the most well-known.
- Each one operates a bit differently, and with a different purpose.
- 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) and in some cases use to exchange for goods and services.
For example, more and more providers of goods and services are accepting Bitcoin as payment method, just as they would cash or credit. A few are even accepting the lesser known currency called Ripple (XRP).
For today, I want to cover what you need to have in place to ensure that if you become incapacitated or die, and you are holding digital currency, you will be prepared.
Unfortunately, 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 to the ethers. And, if you invested in Bitcoin back in the day before it got popular, that could potentially be millions of dollars lost to your loved ones.
There are two things for you to consider if you are holding digital currency:
- Do your loved ones, or whoever you would like to leave your digital currency to, know that it exists?
- Do they know how to access it and cash it in or hold onto it?
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. (And if your loved ones can’t access your iPhone, there’s other problems too (see our article about digital access)! We offer our clients access to a cloud-based digital account administration system. Having that in place would allow the executor of your estate to handle all digital accounts, not just crypto accounts. But if you prefer the traditional route, store that information offline.
Here’s the thing, if you lose those codes, or your loved ones can’t find them, it’s the same as all of your currency being gone.
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 one of the first law firms actively tackling the crypto-currency issue, we want to make sure our clients are ahead of the curb on this as well.
This article is a service of attorney Myrna Serrano Setty. Myrna doesn’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 Life & Legacy 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. Call our office today to schedule a Life & Legacy Planning Session and mention this article to find out how to get this $500 session at no charge.