If you possess complex digital assets like cryptocurrency, it may be in your best interest to name a separate digital executor in your Last Will and Testament document. Even though you may trust this individual with the technological savviness necessary to execute this role, you must be very diligent in the instructions you leave behind for them. With that said, please continue reading to learn the cryptocurrency information essential for your digital executor and how an experienced estate planning attorney in Putnam County, at the Law Office of Andres D. Gil, PLLC, can help you relay this knowledge.
Why is cryptocurrency difficult to access?
Cryptocurrency is notorious for being rather inaccessible. You may have heard the news stories of cryptocurrency owners losing fortunes and life savings simply because they forgot or lost their digital access information. The primary reason behind this is that cryptocurrency is managed on the blockchain, a decentralized, digital ledger that records and verifies transactions. In other words, it is not overseen by the typical government agencies or financial institutions.
Further, these digital funds are stored in digital wallets that do not have reset options if you forget your login or access information. Considering these are the posed difficulties for cryptocurrency owners, imagine what this means for loved ones who try to acquire these digital assets at the time of death.
What information does my executor need to access my cryptocurrency?
First things first, you must inform your digital executor of the type of cryptocurrency part of your overall estate. This may be Bitcoin, Ethereum, Litecoin, Dogecoin, or otherwise. Then, you must say where your cryptocurrency is precisely stored. This may be online (i.e., a software wallet) or offline (i.e., hardware wallet), on a crypto exchange platform (i.e., Coinbase), or otherwise. You must also give them your username, password, private key, and, notably, your seed phrase. This mnemonic or recovery phrase is a set of 12 to 24 words generated by your cryptocurrency wallet to serve as a backup to your private key.
Once you ensure you give them all the information to access your crypto wallet, you must direct them on how to manage and distribute these funds amongst your beneficiaries. For example, you may want them to transfer these digital assets to your beneficiaries directly, or convert them to fiat currency if your beneficiaries do not possess this technical expertise. To decide which direction to give, you should carefully consider the high volatility of this type of digital asset. With this, it is also worth splitting this evenly across your beneficiaries rather than assigning this to one person while the rest benefit from low-volatility assets.
One last piece of advice is that you should not disclose this confidential information directly in your Last Will and Testament document that will eventually become a public record. Instead, cite a digital access guide and then supplement your will with this document. Nonetheless, if you are ready to get started on your plan, please retain the services of a skilled estate planning attorney in Putnam County as soon as you can. We at the Law Office of Andres D. Gil, PLLC, look forward to receiving your outreach.
