With 46 million Americans now owning Bitcoin and many more investing in other cryptocurrencies, it is no wonder that cryptoassets have become a hot topic in estate planning law. Failing to plan for these assets can have quite significant consequences, as there is no bank administration or legal avenue to gain access without a key in the case of cryptocurrency. Here are some things that California cryptoasset owners should do in order to secure the transition of their holdings after they pass away:
- Document the location of the assets, as well as the passwords or “private keys.” Knowing the private key and location of cryptoassets is essential in order for the assets to be accessed — even by the owners themselves. There is no alternative way to access cryptocurrency holdings without the key, so this information is extremely important to make available to an executor.
- Pick a trustworthy executor or trustee and communicate with them. It is important that the person responsible for accessing the cryptoassets not only have the password and location, but that they understand how cryptocurrency works enough to properly manage the assets. It can prove invaluable to have a trustworthy and knowledgeable person in this position when these types of assets are in play. In some cases, it might be worthwhile to have a separate trustee for digital assets specifically.
- Ensure estate planning documents clearly state who can access this information and what oversight will be provided. Digital assets can be tricky to deal with in estate planning, so it is important that documents clearly communicate one’s intention for a certain trustee or executor to have these details. This can keep things smooth during the estate administration process.
Cryptocurrencies are increasingly valuable assets. When it comes to estate planning, these holdings present some significant complications that other assets do not, especially in terms of how they can be found and accessed. As such, cryptocurrency owners would be well-advised to speak with an estate planning attorney to ensure everything is in place to transition these assets as easily as possible when they pass away.