Florida Estate Planning Lawyer Blog
Will It Include My Wallets? – Questions and (some) Answers About Estate Planning With Cryptocurrency.
Over the past 15 years, cryptocurrency has slowly become an integrated part of society and day-to-day life. Gas stations have Bitcoin ATMs, famous athletes and celebrities (in)famously starred in a commercial for a Cryptocurrency venture that failed spectacularly, and the latest wave of newly minted millionaires and billionaires largely credit their rise to this new “decentralized” currency.
On December 5th of this past year, the most popular cryptocurrency, Bitcoin, hit a record-high value of $100,000. This surge in price has renewed interest among investors and regulatory bodies alike—everyone wants a piece of the ever-growing pie.
This very concept of cryptocurrencies being “decentralized” and “stateless” is one of the driving forces behind their popularity, but it also serves as a thorn in the side of lawyers, legislators, and laypeople who are trying to navigate the ever-changing cryptocurrency landscape.
IDENTITY:
One of the main issues facing estate planners is how to adequately identify assets such as Bitcoin, DogeCoin, Ethereum, and other cryptocurrencies. Because there is no centralized bank or account that can identify individuals for succession planning purposes, many recommend transferring your cryptocurrencies prior to death (to the extent that this is possible for someone).
Cryptocurrencies rely on a technology known as the “blockchain,” which acts as a sort of ledger showing any transfers of coins in and out of an account. While most cryptocurrency transactions would appear on the blockchain, there are a few ways to complete a transfer without it appearing on the blockchain (such as by physically giving someone a “cold wallet”—discussed further below).
This becomes a further issue as it can be difficult to determine when a cryptocurrency asset was transferred, especially if transferred in a manner that would not appear on the blockchain. Whether a cryptocurrency transfer is recorded depends on what type of storage vehicle is used.
STORAGE: Continue reading