Have You Addressed Your Crypto Assets in Your Estate Plan?May 6, 2022 | Patricia C. Marcin |
Crypto assets (such as non-fungible tokens, or NFTS) and cryptocurrencies (such as bitcoin) are types of digital assets, which are typically transmitted by means of blockchain technology. (I know, this makes my brain hurt, too!) Crypto assets are growing in popularity as an investment class, and you may already own some or may be thinking of acquiring them. While these assets can be difficult to understand, they are still assets with value that must be addressed in your estate plan, just like your other assets.
Crypto assets are usually stored on either a USB drive or an online digital wallet. If you have not told your family and/or estate planning lawyer about them and you die, those assets may never be found. There are no account statements for your survivors to find, so be sure to let them know about your crypto assets and where to find them! You may even want to specifically bequeath crypto assets in your estate planning documents or at least prepare written instructions detailing these assets and where to find and access them.
Crypto assets are accessed with a private “key,” which can be as long as 64 digits. Your heirs and/or your executor or trustee can access and transfer your crypto assets if they have your private key. Of course, if neither they nor your trusted professional have the key, those assets can be lost forever. So be sure to provide some form of disclosure of your key to someone you trust upon your death.
Crypto assets can also be gifted during your lifetime and may be an asset class you would like to consider gifting, either outright or in trust. Until the tax law changes, there are still viable methods to discount the value of your holdings and reduce the transfer tax costs of gifting digital assets. If you have invested in crypto assets, be sure to discuss these investments with your lawyer in connection with your estate planning.
This article first appeared in the May 2022 issue of Lloyd Harbor Life.
- Patricia C. Marcin