You do not need to understand cryptocurrency to have some. Trading platforms make it easy to buy and sell without in-depth knowledge of the technology behind digital currency.
While few people could claim to be experts on how cryptocurrency works, too many families discover that their deceased loved one’s lack of basic knowledge is a problem. Understanding the technology is not essential. Understanding what happens to cryptocurrency when you die is.
What do you need to do if you own cryptocurrency?
While cryptocurrency sits at the cutting edge, many people’s estate plans do not. If you fail to modernize your estate plan to include your cryptocurrency, your family may be unable to access it when you die. There are two crucial things you need to do:
- Give your family the right to access it: In 2016, California introduced the Revised Uniform Fiduciary Access to Digital Assets Act. It sets out ways for you to stipulate who gets access to cryptocurrency or any other digital assets when you die.
- Give them the means to access it: If you do not give your family the relevant access details and password, your digital money will remain useless to them.
While not even a billionaire in a space rocket can reach your cryptocurrency without the correct codes, there is one agency that will certainly keep on trying — the IRS. In the eyes of the tax office, cryptocurrency is property, and whether you keep your money under your bed or in outer space, they want their share of it when you die and transfer it to your family. The tax rules around cryptocurrency are likely to tighten, so consider using a trust to keep it beyond their reach.