By Sarah Stewart Legal Group
Cryptocurrency and Bitcoin have quickly become household names. From a meager beginning not even a decade ago, the currencies have reached astounding popularity.
In 2009, Satoshi Nakamoto created the first ever cryptocurrency known as Bitcoin and the Bitcoin network. In 2011, other cryptocurrencies were created. By October 2012, more than 1,000 companies accepted Bitcoin as payment for goods and services.
In 2013, the coins were selling for $22 per coin, increasing to $160 per coin by the end of the year. In December of 2017, the coins were worth $14,000 a piece and more than 160,000 merchants accepted the coins as payment for goods and services.
The extreme popularity and surges in value of the coin has begged the question, how do the owners plan for the transfer of the coins when they die?
Estate Planning for Bitcoin, other Cryptocurrencies, and Digital Assets
Since cryptocurrencies and other kinds of digital assets, such as travel and reward programs, are constantly changing, they are usually not addressed in typical estate planning documents like Wills and Trusts.
But, as with other assets that we own, digital assets are still a very real and important part of our lives. As such, they deserve the same consideration and planning about where they should go after our deaths as any other assets we own. We must be proactive in planning their transfer and creating the documents we need to help our loved ones navigate our digital assets.
One option is to appoint a digital trustee in your Will or trust to exclusively handle the transfer of your digital assets. In selecting this special trustee, you would want to be sure they are technologically savvy and trustworthy. You would also want to be sure to leave them clear directions on how you want your digital assets transferred.
List of Assets
For any estate plan, knowledge of where the assets are held is crucial. But, this is probably even more true of digital assets. Trustees will need to know where you are enrolled in rewards and travel programs and where other digital assets are held. These items are fairly easy to transfer, but the trustee has to know where to find them.
Some assets, such as cryptocurrencies, require a password. So, keeping a list of all of your current passwords, whether on paper, online, or on a computer or other device where your trustee can gain access, is vital for transfers. Cryptocurrencies generally do not keep a centralized registry, so loss of these passwords can lead to a large loss of assets for your loved ones.
Passwords should not be kept in Wills because Wills have to be probated and are listed publicly upon the creator’s death. That means anyone with the knowledge of how to access a Court case could find your passwords and transfer your accounts.
Good options for password storage include online password management systems or wallets; having a secure document on your computer or other device that your trustee knows how to access; or providing a paper document kept somewhere safe, along with your other planning documents.
Specific Rules for Each Account
Many digital accounts will have separate, specific rules for transferring ownership. So, your trustee will have to be able to understand each company’s specific rules and follow their directions to transfer your property to your loved ones. Make sure you choose a trustee who can handle this responsibility.
Bitcoin and other digital assets are growing in popularity. They continue to change and evolve. So, it is important to have a plan in place for these assets at your death.