The Future of Inheritance: Managing Cryptocurrency in Your Estate Plan

Plan ahead to ensure your cryptocurrency doesn’t disappear after you’re gone. With thoughtful estate planning, your digital assets can be protected, accessible, and passed on just like the rest of your legacy.

Transcript

Hey, everybody. It’s Peter Klenk here to talk about death and taxes, and really a new area of assets that you have to think about in your estate. So the title is The Future of Inheritance: Managing Cryptocurrency in Your Estate Plan.

So what are we talking about? You know, Bitcoin, crypto, all the different cryptos that are out there. Things that are starting to show up in estate plans as people go, but still very new, and they’re very unique. And something that you have to plan around carefully because, you know, you’re having fun with it. Maybe you have a little in it, maybe you have a lot more into it. But you probably want whatever your investment is to pass on, like the rest of your assets. But this isn’t something like a bank account or land. It can be very difficult to get our hands on after you die if you don’t do some careful planning ahead of time.

Now, it’s not difficult planning, but it’s careful planning. And I’m gonna give you some of the highlights of it. And some might seem very obvious, but some are not. But again, this is something you’re having as an investment and something that you’re growing, something that you enjoy. And if you’re not careful, it could just disappear after you die. That’s the nature of that beast, so you have to be careful.

So first, what are the steps? What do you have to worry about? First is just identifying it. Like, you know where your stuff is. Remember, maybe the only way you access it is on your phone, and that has a password, and then there’s a password to get into the account that you have — layers of safety there. How do we get into that after your death? I mean, firstly, where do we go?

Really, just a list of all your cryptocurrencies that you own and where are they. Like, where are they — in a wallet? How do we get to it? All those things. We need to know that data, right? How to get into it. And that might seem very obvious, but if you stop to think about it, if you have a way that you’ve explained this to your kids or somebody else, you’re way ahead of most people.

There are a lot of times we have an estate and people say, “Look, I think he had some of these things,” and we have no idea where they are, and where do you go from there, right? So identify it. Identify your inventory. Make sure you’ve got it.

And then it’s the access data, right? So we need to go someplace, but without the access data and the details to be able to get in, how do we get into it? So your addresses, seed phrases, all your login credentials and things.

Now, you want this to be safe. Don’t leave this laying around. So we’re gonna talk about where to store it here in a second. But you have to have that data around, right? If you drop dead, we might know where it’s at, but without the data to get into it, we might never get into it. That’s the nature, especially with the way a lot of these things are held. There’s no court that has the power to order access, and it’s lost. So you have to get that data.

Now, we don’t put it in your will. I mean, it’s odd — I’ve seen this happen. Remember, people put all sorts of information in their will about accounts and passwords and things. It’s kinda silly because that becomes public record. That’s filed. Everybody can know that. There’s no need for that, especially in a situation where you’re saying, “Look, I’m leaving everything to my kids.” That’s all I gotta say — everything. You don’t have to list a darn thing.

So why list accounts and especially passwords? Just ridiculous. You don’t need to do that. But you do need that someplace, right? So you have to think about storage space and where you’re gonna put it so it can be updated.

So where can that be? Well, it can just be a piece of paper. It could be on a data drive. It can be anywhere. Again, we have to know where to get it. You might say it’s somewhere in the house. But here’s the problem. Some people say put it in the safe deposit box. Well, look, in most states, if you die, safe deposit boxes have to be opened and itemized, and that data has to be turned over to the tax authorities.

So I’m not saying that your kids would not report anything and pay their appropriate tax — I would never say that. Of course they’re going to. But that data, that information, then all has to be turned over as a matter of law in a lot of states. So a safe deposit box, though it is safe, might not be ideal for you. It might be better to keep it someplace in the house that’s secure.

But again, everyone’s gonna know how to get to it and how to use it — well, not everybody. Just the person that you’re trusting as your executor or your trustee to handle that.

So who are we talking about? Well, again, who are you gonna put in charge of this? You’re gonna ask somebody who you trust, right? Someone to execute your plan — your executor or trustee. They also have to have a certain level of knowledge of how to use these tools. They have to be tech savvy themselves, and maybe they’re Bitcoin people themselves, or at least know how to go to somebody to help out, right, to find these assets and use the information you’re leaving behind.

So it could be good for you to educate them, right? Whoever you pick, make sure that they understand, or at least have nice written instructions about what you think they should do to go secure your currency.

And then there’s the planning. You know, just planning with somebody like us. We can help you put this all in order so that it can be taken care of and things aren’t lost. A lot of people, what they’ll do is they’ll have this letter of instruction they give us, and what I’ll have them do is just seal it up and give it to my executor or my trustee when I die. We put it in the file along with your documents. I don’t know what it says. It’s not my business. But we know that when you pass, we hand that over to your person.

In that way, they don’t have access to it while you’re alive. They only have it when you die, but there’s all the data that you want to share with them. And it’s safe. It’s secure. It’s in our safes, and they get it. And again, totally private because we don’t even read what’s in that.

So there you go. Now, another way to make things more private is you might want to think about a revocable trust. These are called living trusts by some people. I have articles about them, and you can listen to those. But the gist of it for this talk is that it’s a way that your assets pass outside of probate, which means they’re not public. It’s another layer of privacy to keep your plan off the grid.

So a trust can own a wallet. There’s nothing in the rules against that. It can own anything. Or at least you can set things up to make sure that if you become incapacitated or if you die, there’s somebody that can manage these things, take care of them, and make sure that they go to your family. So a revocable trust is just another layer, and they’re very popular with people in crypto because people in crypto generally are private. People that value privacy, a revocable trust will do that for you.

And then, yeah, that’s kind of it, guys. You can see some planning. None of the things I just talked to you about are difficult. They’re not expensive. They don’t take up a ton of your time. They just take a little bit of your time. But just a little planning on your part — getting that data together and that knowledge — it can make the difference between being easy or hard. But it might also be the difference between losing these things and having them for the people who are gonna inherit them and be able to get to them.

So if you’d like to talk more, of course, give me a ring. Happy to talk at any time about this. Estate planning, trusts, death and taxes — not fun stuff, guys, but we try to make it palatable to get you to the finish line. So it’s good talking to you.

If you like this, please like and subscribe so that you can get more in the future as we go, and you guys have a great day.