As digital assets like cryptocurrencies and NFTs become more widely accepted your estate plan should be updated to incorporate these assets into your estate and address their transfer. These assets have little tangible evidence of ownership, being held in online wallets and secured by private keys and passwords. Without quick access and other information this wealth can vanish. Their highly volatile value, lack of regulation, and questionable location for purposes of legal jurisdiction also complicate estate planning.
The inheritance rules and tax requirements that apply to crypto assets generally treat them as personal property like artwork. Due to their value, addressing crypto assets in an estate, once located and secured, could have substantial financial implications for your estate and heirs. Meticulous records need to be kept, and expert appraisals obtained. They need to be identified and access provided. Unique tax laws are applicable, and their volatile value can affect an heir or owner’s access to need-based benefits and raise tax issues for them. Access for estates and beneficiaries needs to be clearly documented and acceptable to third parties that control the accounts or assets.
Any estate with crypto assets should reference them in both a will and a trust. Knowledgeable and capable trustees and executors should be appointed and beneficiaries and heirs clearly identified. If appropriate, a “Digital Executor” can be appointed to address any crypto assets, or if the assets are substantial, a “Crypto Custodian” can be used to maintain the investment and ensure a smooth transition. An inventory should be maintained with all keys or passwords secured and available on death or disability. If the asset allows, designate the beneficiary with its originator.
As traditional estate planners and planning vehicles may not be equipped to address crypto assets in your estate, select knowledgeable and experienced professionals to advise you. The estate planning attorneys at Brooks, Tarulis & Tibble, LLC are equipped to advise you on estate planning for crypto assets or to refer you to the proper professionals who can. Should you have any questions or issues, please contact us.