Bitcoin and other types of cryptocurrency have become an increasingly popular investment. In addition to the fact that some of these currencies have grown significantly in value throughout their relatively recent history, they are appealing to a lot of investors because of the secrecy surrounding them.
For example, bitcoins are stored in a virtual wallet rather than an account. While you need something called a “public key” to send and receive currency, your wallet can be accessed only via a private key. If the owner dies without sharing information about their cryptocurrency holdings with anyone — including their private keys — that currency is gone.
Even if their heirs know that they had cryptocurrency, if they don’t have those keys, they often can’t get to it. However, f you use a cryptocurrency exchange site like Coinbase, your surviving loved ones can get access to your wallet with the proper documentation.
You can make things easier for everyone and ensure that your cryptocurrency goes to the people you want to have it by including it in your estate plan and ensuring that the appropriate people are able to access it.
Just as you should make sure that the executor of your estate has (or is able to access) all of your passwords, you should make sure that they have the private key to your cryptocurrency wallet. Make sure that you clearly identify what this key is.
Why list your cryptocurrency in your will or other estate documents? Why not just give the information to whomever you want to have it — just as you might do with a baseball card collection or piece of jewelry?
The problem is that if the information gets into someone else’s hand, they can walk off with thousands, if not millions, of dollars. It’s what estate planning attorneys call “probate by truck.” If challenged, they can say you wanted them to have it. They might succeed in making that case if your estate plan doesn’t say otherwise.
If your assets include cryptocurrency, be sure to discuss them with your estate planning attorney. They can advise you of the best way to ensure that your wishes for that money are honored after you’re gone.