Bitcoin is a digital currency that is starting to enter the mainstream. A number of businesses have started to accept it as a form of payment. Bitcoins are growing in popularity because they’re not controlled by any one person or organization and are neither affected by their policies thus giving a person complete control of their finances.
Bitcoin proves to be an important financial asset for your family in the event of your death or incapacitation.
Due to its Digital nature, Bitcoin impacts Estate Planning which is one of the ways to transfer Bitcoin funds and accounts to your beneficiaries. Below are the ways to start with Bitcoin Inheritance and include it in your Estate Plan:
- Inform trustworthy family members about your Bitcoin accounts.
- Write down details of your Bitcoin accounts and Wallets and store them somewhere secure.
- Include Bitcoin accounts in your Will, or create a Trust for them.
- Easy access to your assets and accounts, as well as the transfer of funds and accounts to family members.
- Minimizing the danger of theft before your family members get access to and authority over your funds.
- Keeping your Bitcoin heirs out of a fight.
Digital Assets differ from traditional assets in terms of management and future planning. Privacy is a must for the Bitcoin account data after your demise, thus you’ll want to avoid Probate.
Significance Of Probate And Trust For Bitcoin
The process of verifying and validating a Will is known as Probate. It’s a lengthy process that could take a year or more for your bereaved loved ones to gain access to your assets following your death. The process is mentally draining and can cost your family a fortune.
Even if you don’t leave a Will before death, the procedure of Probate applies, and your assets will be allocated according to state regulations. With Bitcoin’s volatility, it’s not worth the risk of having to wait months or years for your family to gain access to your accounts and wallets.
The Will of the deceased individual is submitted in the court and becomes a public record during Probate. Hackers can keep an eye on your Bitcoin accounts if your Will contains information about them. With Probate, the goal of eliminating theft risk before transferring funds to beneficiaries is impossible to achieve.
The best approach to avoid Probate for your Bitcoin is to set up a Trust. A Trust is a legal arrangement in which a Settlor or Trustor transfers asset control to a Trustee for the benefit of the Beneficiary. Following the death of the Trustor, the trust may be able to undertake the following:
- Instruct the Trustee to distribute assets to the beneficiaries or to continue managing the Trust assets for the beneficiaries’ benefit.
- Reduce the amount of paperwork, inheritance, and estate taxes you have to pay.
- Fast access to Bitcoin funds(probate is avoided), saving time and money while also protecting family members’ mental health.
- Probate is removed from the equation with Trust, ensuring that information about your Bitcoin Assets remains private(out of the public records).
You can begin with a Trust for your Bitcoin accounts by remembering the following points:
- In the Trust documents, mention your Bitcoin accounts, wallets, and exchanges.
- Make a list of the passwords and devices you use to log in to your accounts.
- Make a handbook that outlines all the technical processes that your beneficiaries will need to know in order to gain access to your Bitcoin accounts.
A Trust can help you overcome many challenges when it comes to transferring your Bitcoin accounts and funds to your beneficiaries. It’s only prudent to safeguard all of your Digital Assets, including Bitcoin, with a Digital Estate Plan that ensures a smooth transfer of these assets to your family in the event of your demise or incapacitation.