Cryptocurrencies (like Bitcoin) are continuing to become more mainstream as their volatility has made headlines during this past pandemic year. As more people add cryptocurrency to their investment portfolio, it becomes increasingly important for estate plans to account for this asset.
Cryptocurrency is a bit of a double-edged sword. It is highly secure and private. The person with the password (“key”) is considered the owner of the asset. On the other hand, any person who has the key to the crypto account has control of the asset, meaning the original owner can lose access to it if they provide the key to someone else and the other person “moves” it. If the key is ever lost, so is the value of the crypto-asset.
Due to the intricate nature of digital currency, there are a few things to think about when it comes to your estate plan:
The privacy that cryptocurrency offers is also the very feature that increases the risk that you or your fiduciary can lose access to the crypto-asset. Taking certain precautions can help save you and your loved ones a lot of anguish.