In recent years, Cryptocurrency has been catching the attention of people all around the world and efforts have been put to make this virtual currency a common aspect of people’s lives.
Cryptocurrency is viewed as a Digital Asset due to its sole digital existence and the fact that transactions are electronically recorded.
It is evident that Cryptocurrency funds are going to be pre-eminent in the following years and people investing in them often see Cryptocurrency as great financial support after retirement.
With people adopting Cryptocurrency progressively, it will soon become mainstream and like physical assets would require proper planning for security and distribution among family members in the future.
The IRS considers crypto as a property for Federal Tax purposes and not as currency. It is normal to get perplexed by the process of Estate Planning and with Cryptocurrency, the Challenges in Estate Planning increase. Below are 5 tips that can help you out.
1. Make A Record Of Crypto Assets
Start with locating your Cryptocurrency Wallets and Exchange accounts and also the devices accustomed to storing these accounts, then build an inventory stating all this information. Ensure no account or device is lost from being within the list. Produce another list by noting down all passwords, keys, devices accustomed to accessing Cryptocurrency accounts.
2. Protect The Record
Record carrying information of the Cryptocurrency accounts and storage devices ought to be held somewhere safe and accessible. It’s convenient to use a platform like Clocr to store details that would be disclosed in the future to provide financial assistance to your family members after your death or immobilization.
3. Provide Guidance For Beneficiaries
Develop a whole guide incorporating technical steps for your beneficiaries to discover the location of Cryptocurrency accounts and devices, platforms, or applications used for storage for quicker access of the Cryptocurrency funds.
Leave directions to your beneficiaries regarding whether or not you would like to keep running the Cryptocurrency accounts, encash them or exchange them for another Cryptocurrency.
4. Use Of Will
A Will is an official document that states your wishes about the distribution of your financial and personal assets among your beneficiaries. A Will can also state the desired legal guardian and ways to look after your minor children(in case of untimely demise).
A well-drafted Will can ensure that your assets are distributed among your family members in accordance with your wishes and estate or income taxes are exempted or reduced. A Will can also help keep the danger of family feuds or legal disputes to a minimum.
5. Trust To Escape Probate
A Will instructs the Executor of the Estate about the distribution of assets, while a Trust promises privacy of the assets as it ceases the risk of Probate(Will under Probate later becomes a Public Record) and assets can be accessed faster by the beneficiaries.
With the history of rising and sinking value in seconds, it would be challenging to strand your Cryptocurrency for a long time while the process of Probate(with or without Will) completes during which your Crypto Wallets can become a target of hackers.
It’s better to include both Will and Trust in an Estate Plan to ensure complete security and fulfillment of your desires regarding your assets following your demise or immobilization.