Cryptocurrency is becoming more mainstream, but some practicalities—like leaving it to someone else in your will—have not quite caught on. A person could have millions in Bitcoin when they die unexpectedly, but if their loved ones don’t know it exists or how to access it, it will languish in cyberspace.
If you have cryptocurrency and want someone else to have it when you’re gone, make sure you have a will. You’ll also need to follow the guidelines below (with the help of your attorney) to ensure it’s accessible if you’re not around.
List Your Cryptocurrency
One of the biggest hurdles to passing on your cryptocurrency is actually listing it. After all, if no one knows you have it, they can’t tell the probate court that there’s an asset missing. Make sure that you list your cryptocurrency and to whom it goes. Otherwise—if it’s found—it will be treated as a “remainder” in your estate and may not be distributed as you would have wished, or may be distributed according to state law. Again, if no one knows you have it, they won’t be able to access it. Unlike bank accounts and other investments, there is little to no paper trail involved with cryptocurrency.
Make an Access Guide
It’s good practice to mention cryptocurrency in your will, but you don’t want to leave full account numbers and access guides in the document itself. If you have a will when you die, it must go through probate court. That makes your will part of the public record. You do not want access codes for cryptocurrency in the public record.
Instead, make a comprehensive access guide so that even the most technologically inept person can access your funds and/or digital wallets. If anything requires a specific device to access, say so. Test your guide by following only the written instructions (not your personal knowledge) to access your accounts. If you can do it, success! Otherwise, revise and repeat.
Once you’ve ensured your heirs can access your funds, you can add the guide as a memorandum that’s specifically referred to in the will but does not go through probate. It won’t become part of the public record.
Don’t risk letting your cryptocurrency disappear. To ensure that you have covered all your legal bases, and that your access guide memorandum won’t be part of the record, it’s important to work with an experienced probate attorney. Look online for the most up-to-date recommended approaches.
Whether you own cryptocurrency or simply need general estate planning assistance, please call Dworken & Bernstein for a consultation.