As cryptocurrency becomes more mainstream, it is critical to have a plan in place for these assets. More and more frequently, we hear stories of crypto millionaires and billionaires and celebrities endorsing crypto. We also hear stories of individuals with millions or billions of cryptocurrency that they cannot access because of lost keys.
The need for a plan is extremely critical with crypto assets because they are not held by trusted financial institutions like traditional investment accounts. Instead, technology and artificial intelligence or a computer is regulating the transfer and custody of the cryptocurrency. Crypto assets vary widely and may include asset-backed tokens and utility tokens.
How Can You Ensure Your Crypto Assets Pass To Loved Ones?
To ensure you pass these assets to loved ones, it is important to create a plan. Here are some considerations for ensuring your crypto assets will not vanish or be stolen and their value will pass along to your loved ones.
- Identify a person who is responsible for transferring these assets from your control to your beneficiaries upon death. It is important that this person is educated to understand these assets and what the person needs to do to secure these assets.
- Let that person know how to access your crypto assets – through a physical hard drive or an online wallet and any access keys. Timing is very important here as you do not want this person to steal your crypto assets.
- Have a discussion with your estate and wealth planning attorney and include language in your estate planning documents allowing your fiduciaries to access, retain and manage your crypto assets.
- Consider language in your trust allowing your Trustee to serve but having an investment advisor to specifically make investments decisions related to the crypto assets. Ideally this advisor would have the knowledge, experience and maybe even expertise to work with cryptocurrency.
- Also consider language related to your desire to retain the crypto assets in your trust. Many Trustees may not understand the value of retaining crypto investments. This specific language would direct your Trustee and/or investment advisor to retain these assets. You may even consider language limiting the liability of your Trustee and/or investment advisor because of the volatility of these assets.
- Remember that crypto assets can have a tangible nature to them. For example, the assets and keys can be located on a hard drive or on an app on a cell phone. It is important to think about who has access to these devices and ensure your crypto assets do not unintentionally pass to the wrong individual with access to these devices.