Bitcoin Estate Planning Considerations 101
I tend to field a fair amount of questions regarding estate planning. Nowadays, as many of my friends have diversified portfolios that include novel investments such as cryptocurrency, I see more and more estate planning questions regarding such investments. While my friends who are reading this are still free to ask me directly, I thought I would use today’s blog to save them the trouble (and please note that this blog is not to be considered as legal advice).
Here are some cryptocurrency estate planning considerations as discussed in this Forbes article:
Security – one of the benefits of cryptocurrency is that it is considered highly secure since access is usually by way of private key, password, or seed phrase. Although this information must be shared with the estate trustee so that they can access the currency post death, it cannot be provided in a way which publicizes the information. The risk is that anyone who comes across this information can use the currency. Testators have to be careful to ensure that the information is shared confidentially and securely.
Value – cryptocurrency can fluctuate widely in value, even in the course of one day just like precious metals and other commodities. As such, the testator has to ensure that the estate trustee is ready to move following death. Any delays in acting by the estate trustee can put the value in jeopardy, and expose the estate trustee to claims by beneficiaries.
Estate Trustee Powers – it is unclear if cryptocurrency falls afoul of the prudent investor rule. If the testator knows that the estate trustee will be administering cryptocurrency, there should be specific provisions in the last will ensuring there is authority to do so.
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