Do you own Cryptocurrency?

Crypto and Estate Plan. Do you own cryptocurrency? If so, you may be wondering with all of the controversy if it is still a good investment. The answer is probably, but no one knows for sure. Some experts say the long-term cryptocurrency investment will provide direct control over your portfolio. That cryptocurrencies will offer you tools to build long-term wealth by investing in a diversified group of coins. But others, like the Securitas and Exchange Commission (SEC) see it as unregulated, non-compliant, unregistered products that are sold to individual investors and that customers should beware Because some are scams.  

This blog post is not an education on cryptocurrencies. Instead, if you have it as part if your portfolio, this addresses how you might go about funding it into your revocable trust.

What is Cryptocurrency?

In brief, it is a digital asset developed and traded online. Computer miners establish new units of this digital asset and then record them on a string of verified, public transaction records that we call blockchain. These records are public, however, the holder of the cryptocurrency is private. This virtual money is transacted on exchanges, such as Gemini and Coinbase. These transactions use wallet numbers instead of names. The most popular and by far the most valuable are Bitcoin, Ethereum, Dogecoin, and Tether.  Crypto and Estate Plan.

Cryptocurrency and your Estate Plan.

Because the IRS sees cryptocurrency as property rather than currency, it is treated as such. For the investor it means when you purchase cryptocurrency for personal or investment purposes, the profits from the purchase and sale are treated as capital gains. If the currency is held for more than a year, the gain will be long-term. If you hold the crypto for less than a year, you will be assessed a short-term capital gains tax.

Cryptocurrency is stored differently than other property. It’s stored in digital wallets, which can be physical storage units or on the Internet. However, to access the currency you need a very lengthy private digital key. Lengthy equally dozens of characters long. Unlike other password keys, there is no reset and neither is there anyone who will give you a new number. If you lose it or forget it, there goes your money. The key must be safely stored and funded your estate plan.

There have been more than a few horror stories of currency being lost because the key was lost.

  • An investor inadvertently discarded the key to half a billion dollars.
  • Others lost millions because they misplaced their passwords.
  • Cryptocurrency holders have passed away without telling anyone the key. Thus, the funds are lost forever.

A client’s estate planning documents should authorize their fiduciary the right to access and manage their digital assets.

Francine D. Ward
Attorney-At-Law, Author, Speaker

Follow Francine:

Don’t miss Francine’s Latest Blogs:

  • Sweepstakes Scams
    Sweepstakes Scams. The Federal Trade Commission (FTC) has settled with several operators of a sweepstakes scam. The scam bilked consumers out of millions of dollars. Included in the settlement agreement,… Read more: Sweepstakes Scams
  • Incapacity Planning
    Incapacity Planning. Incapacity is an unexpected wrinkle in your estate plan. I am a planner. I make plans, I like making plans, and sometimes my plans go awry. Despite any… Read more: Incapacity Planning
  • Publishing contracts
    Publishing contracts The publishing contract is an agreement that defines the relationship between an author and her publisher. Publishing contracts typically contain elements that speak to territory, rights, ownership, financial… Read more: Publishing contracts
  • What is a Habit?
    As we enter springtime, you may feel far away from your New Year’s resolution. That may be because of the success rate of NYE resolutions. In fact, January 17 is… Read more: What is a Habit?
  • Common Contract Mistake
    Common Contract Mistake #1.  Not Having Written Agreements with EVERYONE You Do Business With. Common contract mistake. Without question, the most common contract mistake is not having the terms of… Read more: Common Contract Mistake
Skip to content