Bitcoin, Dogecoin, Cryptocurrency. While these terms are still relatively new to most of us, “digital currency” is rising in popularity and adding significant wealth to the portfolios of young and tech-savvy investors across the globe.
Our Tampa estate planning lawyers won’t weigh in on whether that’s a good or a bad thing; however, we will explore the effect of digital assets on estate planning. Namely, what happens to your digital assets if something happens to you?
First: what is cryptocurrency?
Think of cryptocurrency as digital money. You can use it to buy goods and services, just like anything else. And you can send it to others over the internet like you do with Venmo and Paypal. The currency itself is backed by blockchain technology, which is a decentralized system that securely records and manages all cryptocurrency transactions. Long story short, the risk of your money disappearing from the internet one day using blockchain technology is relatively low.
Why do I need to include my cryptocurrency in my estate plan?
Since cryptocurrencies are assets, you will need a plan that directs what should happen to your Bitcoin or whatever you hold if something happens to you. If you don’t, your digital assets will be subject to probate proceedings here in Florida. It could take your heirs months (even years) before they can access your digital wealth, and they will have legal fees to pay on top of all of that. It doesn’t matter if your family knows where the accounts are and the passwords to access them; your cryptocurrency can still get held up in court.
Speaking of passwords, that brings us to another key to any good estate plan: you should have your accounts listed in one central place with details on how to access them. Estate plans aren’t just powers of attorney and last wills and testaments – they also include the information needed to help your loved ones administer your estate as quickly and painlessly as possible. There have been stories recently in the news where passwords to cryptocurrencies have been forgotten and the asset was declared “lost forever.” Without a password, it’s the same as flushing money down the toilet, as there is no way for the funds to be recovered.
Putting a plan in place can stop this from happening and give your family peace of mind that your digital currency will be handled properly if something happens to you. An experienced Tampa estate planning attorney can speak with you about the details of your estate plan and how to craft it so it can account for your digital assets.
If you want to learn more about cryptocurrency and estate planning, or if you currently have an estate plan and want to see how an investment in cryptocurrency can affect it, please give us a call at (813) 438-8503 to set up a complimentary consultation.