Florida residents should have an understanding of basic estate planning that includes any crypto assets. While the general public views crypto as digital money, the courts may view it as personal property, especially for estate planning.
Key components of crypto estate planning
Crypto is intangible and as an asset has almost no paper trail. Estate planning has to ensure the protection of your digital assets. Otherwise, your family can lose them.
Your cryptocurrency, first off, needs specific attention when you’re creating an estate plan. The executor has to be aware that these assets exist. Your estate planning attorney may recommend that you put them in a trust, which should sufficiently detail the location of crypto and grant access to any crypto wallet. This sensitive information doesn’t need listing in estate planning; it should instead be part of a memorandum.
Holding crypto in a trust
A trust is one secure way to pass assets down to your beneficiaries. You can place your cryptocurrency in a trust under the following conditions:
- Interview any potential trustee, especially if choosing an entity, about their policies concerning trusts that hold crypto.
- Your trust should state that trustees hold crypto as a trust asset. Part of a trustee’s duty is to invest true assets in a reasonable manner, the way a prudent investor does. This means a balanced portfolio of bonds, stock, mutual funds, real estate, cash and so on.
- Be sure that your trustee has immediate access to your online wallet. Do this through advance communication, a memorandum, that includes information for finding your digital assets.
- Crypto distribution gets reported to tax agencies. Trustees need to know the tax basis of any crypto holdings and their value on the date of transfer. Records will help the trustee stay in compliance with reporting requirements.
Important decisions have to be made to meet your objectives for estate planning. You may benefit from the counsel of qualified financial experts and lawyers to help you protect your family and your assets with sound legal, financial and tax strategies.