Cryptocurrency and Inheritance
Updated: Jan 21, 2021
By Bill Root, Partner
Resch, Root, Philipps & Graham, LLC
Cryptocurrency purchases are becoming more popular as Americans are looking for ways to invest money and make consistent returns on those investments. As estate planners we are asked to advise clients concerning how such cryptocurrency accounts and “wallets” should be owned as part of an individual’s estate plan.
The most recognizable form of cryptocurrency is Bitcoin, although there are many other forms, such as Litecoin and Ripple. These act like real money but they take a digital monetary form and are not governed by any central authority. A product of the digital age, cryptocurrencies operate without the involvement of banks, governments, or any middleman and users of the currency remain anonymous.
In 2020, there were more than 50 million cryptocurrency users.
For security, cryptocurrencies are protected with specialized computer code called cryptography. These codes are purposely designed to be very complicated so that they are nearly impossible to crack (and hack).
It is important that your Successor Trustees and Agents be made aware of the existence of cryptocurrency in your estate. Your estate planning documents should permit your successors to access your digital assets, such as laptops and cell phones, which may have information about any cryptocurrencies owned by you.
A BitCoin ATM machine in Dubin, Ohio
You must provide this information to your successors in order to grant them access to your cryptocurrency after your death. They must be made aware of your passcodes to such accounts and wallets so that they can make distributions of these assets to your beneficiaries at your death in accordance with your instructions and wishes.
Do not forget or lose your password!
The cryptocurrency’s high risk nature has also meant that many people are locked out of their Bitcoin fortunes as a result of lost or forgotten keys (passwords) and unable to cash in on their digital wealth.
If you have questions about cryptocurrency, contact our office to schedule today!