Cryptocurrency and Non-Fungible Tokens (NFTs) have become popular hobbies and investing tools in recent years. Both of these have been around for much longer than the general public has been aware of them, but there are still serious questions about how they should be handled in an estate plan.
These are both considered digital assets, which we talked about last month, but they require unique considerations in order to pass on the assets and retain their value. Without careful planning, all the value you put into these assets and hoped to get out of them will be completely lost. In some cases, that could be millions of dollars.
Crypto Passwords MUST Be Passed On
The one and only way to access and transfer cryptocurrency is to have the password(s) necessary to access them. These passwords obviously need to be secure, so you may not want to leave them sitting in estate planning documents – but you will need those passwords to be accessible for whoever will be inheriting those investments.
If you do not include the passwords necessary to access your crypto wallet then what is possessed in the wallet will be lost forever. It might sound dramatic, but, as we pointed out above, this has and will continue to happen in instances where people fail to account for this possibility.
Detail Where and How Your Crypto and NFT Investments Are Stored
There are thousands of crypto and NFT marketplaces out there. These fast-growing assets can be bought and sold in a variety of ways and will be stored in a wallet in a variety of ways. Your beneficiaries will need to understand where they need to go to access what is being left for them.
For example, a “hot” wallet is a digital storage method whereas a “cold” wallet is a physical storage method (such as an external hard drive for your computer). There remains some debate in the estate planning realm whether a cold wallet would be considered a tangible asset or not, but for your purposes, it will be important to communicate the “where” and “how” of your storage methods.
Talk to an Estate Planning Attorney
A major priority will be working with an estate planning attorney to ensure you get these and other assets taken care of properly. Informing your attorney that you own crypto or NFTs allows them to carefully manage the necessary estate planning for them.
At Charleston Estate Planning Law Firm, we help our clients secure all of their assets for a thorough estate plan. Contact the firm and we can help you pass on what you have worked hard to build.
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