james bondCryptocurrency is the big thing in financial planning. Some people love it, some people hate it, and others are undecided. When you’re estate planning, if you have cryptocurrency, it is important to be very detailed about the crypto, no matter whether it is Bitcoin or something else. You should include information about where the currency is held and what it is. You should also include language in your documents that allows your trustee, if there is one, to manage the crypto without any liability.

In this article, we’ll talk about some of the basics when it comes to cryptocurrency. You can estate plan with this volatile digital currency, and the results can be quite beneficial for you and your family.

What is Cryptocurrency?

If you’ve seen any headlines in the past year, you’ve probably seen crypto mentioned time and again. Cryptocurrency is a collection of decentralized binary data. The binary data acts as a digital exchange. Basically, you buy Bitcoin, Ripple, or Litcoin with regular currency, and you can use it as a form of payment. The value of the cryptocurrency is volatile, plummeting and rising frequently. The main allure of crypto is that it is decentralized. It can be circulated without the need for a bank or government to act as a central monetary authority.

What Loved Ones Need to Know 

Basically, if no one knows you have it, then you will lose it, once you die. You need to treat crypto like any other asset when you’re making your estate plan—at least, as far as making sure it is included goes. Loved ones need to know that your crypto stash exists. They need to know where the crypto is, how to access it, and what to do with them. Investors need to choose and execute an estate plan that is based on their circumstances and holdings. If you have a more complex estate, you might need to seek the help of a trustee or custodian. 

Tips for a Secure Transfer

While the way cryptocurrency works into your estate plan depends on the value and nature of your holding, there are some good tips for ensuring that the assets don’t get lost after you die. These include: 

  • With a trusted friend or family member (preferably one who understands at least rudimentarily how cryptocurrency works), share your private keys and seed phrase.
  • Splinter the private keys and seed phrase among several trusted friends or family members. That way, no one has total control over your digital assets.
  • Create a trust. Then, transfer your crypto assets to the trust. You can designated a family member, corporation, or other authorized entity to manage the trust as a trustee.
  • Place your assets in custody, using something like a hardware wallet or software application. 
  • Utilize what is known as a “dead man’s switch app,” which will trigger the transfer of your crypto assets.
  • Instead of choosing a self-sovereign wallet, pick a cascading multi-signature wallet. 

One or a combination of these tips might be helpful to you in deciding how you want to manage the asset transfer. The main key is to be strategic and careful about how you structure your plan. If in doubt, contact an attorney.

Digital Asset Custodian Services 

There are companies out there that offer custodian services. These include businesses like Unchained Capital, Casa, BlockFi, Genesis, and Anchorage, among others. Some companies offer custodian and trustee services. Some trust companies tend to create lifetime discretionary trusts. But, again, there is no template for a successful digital estate plan. Your solutions can range from the complex to the simple—but almost all plans require some flexibility. 

An estate planning attorney familiar with cryptocurrency can help you manage it. A secure transfer is possible, but there are a lot of considerations that go with it. Don’t wait to include your digital assets in your estate plan. Visit our website and learn more about cryptocurrency.