If you’re like most people, you are at least marginally familiar with the term “Bitcoin,” which leads the pack in the growing popularity of cryptocurrency. These digital currencies are often highly secure by design, yet they are not regulated by any government because they are not government issued.
If you are a little more tech-savvy or investment-savvy, you may be more than simply familiar with cryptocurrency. You may actually own some. Can this be included in your estate plan? And if so, how?
A recent article in Forbes notes that cryptocurrency can be placed into (and therefore owned by) a trust, but that some specific language must be included in order to do so. Moreover, your attorney will need to draft some specific tax provisions into the trust, because the IRS treats cryptocurrency not as currency but as property. Therefore, the value is set differently than the standard exchange rate into U.S. dollars.
The article also warns that you’ll need to take special steps to balance securing the cryptocurrency and ensuring that your loved ones can access it when you are gone. This includes protecting the private key or seed phrase.
The discussion about crypto currency is part of a larger trend in estate planning to plan for and protect digital assets generally. As most of us make the shift to living more of life online, we are cultivating considerable cloud-based assets and property, and those will eventually need to be included in our estate plans.
Whether you own cryptocurrency or have no idea what it is, there is no time like the present to plan your estate and ensure that all your assets are accounted for. To get started, contact our office and speak to an experienced estate planning attorney.