The increased investment in cryptocurrencies has given rise to a new asset class that needs to be considered in estate planning – crypto assets.
Cryptocurrency, also known as crypto assets, refers to a digital asset that uses cryptography for security. This form of digital currency is decentralized and often used as an investment, similar to stocks or real estate.
Like any other asset, cryptocurrency should be included in estate planning documents. This is because these digital assets can have significant value and should be treated like any other valuable asset. You could also choose to invest into stocks like otcbb:nbev which are a tad bit safer but crypto is booming!
Factors to consider when creating an estate planning documents for digital assets
Here are some things to consider if you’re thinking about creating an estate plan for cryptocurrency.
1. Determine what type of cryptocurrency you own.
There are many different types of cryptocurrency, each with its own characteristics. Before you can create an estate plan for cryptocurrency, you need to determine what type of cryptocurrency you own and how it will be classified in your estate. Therefore, you have to make sure all your cryptocurrencies are properly accounted for. This includes keeping track of the purchase date, type of cryptocurrency, and value.
2. Consider how you will store your cryptocurrency and the private key
Cryptocurrency is stored in a digital wallet. You will need to decide how you will store your digital wallet, and whether you will give someone else access to it. You will also need to specify how your private key will be stored and the circumstances under which it should be revealed.
3. Determine who you want to inherit your cryptocurrency.
When creating an estate plan, you will need to designate a beneficiary for your cryptocurrency. You should consider carefully who you want to inherit your cryptocurrency and whether they would be able to manage it. This can be done by listing the cryptocurrency as an asset in a will or trusts. In this legal document, you will have to specify how your cryptocurrency will be inherited.
4. Keep your cryptocurrency secure.
Cryptocurrency is subject to theft and hacking, so it’s important to keep your cryptocurrency secure. You should consider using a combination of offline storage methods, such as a hardware wallet, and online security measures, such as two-factor authentication.
5. Review your estate plan periodically.
Your cryptocurrency holdings may change over time, so it’s important to review your estate plan periodically to ensure that it still meets your needs. Your estate planning attorney can help draft an estate planning document that specifies all these obligations. That way you can safely transfer all the assets held in your cryptocurrency account to your beneficiaries.
What are the benefits of an estate plan if I own cryptocurrency and other digital assets?
Estate planning can help to ensure that your cryptocurrency and other digital assets such as NFTs are distributed according to your wishes. With estate planning you are ensuring that that your loved ones are able to inherit your digital investments without any problems.
If you don’t have an estate plan, your cryptocurrency could be subject to probate, which could be a lengthy and expensive process. An estate plan can also help to minimize taxes on your cryptocurrency holdings and reduce the risk of theft or loss.
If you own cryptocurrency, an estate plan can help you to:
- Safeguard your cryptocurrency assets.
- Ensure that your cryptocurrency is distributed according to your wishes.
- Minimize taxes on your cryptocurrency holdings.
- Reduce the risk of theft or loss of your cryptocurrency.
- Keep your cryptocurrency secure.
- Review your estate plan periodically.
Creating an estate plan for cryptocurrency is not difficult, but there are a few things to consider before you get started. By taking the time to create an estate plan, you can ensure that your cryptocurrency assets are protected and that they will be distributed according to your wishes.
How do you put cryptocurrency in a will?
If you want to include cryptocurrency in your will, you will need to designate a beneficiary for your cryptocurrency and specify how you want the cryptocurrency to be distributed. You should also take steps to ensure that your cryptocurrency is secure and that your loved ones will be able to access it. You may also want to consider using a trust to hold your cryptocurrency.
A trust is a legal entity that can hold assets on behalf of another person. A trust can be used to manage cryptocurrency and other assets after your death. Trusts can be revocable or irrevocable, and they can be structured in many different ways.
If you’re considering using a trust to hold cryptocurrency, you should speak with an attorney who specializes in estate planning. They can help you to determine whether a trust is right for you and assist you in setting up the trust.
How do I gift cryptocurrency?
If you want to gift cryptocurrency, you will need to designate a recipient and specify how much cryptocurrency you want to give. You will also need to take steps to ensure that the cryptocurrency is secure and that the recipient will be able to access it. It’s important to note that gifting cryptocurrency may have tax implications, so you should speak with a tax advisor before giving any cryptocurrency as a gift.
What if the beneficiary does not want or know about cryptocurrency?
If the beneficiary of your cryptocurrency does not want or know about cryptocurrency, you may want to consider using a trust to hold the cryptocurrency on their behalf. A trust can help to ensure that the cryptocurrency is distributed according to your wishes and that the beneficiary will not have to deal with the cryptocurrency directly. You may also include a clause that explains how they may sell it. They may dispose of the crypto assets in one of these ways:
- Hire a cryptocurrency specialist to manage the sale of the crypto assets on their behalf.
- Sell the cryptocurrency themselves, either through an online exchange or over-the-counter (OTC) trading.
- Give the cryptocurrency to another person who is interested in cryptocurrency. It’s important to note that gifting cryptocurrency may have tax implications, so you should speak with a tax advisor before giving any cryptocurrency as a gift.
What are the risks of not having an estate plan for cryptocurrency?
If you don’t have an estate plan for cryptocurrency, your cryptocurrency could be subject to probate. Probate is a legal process that is used to settle an estate after someone dies. If your cryptocurrency is subject to probate, it could be delayed or even lost. In such a scenario, your loved ones will be denied access to your cryptocurrency accounts. In addition, your cryptocurrency could be subject to estate taxes.
By taking the time to create an estate plan, you can help to ensure that your cryptocurrency is protected and that it will be distributed according to your wishes.
Cryptocurrency can be a valuable asset, but it’s important to take the time to create an estate plan for cryptocurrency. By doing so, you can help to ensure that your cryptocurrency is protected and that it will be distributed according to your wishes.
You should speak with an attorney who specializes in estate planning to discuss whether a trust is right for you. They can assist you in setting up the trust and ensuring that it meets your needs.
