Do you know someone who has invested in cryptocurrency? Do you know if that person has a plan for how to deal with that investment in the event that the person passes away? Cryptocurrency estate planning is an increasingly important aspect of taking care of assets.
Per Fidelity.com, “When the CEO of a crypto company died suddenly at age 30 holding hundreds of millions of dollars in cryptocurrency that was inaccessible to anyone else, it sparked many questions about how this asset would be transferred at death. The unique scenario illustrates how important it is for owners of cryptocurrency to factor it into their estate plans and understand the considerations it brings."
Small but Growing Fast
Cryptocurrency is a small, young type of investment, but it is growing rapidly. As of October 19, 2022: “The Ontario Securities Commission (OSC) today released the results of an investor survey on crypto assets that found 13% of Canadians currently own crypto assets or crypto funds.”
Keep It Secret, Keep It Safe
One of the keystones of cryptocurrency investing is that there are many scams and scammers in the space, so keep your investments private and don’t talk about them to anyone. This is great advice to keep your investments safe while you are actively working on them, but if you should unfortunately pass on, your inheritors will need to know how to access them or they could be lost forever.
Include Crypto in Your Will
Everyone should have a will; that is a basic fact of modern life that far too many of us don’t pay attention to. If you are active in cryptocurrency investing, this becomes even more important, because your lawyer can become your bridge to your inheritors so they can benefit from your hard work, just like you have planned
Part of your estate planning can be telling your lawyer what coins you have, where these coins are stored, and where the documentation to access these coins are.
This video talks about how your digital assets might be handled after your death.
Talk To a Lawyer And a Financial Planner
Cryptocurrency is more complicated in estate planning because the assets aren’t clearly defined as tangible assets or intangible assets. There are also the tax implications to consider, and how to access the digital assets (you want to keep your assets safe, but not so safe that they are lost to inheritors).
To summarize, your inheritors need to know what coins you have, how much of each you have, where they are stored, what you paid for them, what they are currently worth, what type of asset they are, and what the tax liabilities are. If you are feeling overwhelmed at this point, you aren’t alone. Shaw & Associates would love to help you with all your financial planning needs (and recommend a good lawyer to help you draw up a comprehensive will that includes your digital assets).
Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.