News channels have been reporting the massive rise in the popularity and value of cryptocurrency, for example “Bitcoin.” Cryptocurrency is virtual money that is not backed by the government and is typically not held by banks or other traditional financial institutions.
Unfortunately, as cryptocurrency’s popularity and value has continued to rise, people’s estate planning has fallen behind the trend. If you pass away without addressing your cryptocurrency in your estate plan–or without making arrangements for your personal representative to gain access–it could be gone forever.
How to address cryptocurrency in your estate plan
If you have digital currency, understand that it is an asset that will be subject to distribution just like your other assets. As such, you should consider who you want to have it, when you want them to receive it, and what you need to do so that they can access it.
To do this, address cryptocurrency in your will and estate plan and consider having a letter like this one that directly addresses cyptocurrency. You should be mindful of whether the intended recipient is capable of managing such a complicated and volatile asset. You will also want to provide access information to ensure a personal representative or other designated party can access your account when the time comes.
Avoiding costly mistakes
If you do not address cryptocurrency in your estate plan, then it will be as if it never existed. This is especially true if you have not told anyone about it in the first place.
Another costly mistake would be to oversimplify your directions for distribution. Leaving instructions open to interpretation or placing highly technical requirements in the hands of someone unfamiliar with the technology can lead to unsecured accounts and property loss.
Finally, addressing complicated assets like cryptocurrency without the guidance of an experienced estate planning attorney can prove to be an expensive misstep. An attorney can spot problems and gaps in your plan that you may overlook, and they can help you protect your wishes and property.