A recent article in the Tampa Bay Times asked, What happens to your crypto when you die? Crypto currency is no longer unique or uncommon. In fact, the estimate is that 27 million Americans, 8.3% of the United State’s total population, currently own cryptocurrency. How you choose to own cryptocurrency impacts your estate planning.
1. A Cryptocurrency Broker or Exchange:
A cryptocurrency exchange or broker is a platform where buyers and sellers meet to trade cryptocurrencies, typically with low fees and easy to use interfaces. Casual crypto investors mostly use exchanges such as Robinhood, Binance and Coinbase. Your currency is stored and managed directly on the exchange or broker platform.
If you own cryptocurrency in a brokerage or exchange, your heirs will have to go through the platform to access their funds, and the crypto assets will have to go through probate to be dispersed to your heirs, which can be expensive, time consuming and stressful.
2. Crypto Wallets With Private Keys:
Larger crypto investors use digital wallets and private keys that can only be access via the exact sequence of alphanumeric characters that make up your wallet key. Private keys are considered the safest and most private way to store crypto. Crytptocurrency in a digital wallet does not go through probate, but your heirs have to know how to access it. Your heirs must
• know the cryptocurrency account exists
• know where to find the crypto
• have the exact private key sequence to open your crypto account – or the currency will be gone forever
An executor is the person you name to take care of the legal responsibilities to close your estate such as paying your bills and taxes and transferring your assets to your heirs. A digital executor handles your digital assets, such as cryptocurrency, online social media accounts, PayPal, intellectual property, etc.
Currently, the crypto brokers and exchanges do not offer beneficiary planning, but many of the bigger exchanges say that is in the works. You should consider at what point is your exchange account large enough that it should be moved to a digital wallet.
An estate planning attorney with experience in managing digital assets including cryptocurrency can help you create an estate plan that documents the existence of your cryptocurrency accounts and how to access it, and the best strategy to protect your crypto for your heirs.
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Protect your cryptocurrency and other digital assets by consulting an experienced estate planning lawyer who can advise you on the best options for your situation. To talk to a qualified estate planning attorney in Chicago or Oak Brook, contact the Estate & Probate Legal Group at 630-912-0322.
We serve Cook, Dupage, Kane, Lake and Will counties.