Cryptocurrency is so new that many investors (people that own cryptocurrency) forget to include it in their will or trust. In fact, Bitcoin, which was the first successful cryptocurrency, only began in 2009, according to Forbes, and it was not until 2010 that it was first sold by an investor.
One person sold 10,000 Bitcoins for two pizzas, an amount of Bitcoins that, today, would be worth nearly $100 million. With so much uncertainty surrounding Bitcoin and the volatility of cryptocurrencies in general, it is no wonder that investors forget to fill in their heirs about what to do with their investments if they should pass away.
If you own any amount of cryptocurrency, even if you believe that it is too small of an amount to worry about, you need to speak with an estate planning attorney at once. After all, when it comes to cryptocurrency, what was worth two pizzas just a few years ago is now worth nearly the entire GDP of a small country.
How is Cryptocurrency Different Than Personal Savings in a Bank Account or Real Estate?
Cryptocurrency is practically built on secrecy. The Bitcoins themselves, which of course have no physical presence, are stored in a “wallet,” which is just on a personal computer, or on the Cloud.
If you do not leave behind your password, personal identification number (PIN), and mnemonic phrase, your cryptocurrency may be lost forever, out of the hands of your beneficiaries who were allowed to accept all of your other assets without any issues.
Cryptocurrency is different than traditional financial assets, such as a bank account, 401(K), or stock holdings for a variety of reasons. These differences, such as those listed below, can complicate the transfer of cryptocurrency to heirs when the Bitcoin, Ether, Litecoin, or Zcash investor passes away, according to Barron’s:
- Cryptocurrency does not require the investor to disclose their personal information, such as their name;
- Account details are kept (or should be kept) on paper documents, which presents a problem of losing them or having them getting in the wrong person’s hands, or simply being thrown away;
- The investor must be able to tell their heirs what they own, how they acquired it, and how it can be accessed; and
- Cryptocurrencies do not necessarily require the investor to name a beneficiary, so you must take this matter into your own hands by working closely with a trusted estate planning lawyer.
Call Maryland Estate Planning Attorney Tara K. Frame Today
With so much uncertainty surrounding cryptocurrency these days, a will or trust will at least add some stability to your family’s future after you are gone. If you have not yet included your cryptocurrency investments into your living will or trust, the time to do so is now. The Pasadena, Maryland estate planning attorneys at the law offices of Frame & Frame are available for a consultation. Call or email us today to set up a meeting.
Resources:
forbes.com/sites/bernardmarr/2017/12/06/a-short-history-of-bitcoin-and-crypto-currency-everyone-should-read/
barrons.com/articles/bitcoin-should-be-part-of-estate-planning-too-1517519730