Need tips on how to handle digital assets like cryptocurrency? We've got five!
Digital assets like cryptocurrency are being considered more than ever when putting estate plans together.
Corey Roun, with Lyons Wealth Management says, "The big hurdle is there is nobody to call to recover passwords, keys, and locations of digital assets, making pre-planning more critical than ever before in estate planning.”
Here are five tips to help cryptocurrency owners plan for the future:
Know where the crypto is held. Custody with an institution can have a designated beneficiary while self-custody does not. If you choose to self-custody in an off-chain wallet, which is appealing to some crypto owners, you must inform family members in some way that the currency is there otherwise it may be lost.
Your crypto could be lost forever! Know that your cryto could be lost forever if you choose to keep the information in a secret place and don't tell anyone where it is
Give access to your crypto account to a trusted person, perhaps the executor of your estate to ensure that it is allocated properly. Make sure the person that has access to your accounts will not take funds out prior to the settlement of your estate.
Be mindful on HOW you give access to your accounts. Keep in mind that a will is public knowledge, and if any details about crytocurrency are in your will, that will become public. A digital vault with a third party might be the best option.
Don't forget about cryptocurrency taxes! Any capital gains that are realized are subject to capital gains tax, and if the estate is above a certain threshold, estate taxes may be due as well.