Estate Planning in the Digital Age

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Estate Planning in the Digital Age

You are likely familiar with traditional estate planning documents like wills, trusts and durable power of attorneys to dictate how your assets such as your bank and investment accounts, home, and personal belongings are distributed after your passing. But have you also planned for what happens to your digital property after you pass away? In today's digital age, no estate plan is complete without instructions to access your digital accounts and property after you pass away.

Check out the video below for some guidance on estate planning for your digital property.

Should Cryptocurrency Be a Part of Your Estate Plan?

Cryptocurrency is quickly becoming a prominent part of many people’s estate plans. That is because many people who own cryptocurrency worry about whether their crypto assets will go to their loved ones when they pass. It is imperative that you realize that your crypto should be a part of and documented in your estate plan.

As you may know, cryptocurrency is a form of digital currency in which transactions are verified and all records are kept using cryptography, commonly referred to as blockchain technology. Having your currency verified by a blockchain system is in contrast to the currency that is regulated by a centralized authority such as a sovereign government. There are thousands of different types of cryptocurrencies such as Ethereum, Litecoin, Bitcoin, and Chainlink, just to name a few. You can, of course, use digital currency to make purchases or make investments.

Protecting Cryptocurrency Assets in an Estate Plan

The IRS now considers cryptocurrency a taxable asset, as it is now classified as property. Because of this, your cryptocurrency can be a target for any legal action brought against you if you owe money to creditors.

Protecting your cryptocurrency assets will ensure that if you become part of any legal action, you will have an extra layer of protection, and it will be a greater challenge for any entity to try and seize them. Many people are investing in cryptocurrency because of the potential for high returns. Due to the increase in wealth, you will want to pass your digital currency to your loved ones. Adding your cryptocurrency to your estate plan, it will protect the current and future value of your cryptocurrency.

There are certain steps you can take to pass your cryptocurrency to your beneficiaries. They include:

Make sure your trustee or fiduciary has your password ‘key’. This will be necessary so they can take control of your account when you pass away. In the alternative, you may want to store your digital key in a safe or safety deposit box.
A death certificate is not necessary, your beneficiary, trustee, or another fiduciary will be able to immediately access your cryptocurrency account.
Your estate planning attorney can add a clause to your will or other estate planning document that grants your fiduciary the power to access, retain, and manage your cryptocurrency in order to avoid liability under privacy laws.

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