Despite high volatility and cautions from financial advisors, cryptocurrencies continue to grow in popularity. That can make estate planning difficult.
Most financial advisors surveyed on the subject, say they would advise their clients not to invest in cryptocurrencies, such as Bitcoin and Ethereum. The markets for these and other digital currencies are extremely volatile and subject investors to substantial risk.
For many people, the volatility is attractive because there is a chance for a great reward. Therefore, cryptocurrencies are increasingly popular but they are choosing to deal with an issue discussed by the Financial Standard in "Crypto assets rewrite estate planning."
One of the biggest problems is proving ownership of cryptocurrency. The way the technology works, each currency holder has a unique digital key. Possession of that key, grants access to the account and there is no other proof of ownership.
Consequently, estate plans must be written so that the estate of a decedent account holder has access to the digital key, without inadvertently revealing the key to anyone else who could use it to gain unauthorized access to the account.
Another potential problem is simply the volatile nature of cryptocurrencies. Unless carefully considered in an estate plan, this can make it difficult to equalize inheritances between children. Without having an idea what the currencies might be worth at the time of death, one child could potentially have a much larger (or much smaller) inheritance than others.
For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Financial Standard (March 5, 2018) "Crypto assets rewrite estate planning."