Estate Planning for Cryptocurrency

The cryptocurrency market is predicted to grow at an annual rate of nearly 13% until 2030 (Furtunly)

There are currently 300 million people using crypto worldwide. And chances are, many of them have not thought about how those assets play into their estate plan.

No matter your level of investment in crypto assets, you likely need to give your estate plan some special attention to ensure those assets are protected. Doing nothing is not an option!

Uncertainty Remains Despite Rising Popularity in Crypto Asset Investment

Whether you are a full-fledged crypto evangelist, own some Bitcoin as part of a diverse investment portfolio, or received an NFT as a gift from an eccentric relative, if you are reading this you are likely part of a rapidly growing segment of Americans who have waded into the brave new world of crypto asset investment.  [i] One recent study suggests that as many as 50 million Americans will buy crypto assets in some form over the course of the next year.  [ii] Even with this staggering growth, much remains unknown and frustratingly unclear in the crypto domain.  One, particularly concerning facet of this uncertainty, is the lack of a uniform system for disposition of crypto assets upon the death of an account holder.

Unlike more traditional financial institutions that manage checking, savings and 401(k) accounts, many popular crypto asset investment platforms like Coinbase, Binance, and Kraken do not allow account holders to name a beneficiary directly within their accounts.  That means that if you pass away without planning for the administration of your crypto assets, you could unwittingly be placing your loved ones in a probate quagmire that could take months to resolve.  For example, Coinbase, by far the most popular crypto investment platform, requires would-be beneficiaries to produce significant documentation before Coinbase will take steps to distribute the balance of the deceased Coinbase account.  And that’s ruling out the nightmare scenario—simply losing the value of your asset because you are unable to access it due to the increased security which can make even accessing your assets an expensive challenge:  Read Here About the Man Who Lost Hundreds of Millions of Dollars Because He Lost His Password.  Assuring that information related to your crypto investments is easily accessible and clearly accounted for can alleviate most of these issues, and reduce expenses and stress for your loved ones.

Make a Plan to Avoid Unnecessary Costs and Confusion

For many ordinary crypto investors, crafting an effective plan will be a relatively simple process comprised of a few easy steps:

  • Taking an inventory of your digital assets.
  • Deciding where you want your digital assets to go after you die.
  • Appointing a digital executor.
  • Finalizing the details your digital estate plan as part of your comprehensive estate plan.

When such arrangements are made through your estate planning attorney, the process becomes markedly simpler for those administering your estate.  As noted on Coinbase’s website: “the ownership of your Coinbase account would be transferred according to your will or other arrangements made with your legal counsel.”

Sandin Law is Here to Help!

For the more sophisticated crypto investor, various third party providers such as Inheriti, Safe Haven, Casa, and Trustverse  provide streamlined tools for facilitating crypto disposition planning in conjunction with your comprehensive estate plan.

Whatever your interest or investment level, Sandin Law’s talented estate planning professionals are here to answer your questions and help you feel secure in your crypto estate planning.

[i] https://www.pewresearch.org/fact-tank/2021/11/11/16-of-americans-say-they-have-ever-invested-in-traded-or-used-cryptocurrency/.

[ii] https://www.fool.com/the-ascent/research/study-americans-cryptocurrency/.

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