More and more people are investing in digital currency, such as Bitcoin or Ethereum, and non-fungible tokens (NFTs). If you own NFTs and other digital assets, it’s important to make sure you understand the laws to gift your NFTs and to leave them to your heirs. If you own NFTs and want to give or bequeath them as part of your estate (versus sell them), you have 3 legal options:
There are some key issues concerning gifting or bequeathing NFTs:
• taxes including transfer taxes, gift taxes for lifetime gifts and estate taxes
• access and protection via blockchain technology using digital wallets including public wallets, ledger wallets or wallets on a USB stick
• regulations and protections regarding trusts, trustees and digital assets
Because NFTs are a new form of digital assets, IRS, federal and state laws have not been put in place to manage the transfer of NFTs via estate planning. An experienced estate planning attorney will:
• Ensure follow your estate plan follows all state and federal digital asset transfer laws to protect the beneficiary
• Ensure that your digital assets are clearly listed and identified in your will or trust without revealing their location or access information
• Secure your digital assets through a Letter of Intent that is not part of your will and can list confidential and secure information about your NFTs, cryptocurrency and other digital assets, and be easily updated without going through updating your will
• Ensure that your Letter of Intent provides detailed instructions on how your heirs can find and access your NFTs and other digital assets including all passwords and pins
• Identify what skills the executor of your will needs to manage the transfer of your NFTs, cryptocurrency and other digital assets, and recommend a professional executor if necessary
If your estate includes non-fungible tokens, cryptocurrency and other digital assets, it’s important to work with an experienced estate planning attorney who can help you plan for the safe transfer of your assets to your heirs who may not be as familiar with digital currency and other assets as you are.
Protect your NFTs and cryptocurrency and digital assets by consulting an experienced estate planning lawyer who can advise you on the best options for your portfolio. To talk to a qualified estate planning attorney in Chicago or Oak Brook, contact the Estate & Probate Legal Group at 630-864-5835.
We serve Cook, DuPage, Kane, Lake, and Will counties.