This is a new asset class that estate planning attorneys are likely to see in their clients’ portfolios in the future. It is important to include language in every will and trust that permits the fiduciaries to access the digital records necessary to properly administer any cryptocurrency in the estate.
Impact on estate with Cryptocurrency.
Estate planning for investment portfolios has always been somewhat complicated, but in the era of digital currencies, it has gotten significantly more so. It used to be that investors could write out a will and include items like stock certificates in a safe deposit box for their next of kin and that the transfer of investments would move smoothly. Now, there are new laws and protocols which must be observed if an investor wants to be sure that his or her digital assets are safely and securely transferred when the time comes.
Estate Planning Technique for Cryptocurrency
- Adding cryptocurrency to your Estate Plan is much simpler than it may seem. Especially since the hard part of starting and securing your investments has passed. The first step to this process is to list each type of cryptocurrency you have in your Trust. The reason you do this is to ensure that it can be dispersed amongst your beneficiaries according to your wishes.
- Make sure to include each type of cryptocurrency you have invested in to ensure that none of it is lost and swept up in the residue as many who failed to apply with these principles got a lost while incapacitated.
- Remainder of your estate, keeping your family/beneficiaries informed can also help mitigate the chances of any uncounted cryptocurrency.
- You’ll want to make sure that any and all digital wallets are listed and accounted for. Many Websites and Applications have two factor authentications so it would be important to include access to any device that those authentication codes would be sent to.
- It is also important that you place any passwords or secure keys in a secure location with directions on how your beneficiaries may access everything about your cryptocurrency in your Estate Plan.
- You wouldn’t want your beneficiaries to be able to find the accounts without any means to access them. If you make it easy for your beneficiaries to access the account, you run the risk of it becoming easy for hackers and thieves to do so as well.
- Essentially, speaking with these persons before finalizing your Estate Plan so they can have an easier time accessing the information they will need once the time comes for the Estate Plan to be executed.
Why you should plan your estate immediately
1. It provides for your immediate family.
An estate plan will provide enough money for your surviving spouse to continue to care for the family. If both you and your spouse pass, an estate plan will name appointed guardians to care for your children.
2. It will ensure your property goes to the right beneficiaries.
Your estate plan will outline exactly where your assets like cryptocurrencies are to go in the event of your death. This leaves no questions to be resolved by the courts or cause for family discord.
3. It minimizes expenses and taxes.
When you take care to create an estate plan, you should be able to keep the cost of transferring any property to your named beneficiaries. You can use your estate plan to set up a special trust for your children and grandchildren
4. It eases the burden on your family.
It can be difficult to plan the funeral of a loved one when grieving. When working on your estate plan, you can outline your wishes for funeral arrangements and even set aside funds for them. This takes some of the burdens off your family during this difficult time.
5. To support a favourite cause.
If you are passionate about a local cause or charitable organization, an estate plan can allow you to support them after your passing.
6. It can be used to plan for any incapacity.
Life is unpredictable. If you should ever become mentally or physically incapacitated, an estate plan will outline your wishes regarding life and who will make medical decisions on your behalf.
7. It reduces taxes that take place on your estate.
By crafting an estate plan, you should be able to minimize the amount of taxes collected on your estate, which results in your beneficiaries keeping more of the money you set aside for them.
8. It establishes trustees over your estate.
You’ll need someone to serve as the executor of your estate to make sure everything is handled properly. Your estate plan will name this person, which will save money and simplify the administration process.
9. It provides for those who many need help.
Do you have a child who has a disability? Or perhaps you have grandchildren who will be attending college in the future. Through your estate plan, you can set up a special trust to provide funds to support them.
10. Ensure a business continues with a succession plan.
If you own your own business, you’ll want to establish some kind of plan to keep it going after you pass. An estate plan will name your successor and outline what happens to your interest in the business.
Please contact any of our estate planning attorneys today. If you would like to learn more about estate planning with Cryptocurrency.