An increasing number of Americans hold valuable blockchain assets. As these holdings gain popularity, an increasing number of owners are rightfully concerned with how to include such assets in their estate plan. Michigan cryptocurrency owners must work through some unique planning challenges in order to pass these assets along effectively. These challenges include:
- Disclosure of crypto assets: Estate planners and executors often rely heavily on account statements from traditional banks to establish what is held where. However, when it comes to the blockchain, beneficiaries may not even know of the existence of assets without a clear disclosure. Since there are no institutions or formal accounts involved, the onus is on the estate planner to ensure the locations and quantities of all assets are clearly documented.
- Transfer of crypto assets: As important as providing information on the existence and whereabouts of crypto assets is providing the information needed to access these holdings. Without a private key, there are absolutely no other workarounds for beneficiaries to access crypto assets. While the private key system can make it easier for beneficiaries to access assets, communicating this information in a secure way that cannot be lost is critical.
- Security before death: Because anyone with the private key could potentially access one’s crypto assets, planners can be rightly concerned about how they record this information as part of an estate plan. Options range from a safety deposit box to technical solutions that arrange for assets to be automatically transferred upon death. There are pros and cons to each possible solution, so it’s a good idea to survey options, depending on one’s specific situation and concerns.
Individuals with crypto assets must keep these challenges in mind when estate planning. The good news is that, if these challenges are properly addressed, transitioning crypto assets can actually be easier than holdings in bank accounts. Provided the right person has the right private key and all relevant information to distribute funds, smooth estate administration with crypto assets is very much attainable. Those who need support for estate planning with or without such assets should speak with a Michigan estate planning attorney.
