Estate planning for cryptocurrency owners

On Behalf of | Jul 8, 2021 | Estate Planning |

Cryptocurrency is currently a hot trend for investors these days. Many who enjoy taking speculative risks with their discretionary funds have invested significant sums in the various crypto offerings — Bitcoin, Etherium, Dogecoin, etc.

But problems can emerge as you try to integrate these holdings into your estate plan. Read on to learn more about estate plans for cryptocurrency holders.

Keeping your crypto holdings secure

Unlike a stash of gold bars in your safe, your cryptocurrency is very secure. The problem is, could it be too secure? Without the key to your crypto wallet, your assets can languish forever out of the reach of your beneficiaries and heirs.

But the opposite problem also exists. Being careless with the key to your crypto holdings allows anyone to gain control over your investments. Because cryptocurrency transactions are notoriously hard to trace, you could wind up with an empty virtual wallet.

Cryptocurrency is an unprotected resource

If a stockbroker goes rogue and raids your portfolio, the Securities and Exchange Commission can hold them accountable. But there are no regulatory agencies that protect cryptocurrency transactions. Similarly, trusts aren’t typically designed to accommodate crypto holdings. Because crypto coins are viewed legally as property instead of currency, they face different regulations regarding capital gains.

What can you do?

Since cryptocurrency is still a bit of the Wild West of investments, you will need to learn all you can about the best ways to safely preserve your crypto holdings, yet still allow legitimate access to your intended heirs after your death. Working with a financial planner and trusted legal advocate can help you accomplish what you need to do to secure assets now and in the future.