When people think of creating an estate plan, they may consider including money from bank accounts, stocks, their home and other physical and financial assets. One new facet of estate planning is cryptocurrency. This is a digital currency that is not tied to a central bank as is the case for most traditional currency. Those who own cryptocurrency here in Michigan and elsewhere may assume that it will easily pass to their heirs upon their death, but that may not be the case. Fortunately, experts have advice for people who want to include cryptocurrency, like Bitcoin, as part of an estate plan.
First, cryptocurrency generally requires a private key or seed phrase in order to access it. If owners aren’t careful with the key or phrase, their currency could be accessed by anyone. This is especially concerning as cryptocurrency can’t be traced. An estate plan will need to secure the private key or seed phrase, but ensure it is accessible to those who need it.
Next, owners need to be aware that cryptocurrency isn’t like a lot of other financial assets they may pass on. It can be treated like stock, as its value can increase or decrease in the same manner, but the risks are greater. Cryptocurrency is not regulated by any government, so if an owner loses any there is no automatic insurance as with other assets. Furthermore, including it as part of a trust may not be as simple as one may think. A trust needs to specifically outline provisions for cryptocurrency, otherwise it may not be able to pass it to a trustee.
Even with all of these precautions, anyone here in Michigan owning cryptocurrency and other assets may want to consult an estate planning attorney. An experienced attorney can work with an estate owner to determine precisely how he or she wants all of their assets handled, regardless of what they may be. Doing so may be the best way to leave one’s legacy to those they care for most.
