If you are one of the nearly 100 million individuals who are invested in cryptocurrencies, you might be wondering what happens to it upon your passing. Given that it is intentionally a decentralized currency, which often leaves no paper trail, succession planning does not function like it would with a traditional investment or bank account. In other words, when you pass, unless you have provided login and passkey information to your heirs, the digital wealth you have accumulated could be lost. Importantly, too, if you are invested in cryptocurrency through an intermediary like Coinbase or Acorns, these accounts currently do not support addition of a beneficiary which further complicates estate planning. Another unique feature of cryptocurrency investments is that they can be accessed by individuals who have the right login information (i.e. passkey). So, placing this passkey information in your will, which is publicly filed when probated, is also not wise.

                So, how can we both protect your passkey, but ensure access for your heirs? The answer is usually a letter of instruction to the Executor appointed in your will, or a trust (or a combination of both)! The letter of instruction document can be placed with your will for safekeeping and may include information about the number of shares owned, where they are located, and how they can be accessed.  Your estate would be probated, including any cryptocurrency which is generally treated as an intangible asset to be distributed according to your will. If you choose a trust, the probate process could be skipped and assets distributed by your trustee according to the terms of the trust and the letter of instruction providing the passkey for access to the cryptocurrency.

                Similarly, we also recommend that digital asset power be given to your agent in a power of attorney. This ensures access to the cryptocurrency during your lifetime by a trusted individual in the scenario where you lose capacity and are unable to act.

                If you are invested in cryptocurrency and have questions about how it may affect your estate plan, contact us. We would be happy to sit down with you and discuss how to protect this unique, but popular, asset.