CRYPTOCURRENCY AND YOUR ESTATE PLAN

Cryptocurrencies, particularly Bitcoin, have been all over the news as an investment opportunity shifting the reputation it previously held as a currency for the “dark web.”

Bitcoin is a decentralized currency and payment system. No actual coins are used but instead individuals purchase “keys” or account numbers. Accuracy of the key is confirmed through encryption algorithms and a ledger of coin transactions is distributed to all users. The ledger can then be consulted to confirm that the same coin has not already been spent.

So how do you include bitcoins in your estate plan? Bitcoins fall into the category of “digital asset.” Therefore, you should grant your executor, trustee, or power of attorney (fiduciary) the authority to access and control your digital assets which is done through a will, trust, or power of attorney document. Unlike a traditional bank account Bitcoins do not necessarily have title. This means you cannot request a change in ownership form from Bitcoin and list your revocable trust as the new owner. Nor can you contact Bitcoin to inform them of an owner’s death in order to transfer assets to heirs. Instead, your fiduciary must have access to your “key.” Keys can be held in a wallet which is either digital, paper (print out the key) or hardware (thumb drive). Like all digital assets it is important to make sure any successor trustee or fiduciary has access to your passwords. However, with the current value of Bitcoin being $6,293.12 per coin, it is even more imperative to come up with a digital password management system.

For more information on creating an estate plan contact the Law Office of Stephanie Macuiba at (949) 697-5958.