The personal representative of an estate has an important job. One of the most important parts of that job is locating and gathering probate assets. Finding a decedent’s car and house may not be hard, but what about items that are stored somewhere, such as personal property, cash or bitcoins? The job may be harder when treating digital currency as a probate asset. Planning ahead can make the job easier.
It is a super secretive virtual form of money. Investors buy the digital currency and store it in online “wallets.” The unbreakable cryptography and security measures inherent to digital currencies make it virtually impossible to access the coins without the private key, passwords, and other login information. To make things just a little more complicated, buyers may not be required to show identification and could buy digital currency using fake names.
No, some property does not become part of the deceased owner’s probate estate. For example, trust assets pass to heirs according to the terms of the trust. Some property may be titled in a way that passes the property interest directly to a co-owner or to an heir. Financial accounts and insurance policies typically allow account holders to name beneficiaries to receive their accounts without the need for probate. However, digital currency accounts typically do not offer this option. The owner of the digital currencies can and should make them part of their estate plan.
Like all probate assets, the personal representative should locate digital currencies and protect them. In addition, the estate may keep or sell the digital currencies. Of course, the personal representative has to be able to access the digital currency and know how the decedent wanted them to be handled.
Ownership of digital currencies should be reflected in your estate plan. Additionally, prepare a digital asset inventory that includes all the information your personal representative and heirs will need. Update the list regularly and keep it in a safe location at all times.
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Written by: John Mangan, JD, MBA