Safeguard Your Cryptocurrency Assets With Estate Planning

Filed under Asset Protection, Estate Planning, Estate Planning Blog | By


One of the biggest appeals of cryptocurrency, such as Bitcoin, is that it is decentralized, unregulated, and anonymous. There are no financial institutions controlling it, and unless you tell someone you own digital currency, it remains a secret.

When it comes to estate planning, however, that kind of secrecy can be disastrous. In fact, without the appropriate planning protections in place, all your crypto wealth will likely disappear the moment you die or become incapacitated, leaving your family with absolutely no way to recover it.

Indeed, we’re facing a potential crisis whereby millions—perhaps billions—of dollars’ worth of family wealth could potentially vanish into thin air unless cryptocurrency owners take action to protect their digital assets with estate planning. Fortunately, putting the appropriate safeguards in place is a fairly simple process for an attorney experienced with cryptocurrency.

The first step in securing your crypto assets is to let your heirs know you own it. This can be done by including your digital currency in your asset inventory (such as the one we prepare for our clients) listing all your assets and liabilities. Along with the amount of cryptocurrency you own, you should also include detailed instructions about where it’s located and how to find the instructions to access it. But you want those instructions to be kept in a secure location because anyone who has them can take your cryptocurrency.

Even if your heirs know you own cryptocurrency, they won’t be able to access it unless they know the encrypted passcodes needed to unlock your account. Indeed, there are numerous stories of crypto owners losing their own passcodes and then being so desperate to recover or remember them that they dug through trash cans and even hired hypnotists.

The best way to secure your passcodes is by storing them in a digital wallet. The safest option is a “cold” wallet, or one that is not connected to the internet and thus cannot be hacked. Cold wallets include USB drives as well as “paper” wallets, which are simply the passcodes printed on paper—and ideally stored in a fireproof safe or safe deposit box.

Since digital currency is such a recent phenomenon, not all estate planning attorneys are familiar with it.  And although I don’t advocate any of my clients invest in it – that is their own personal choice – I have helped many safeguard their digital wealth just as effectively as all their other assets.

Why? Because at my firm we don’t just draft documents; we ensure clients make informed and empowered decisions about life and death, for themselves and the people they love. After all, that’s what estate planning should really be all about.

Dedicated to empowering your family, building your wealth and defining your legacy,

Marc Garlett 91024