Your Guide to Cryptocurrency Estate Planning

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As the finance industry changes and more people invest in cryptocurrency, we’ve been getting legal questions about cryptocurrencies. Here’s what you need to know.

Author: Paul Black

Paul’s experience as the son of two parents with big health challenges is what led him to the work he does today and gives him first-hand knowledge of the challenges that many caregivers and family members face. After graduation from GSU Law, Paul was chosen from dozens of applicants nationwide as one of three 2010-2011 Borchard Foundation Law & Aging Fellows. Paul has been named as  a SuperLawyers “Rising Star” in the area of Estate Planning and as a member of Georgia’s “Legal Elite” by Georgia Trend magazine. Published on: October 05, 2020. Last updated on: October 17, 2020.

Understanding Cryptocurrency and Estate Planning

Understanding Cryptocurrency and Estate Planning section

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Cryptocurrencies, such as Bitcoin, Dash, Ripple, and Zcash, are increasingly popular inclusions in detailed estate plans. The IRS views Bitcoin as personal property instead of currency for tax purposes, so there are some tax benefits for prudent investors who accumulate digital assets.

However, the introduction of cryptocurrency can create some issues. Bitcoin wallets are private since only someone with access to the wallet can gain access to its contents. If you pass away unexpectedly without a proper estate plan, your Bitcoin holdings and other digital assets die with you.

Whether you’re exploring your cryptocurrency options for the first time or you have an outdated estate plan, the attorneys at the Law Office of Paul Black are here to help. We can offer solid advice regarding cryptocurrency’s evolving legal landscape and help you prepare strong documentation that plainly communicates your wishes and upholds the security of your digital assets.

What Happens If a Bitcoin Owner Dies?

Unlike conventional assets, like your home, the money in your bank account, or even stocks, cryptocurrencies like Bitcoin are purely digital assets. This means that they could be lost forever if a Bitcoin owner dies unless the appropriate precautionary measures are taken. During the owner’s life, cryptocurrency is accessed using a “private key.” In order to pass cryptocurrency assets to a living beneficiary, the private key will have to be transferred, which can be a complex process.

For cryptocurrencies to be transferred to somebody else, they should be both technologically accessible and legally transferred so that the administrator of the estate can either sell it or transfer it in accordance with the will.

The first problem here is that many individuals do not thoroughly plan for their cryptocurrencies. Additionally, if your administrator knows that your cryptocurrencies exist but they do not have the private key or other means to access them, there is no chance to recover these assets.

Since accessing cryptocurrencies requires access to a lengthy private key or password, somebody must be able to access these codes in order to access and distribute your digital currency as you wish. As such, keeping up-to-date lists of virtual assets and creating a strategy for how successors can access them is a significant and growing area of law.

It is a good idea to assume that your beneficiaries (people who will inherit your assets under your will or through your trust) know nothing about cryptocurrencies. Using plain language, you should draft a step-by-step guide for your beneficiaries explaining how to access your digital assets.

After you have written the guide, ask a trusted friend or family member with no knowledge of how cryptocurrencies work to try to follow the steps. If they are able to, that is a good sign that your future beneficiaries will be able to do the same. If this sounds difficult, rest assured that our knowledgeable estate attorneys are experienced in helping clients draft these types of guides. Let us help you make sure that your beneficiaries can access the digital assets you have worked hard to obtain.

Benefits of Estate Planning for Cryptocurrency

Benefits of Estate Planning for Cryptocurrency

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Estate planning for cryptocurrency requires a balance between the need to keep private keys secret to protect the security of the digital currency while alive and the need to pass these private keys on so they don’t remain stuck in the blockchain after the investor’s death. As experienced attorneys, our law firm can help you find a solution that maintains this balance to ensure that your cryptocurrency can be appropriately passed on to your loved ones.

It is a process of preparing for how your assets and personal property will be transferred to others at the time of your death, with wills and trusts playing vital roles in the process. A Georgia will should be executed in accordance with stringent procedures that serve evidentiary, cautionary, channeling, and protective roles. In other words, requiring compliance with procedures helps make sure that a will is not tampered with and that the intent of the departed is effectuated.

There are many options and circumstances to think about when establishing an estate plan that protects your legacy and personal property in addition to meeting your cryptocurrency objectives. Crucial choices must be made with the guidance of experienced cryptocurrency attorneys. At the Law Office of Paul Black, we have the specialized skills, resources, and experience you need to make sure that your assets, both traditional and digital, are in good hands.

Cryptocurrency Estate Planning Methods

To ensure that your loved ones can access your cryptocurrency after your death, you will want to:

  • List your cryptocurrency in your will.
  • Include details about your digital wallets in your will.
  • Add a memorandum to your will with passwords and PINs.
  • Include a detailed guide to describe how your beneficiaries can access your cryptocurrency.

Since there is no physical record of cryptocurrency, it is vital that you state it in your will and likewise let the individual who will be managing your estate know about it. Unlike with a bank account, the fiduciary does not have to offer a death certificate or Power of Attorney in order to access your cryptocurrency. As long as the fiduciary has your private key or passcode, he or she can take control of the currency, so you’ll want to be sure that your fiduciary is somebody you can trust with these details. Many investors choose to store this information in a safety deposit box or another similarly secure location.

You should avoid putting the passcode straight into your files or estate planning documents. If they go through probate, they might end up being public documents. Rather, just note the cryptocurrency as an asset in your will and put the instructions on how to access it in a different file that is likewise referenced in the will. These instructions will need to be as specific as possible and updated periodically as needed. If you lose the private key to your Bitcoin, it might not be possible to recuperate it, so it is essential to save it in a safe location like a safe deposit box, as you would with other valuable personal property.

If you’re still worried about security or what will happen to your cryptocurrency after your death, you can put your cryptocurrency into a trust. This will keep your cryptocurrency out of probate and maintain the security of vital information since trust documents do not typically enter the public record. If utilizing a living trust to pass down your cryptocurrency interests you, don’t hesitate to seek assistance from a reputable estate planning attorney or law firm.

Cryptocurrency Estate Planning Methods

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Our Cryptocurrency Estate Planning Services

Our Cryptocurrency Estate Planning Services

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With cautious preparation, you can protect your cryptocurrency assets and pass those assets on to successors through your estate plan. At the Law Office of Paul Black, our Atlanta asset protection lawyers work with clients to establish a reliable and secure access strategy for their cryptocurrency. 

The following are a few of the cryptocurrency estate planning services we offer:

  • Choosing an individual who can access the cryptocurrency. Ideally, this individual should have some knowledge about cryptocurrency and should not be a beneficiary of the estate.
  • Composing an instruction letter for distributing the cryptocurrency that does not consist of any crypto keys, access codes, or seeds. This letter should instead contain the location and inventory of the assets and the list of hardware required to access them.
  • Advising you on storing hard wallet backups in access-controlled areas in a water-resistant, fire-resistant container. 
  • Incapacity planning by including language in a Durable Power of Attorney supplying access to the cryptocurrency in case you become disabled.
  • Dispersing the cryptocurrency through a will and naming the individual selected to access these assets on behalf of the estate.
  • Placing the cryptocurrency in a trust to protect these assets and prevent the lengthy probate procedure from posing security risks and unnecessarily tying up assets.

The above list is not exhaustive. When you meet with our Georgia estate planning lawyers, our law firm can guide you through each of the ways we can help protect your cryptocurrency for your beneficiaries.

Contact a Cryptocurrency Lawyer Today

Contact a Cryptocurrency Estate Planning Lawyer Today

Talk with an Estate Planning Expert Today.

As it continues to grow in popularity and its investors begin to age, the future of cryptocurrency is uncertain. However, what is certain is that you need a detailed and up-to-date estate plan, and you should not let your financial investment die with you. 

Since this technology is still in its infancy, the laws regarding cryptocurrency are rapidly evolving and changing. Even if you already have an estate plan that covers your virtual assets, it’s important to seek renewed legal advice and re-evaluate your strategy frequently with a cryptocurrency estate planning attorney to ensure that your estate plan abides by all updated laws and regulations as well as your own personal circumstances. Our attorneys are experts in offering customized legal advice and preparing estate planning documents to fit each person’s unique situation.

No matter your situation, we invite you to schedule a consultation with our law firm, where we will listen to your objectives and guide you through your options. Contact us online or call (404) 410-6820 today to get started.

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The Law Office of Paul Black

info@georgia-estatelaw.com
404.410.6820

Decatur Office Location:
One West Court Square, Suite 750 Decatur, Georgia 30030

Decatur Office Location

The Law Office of Paul Black

info@georgia-estatelaw.com
404.410.6820

Dunwoody Office Location:
2002 Summit Blvd, Suite 300 Atlanta, Georgia 30319

Dunwoody Office Location