Cryptocurrency functions differently from traditional money.
Much has changed over just the past several decades.
Computers can now be taken from one location to another.
Phones now do more than simply make phone calls.
Asset holdings have even changed as people hold cryptocurrency.
According to a recent The Indiana Gazette article titled “Millennial Money: What happens to your crypto if you die?,” those who own cryptocurrency must take appropriate actions to account for it in their estate planning.
The nature of “crypto” makes it more vulnerable to being lost when you die.
Cryptocurrency is stored in a Crypto Wallet.
These are either kept on a thumb drive or managed using a website or an app.
If you plan to buy and sell your crypto, you will utilized a Hot Wallet.
Because these are connected to the internet at all times, they are convenient but less secure.
A Cold Wallet is for long-term storage of cryptocurrency.
Having both is similar to having a savings account and a checking account.
A key is necessary to access these wallets and is essentially a randomly generated password of numbers and letters.
Some owners choose to be the sole individuals with access to the key.
Others choose for a third-party crypto exchange to maintain access, but these provide less owner control and are often more vulnerable to hacking.
Utilizing both is also an option.
Even if you maintain access by storing your cryptocurrency on a physical device, someone with access to your key could steal your currency from you or your heirs.
Despite this fear, someone else should know your key.
Because otherwise you could lose these assets forever if you become incapacitated or die!
How should you handle these assets?
First, do not put cryptocurrency information in your last will and testament.
This document is filed with the probate court and becomes public record.
By adding information to your last will, you would be allowing anyone to access it.
A better idea is to name beneficiaries in your last will and leave access information in a secure location with instructions to your executor in a separate estate planning document.
Although certain platforms like Coinbase have a system for heirs to access the cryptocurrency after the owner dies, not all platforms do this.
To ensure your cryptocurrency is not lost when you die, you will want to create a plan yourself.
Be sure to review and update your cryptocurrency planning regularly, as well as your entire estate plan.
Only regular maintenance can account for changes in family, updates to the digital platform, and edits to instructions for executors.
Reference: The Indiana Gazette (Nov. 7, 2021) “Millennial Money: What happens to your crypto if you die?”