Estate planning is always evolving along with the times, and we are now in the midst of a digital currency revolution. Over 100 million people worldwide have owned cryptocurrencies, including 14 percent of Americans, and this has inheritance planning implications.
Revocable Living Trust
One of the great appeals of blockchain technology is the security, because the owner is the only person or entity that can gain access. A private key that is typically 64 characters long must be utilized, and there is no way to access cryptocurrency without it.
Since it has no presence in the physical world, no one would know that you were in possession of cryptocurrency unless you make the information available. This can be done through utilization of a revocable living trust as the centerpiece of your estate plan.
While you are living, you would be the trustee, so you would maintain control of the assets in the trust. When you are drawing up the trust declaration, you would transfer your cryptocurrency into the trust and name a successor trustee to manage the trust after your passing.
You can share the private key with the individual or entity that is going to be the trustee of the trust. This can be done directly, or you can store the information in a particular location. There are also multi-signature cryptocurrency wallets that can be utilized to provide access.
It is possible to bequeath your cryptocurrency through the terms of a simple will, but there are some significant drawbacks. The executor that is named in a will is required to admit the will to probate, the court provides supervision during the probate process.
Final debts are paid during probate, so creditors are notified, and there is a proving of the will. The court examines the will to determine its validity, and if anyone wants to contest the will, they can make a case while the estate is being probated by the court.
This is a public proceeding, so anyone that wants to access the records can obtain them. This is one of the reasons why people avoid probate. If you use a living trust as an asset transfer vehicle, the probate court is not involved during the administration phase, so your privacy is protected.
Schedule a Digital Wealth Planning Consultation!
We are on the cutting edge of digital wealth estate planning, and we can help you devise a plan that will facilitate safe and effective cryptocurrency transfers. And of course, we will make sure that you take the right steps to get other types of assets into the hands of your loved ones.
If you are ready to get started, you can schedule a consultation at our Naperville, IL estate planning office if you call us at 630-568-8611. You can alternately use our contact form to send us a message, and if you reach out electronically, you will receive a prompt response.