By: Layne Blasingim, CPA
Are you a cryptocurrency investor or an NFT collector? Have you considered how your digital assets, such as Bitcoin, Ethereum, and NFTs, will be managed and/or transferred in the event of your passing? Thinking of cryptocurrency and digital assets is an essential step in estate planning for the 21st century.
Here’s why it’s crucial to include cryptocurrency and other digital assets in your estate plan:
Secure your digital wealth – Cryptocurrency holdings are typically stored wallets. Digital wallets, also referred to as hot wallets, are accessible through a website or online/mobile app and will require a username and password or private keys (generally a twelve word passphrase). Hard wallets, also referred to as cold wallets, are devices similar to a thumb drive, small calculator, or cell phone looking device that is not connected to the internet in which digital assets are stored. Without proper planning, access to these wallets can be lost forever. By incorporating cryptocurrency and other digital assets into your estate plan, you can ensure that your loved ones can access and inherit your digital wealth.
Safeguard against loss – Cryptocurrency is highly secure but can also be vulnerable to hacking, loss of private keys, or accidental deletion. Private keys should not be listed in your will or other publicly available documentation. If someone has your keys they can access and misappropriate your digital assets. With a well-thought-out estate plan, you can provide instructions and mechanisms to prevent loss or unauthorized access to your digital assets.
Tax efficiency – Proper estate planning can help minimize the tax implications associated with transferring cryptocurrency and NFTs, potentially saving your beneficiaries and/or estate from unexpected tax burdens.
Our experienced team understands the intricacies of digital assets and estate planning and can help you develop a comprehensive plan. We can help guide you through the process of securely storing your private keys, designating beneficiaries, and establishing mechanisms for the seamless transfer of your digital assets.
Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, contact Ryan Mink, CPA at (304) 554-3371 or rmink@suttlecpas.com. You may also contact Layne Blasingim, CPA at (304) 554-3371 or lblasingim@suttlecpas.com.