The growing popularity of cryptocurrency means it is increasingly something that must be considered in your estate plan. If you own cryptocurrency, providing instructions in your will or trust is a must.
Cryptocurrency is virtual money that exists only in digital form. The most popular cryptocurrency is Bitcoin, but there are many different types. Usually the only way to access the funds is through a computer, using a personal passcode.
Unlike a bank account, there is no physical record of the currency, so if you own cryptocurrency it is essential that you declare it in your trust or will and also let the person who will be handling your estate (your fiduciary) know about it. Also, unlike with a bank account, the fiduciary does not have to provide a death certificate or power of attorney in order to access the currency. As long as the fiduciary has your passcode, he or she can take control of the currency. This means you need to be sure that your fiduciary is someone you can trust with this information.
You do not want to put the passcode directly into your estate planning documents, which if they go though probate could become public documents. Instead, simply list the cryptocurrency as an asset in your trust or will and put the instructions on how to access it in a separate document that is also referenced in the trust or will. The instructions should be as specific as possible, and it can be updated as needed. If you lose the passcode to the currency, it may not be possible to recover it, so it is important to store it in a safe place, like a safe deposit box.
We include a portfolio binder with our estate plans that organizes all of the information that a successor trustee needs to properly manage your assets. We can help you make a plan for your digital assets.