How to Include Cryptocurrency in Your Estate Plan

As cryptocurrencies like Bitcoin and Ethereum become more integral to financial portfolios, it’s essential to incorporate them into your estate planning. Properly planning for the transfer of these digital assets ensures they are passed on smoothly and securely. Here’s how you can include cryptocurrency in your estate planning with Texan Wills and Trusts.

1. Understand Cryptocurrency

Cryptocurrencies are decentralized digital assets stored in digital wallets and accessed through private keys. Unlike traditional assets, cryptocurrencies are not tied to any centralized financial institution, requiring special considerations for estate planning.

2. Inventory Your Crypto Assets

Create a detailed list of all your cryptocurrency holdings, including:

• Types of cryptocurrencies owned
• Amount of each cryptocurrency
• Platforms or wallets where they are held
• Public keys and addresses associated with each wallet

3. Securely Store Your Private Keys

Private keys to your digital wallets are essential for accessing your cryptocurrency. Without these keys, your beneficiaries cannot retrieve your digital assets. Store your private keys securely, using multiple methods for redundancy:

• Hardware Wallets: Devices like Ledger or Trezor store your private keys offline.
• Paper Wallets: Physical documents that contain your private keys.
• Encrypted Digital Files: Store your keys in a digital format, encrypted for security.

4. Create a Cryptocurrency Estate Plan

Use Texan Wills and Trusts to prepare your estate plan and provide a letter of instruction to your Executor or Trustee. Your letter should outline:

• How your cryptocurrency will be accessed upon your death
• Who will have access to your private keys and how they will be securely transferred
• Instructions on how to manage and distribute the cryptocurrency

5. Incorporate Cryptocurrency into Your Will or Trust

Specify in your will or trust how your cryptocurrency should be distributed. You might also consider setting up a trust specifically for your digital assets to provide ongoing management and security. This can be especially helpful if you have a close friend who knows cryptocurrency but may not be the best choice to manage and distribute the rest of your assets. Our trust plans include an assignment of personal property and digital assets to fund your cryptocurrency into your trust. An additional technique that could make your trustee’s job easier is to store your private key/physical wallet in a safe deposit box at the bank which is owned by your trust. Cryptocurrency held by traditional brokerages offer easy beneficiary designation forms, but using a brokerage may not be appealing to people who like cryptocurrency due to its decentralized nature.

6. Designate a Knowledgeable Executor or Trustee

Appoint an executor or trustee knowledgeable about cryptocurrency. This person should understand how to access and manage digital wallets and be capable of securely transferring the assets to your beneficiaries.

7. Keep Your Plan Updated

Cryptocurrency markets and technologies evolve rapidly. Regularly review and update your estate plan to account for new assets, changes in value, and advancements in security practices.

8. Provide Instructions and Education for Beneficiaries

Ensure your beneficiaries understand how to access and manage the cryptocurrency they will inherit. Provide clear instructions and consider educating them on the basics of cryptocurrency and digital wallets.

By taking these steps, you can ensure that your cryptocurrency assets are secure and that your loved ones can access and benefit from them according to your wishes. Get started today with an estate play from Texan Wills and Trusts.