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May 28, 2021

Estate Planning for Cryptocurrency

Cryptocurrency is a unique financial asset. Accordingly, it requires unique consideration when planning your estate.

Financial assets such as retirement accounts or checking accounts, are typically transferred to your trust by listing the trust as a beneficiary, POD (payable-on-death designee), or via a similar convention. However, any cryptocurrency stored in your digital wallet is intended to be confidential. Ownership records remain anonymous. Accordingly, we cannot attach a Trust directly to your digital wallet by traditional conventions like TODs, etc.

How do you transfer cryptocurrency to your Trust?

There are two steps to transferring your digital wallet to your Trust: a legal step and a practical step.

1. The legal step requires transferring your digital wallet to your Trust by an Assignment of Personal Property. We execute this document in conjunction with your Trust. Essentially, it moves all your assets that do not have a “paper trail” into your Trust. Your Assignment of Personal Property needs to explicitly include cryptocurrency in your list of assets. However, it does not need to list the specific forms of cryptocurrency you own or any amounts (obviously these details are prone to change and fluctuation).

2. The practical step requires creating Access Instructions. Simply moving your cryptocurrency into your Trust is not sufficient for your Successor Trustee to access your digital wallet and distribute your cryptocurrency to your Beneficiaries. You will need to leave specific Access Instructions for your Successor Trustee. This must include any information necessary to access your digital wallet (username, password, security questions, etc.).

How will my Successor Trustee know where to find my Access Instructions?

You should always store your Access Instructions with your Trust. Ideally, both documents (along with other estate planning documents) should be stored in a fire-proof safe or safe deposit box. The whereabouts of which should be shared with your Successor Trustee, so they can be accessed at the time of your death.

Will anyone know that I have cryptocurrency if I include it in my Trust?

No (unless they are your Successor Trustee or Beneficiary). Trusts are intended to be confidential documents. By contrast a Will, subjects the contents of your Will, and any assets transferred through it, to public inspection via Probate Administration. A Trust on the other hand is kept private, and all transitions of ownership occur in a discrete and efficient manner.

This article represents the opinion of the author and is intended for educational purposes. This article does not constitute legal advice, nor does it create an attorney-client relationship. One should always consult with an experienced attorney before making estate planning decisions.

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