Crypto and non-fungible tokens (NFTs) are popular digital assets.
The digital realm is continuing to grow in scope and importance.
Although some people prefer to have physical assets, most have embraced the digital world to some degree.
Some people limit their interactions to email or photo storage.
Others have expanded their involvement to trading digital currency.
According to a recent Kiplinger article titled “Got Cryptocurrency or NFTs? They Need to Be in Your Estate Plan,” investment in digital currency is growing.
As people expand their portfolios to include NFTs and cryptocurrency, they will need to take steps to include these in their estate planning.
Without appropriate planning, these assets could easily be lost to heirs.
Although Bitcoin is the most well-known cryptocurrency, other kinds include Binance Coin, Ethereum, and Thether.
NFTs are collectible, unique, and tradable digital assets.
These are purchased in the metaverse through a bidding process.
With sales of NFTs estimated to have exceeded $17 billion in 2021, this asset class cannot be overlooked.
How does one secure, store, and distribute digital currency?
To access crypto, a private key is required.
The key is a stream of alphanumeric characters stored in a digital wallet or cold storage.
This key is only to be known by the owner.
The person who has possession of the key can spend, buy, or sell the currency.
To ensure heirs are able to inherit these assets, your fiduciary or loved ones should know what you own as well as how to access them.
It may even be necessary to provide instructions regarding what to do with them.
What options do you have?
You could use a hardware wallet or software application to place NFTs and crypto into custody or to share the private key.
Several companies now exist to serve this need.
Another option would be to create a secure spreadsheet with the necessary information on your digital assets.
Utilizing a trust to own the NFTs or crypto accounts is not an efficient option at this time.
Although some digital wallets do allow for this, it is not universal.
Additionally, beneficiary designations cannot be listed on crypto accounts at this time.
Currently, the best means for transferring NFTs and cryptocurrency is to use a last will and testament to direct them through probate.
You should grant digital asset powers to your fiduciary in your durable power of attorney, last will and testament, or your trust.
Although not all states have adopted the Uniform Fiduciary Access to Digital Assets Act (UFADAA) or the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), 46 states have.
Kansas and Missouri are among the 46 states.
If your state is one of these 46, your loved ones will have an easier time accessing your cryptocurrency and NFTs if you die or become incapacitated.
Start planning now to protect your digital assets.
Reference: Kiplinger (May 23, 2022) “Got Cryptocurrency or NFTs? They Need to Be in Your Estate Plan”