Digital assets have necessitated major changes to estate-planning techniques. Once just a small pocket of the market, the now trillion-dollar-plus crypto market has yielded significant wealth for many individuals and families. For these families, the need to safely secure, transfer, and gift this new type of asset is critically important. Evolving estate planning techniques can help families manage their digital assets effectively to ensure they are neither lost nor devalued as they pass to the next generation.
Protecting Crypto Assets from Loss and Theft
Estate planning can help crypto holders keep their digital assets safe and secure. Cryptocurrency can be purchased, sold, and used through the use of a private key, which is essentially a password known primarily to the owner of the digital currency. Because cryptocurrency can be accessed and manipulated through the use of a password, it is vulnerable to both loss and theft. A fiduciary can help crypto holders maintain their private key in a manner that is safer than storing it personally.
Preserving Crypto Assets for Future Generations
A traditional will is insufficient to protect crypto assets. It can even be detrimental to that goal, given that wills can become part of the public record if court proceedings ensue after a loved one’s death. Still, it is important that family members and other intended beneficiaries know about the crypto assets they stand to inherit, as well as where to find those assets and how to access them.
Fortunately, there are a variety of methods available to help crypto holders preserve and prepare their assets for future transfer.
One strategy includes listing any crypto assets on a schedule of trust assets and diligently providing the login protocols needed to access the account to the successor trustee. For individuals with large crypto holdings, however, it may be beneficial to establish a custodian and trustee of one’s digital assets.
Other estate-planning strategies include creating a trust and then transferring ownership of a given crypto asset to that trust, or placing one’s crypto assets in a custody, such as a hardware wallet. Owners of crypto-assets can also choose a cascading multi-signature wallet over a self-sovereign one and may consider using a so-called dead man’s switch app to trigger the transfer of their crypto assets after their death.
Finally, cryptocurrency holders should also consider the tax implications of their new wealth. Taxes can be implicated both in transfers and sales of crypto assets.
Estate-planning attorneys who are knowledgeable in cryptocurrency can help owners of digital assets sort out what estate planning techniques and considerations are relevant and appropriate for their particular needs.
Colorado Estate-Planning Attorneys Are Standing By
If you are a Coloradan with cryptocurrency holdings, you deserve to see your digital wallet continue to grow over time. Do not take the risk that your assets could be stolen or lost either during your lifetime or upon your death. Instead, contact the Braverman Law Group to consult an attorney with special knowledge in digital asset management. With a growing list of clients seeking Colorado estate planning help for their digital assets, we are well equipped to assist you in creating a tailored plan to preserve your assets in the here and now and for the future of your loved ones. For a free consultation, call (303) 800-1588.