What if millions, or even billions, of dollars in wealth suddenly disappeared? What if some of your assets are lost after your death and your heirs are unable to recover them? With the rising popularity and value of cryptocurrency, these scenarios are now a very real possibility.
What Is Cryptocurrency?
A cryptocurrency is a digital asset designed to work as a virtual medium of exchange. The "crypto" part of the name comes from the fact that the currency uses cryptography to secure transactions. Think of it like wiring money or trading stocks (all ones and zeros), except that cryptocurrency is not regulated by a central bank or securities commission.
This lack of regulation poses a big problem for investors. Cryptocurrency appeals to many investors because it is intensely private. In other words, no one knows if you own Bitcoins, for example, unless you tell them. So if you die unexpectedly and leave no records of your cryptocurrency wealth, how will your heirs be able to access those assets?
Cryptocurrency and Estate Planning
As with all digital assets, any cryptocurrency you own should be incorporated into your estate plan. We have created a guide to digital estate planning, and the principles in that guide generally hold true for cryptocurrency. However, unlike many other digital assets, the secrecy of cryptocurrency means that creating a digital estate plan is the ONLY way you can ensure the safe transfer of your cryptocurrency after death.
Unlike banks accounts or stock portfolios, cryptocurrencies do not send statements to the IRS. They do not have a customer service number. They do not have a "search" function whereby you can find whether someone has an account. All account information is private.
Even if you tell your heirs that you own cryptocurrency, you need to tell them how to access those assets. What do they need to know in order to find and control your cryptocurrency? Consider including the type of cryptocurrency, your passcode, answers to your security questions, and other important information. Without passing along this information to your executor or your heirs, your digital assets could be lost forever.
Create Your Digital Estate Plan Today
If no one knows about your cryptocurrency investments, all that wealth could essentially float away into the Internet abyss after you die. To discuss estate planning and how you can incorporate digital assets like cryptocurrency into your estate plan, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation appointment.
[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]