Bitcoin is undoubtedly a relatively new asset. Therefore, leaving Bitcoin in a will is somehow uncharted territory. Planning your estate when you have Bitcoin may not be easy because gifting the cryptocurrency might not be effective. Also, you must ensure that the beneficiaries know how to access or find the Bitcoins you bequeath to them.
How Bitcoin Differs from Traditional Assets
Bitcoin as a digital asset differs from traditional investments that you may include in your will or estate plan. Essentially, you have a physical record of conventional assets. For instance, you might want to leave a beneficiary the fiat money you have in a bank account. Typically, the fiduciary or the person handling the estate has to produce testamentary letters or an original death certificate to take control of the account upon your death.
With Bitcoin, nobody will require the individual handling your estate to prove your death or possess a power of attorney. All they need is your passcodes to access and even transfer the Bitcoin account for estate administration purposes.
For this reason, it’s paramount that you trust the person you name as the fiduciary because they can use the passcodes to access, transfer, or manage your Bitcoin account without or with little oversight.
Steps for Including Bitcoin in a Will
Once you decide to include Bitcoin in a will, follow these steps to do so.
1. Get a Tenured Attorney
Select an attorney with relevant skills and experience in adding Bitcoin into a will or estate plan. Despite being a new asset, many people have already included and transferred Bitcoin to their loved ones through a legal will. That means you can find an experienced attorney who can help you through the process. That way, you can include both traditional and digital assets into your will or estate plan.
2. List All Your Digital Assets
Maybe you have other cryptocurrencies that you wish to include in your will. If you don’t list all cryptocurrencies, they may be subject to residue or forfeit, meaning the aggregate or remainder of all probate assets in the estate once you pass on. Therefore, describe your digital assets and where your heirs can find them in your will.
3. Describe Your Crypto Wallets
Bitcoin investments entail more than owning the currency. To purchase Bitcoin, you must have a digital wallet where you can receive and send the tokens. Also, you may have an account with a crypto exchange bitcoinprime.software, where you can buy Bitcoin with fiat money.
Once you’ve created an account with a crypto exchange and bought Bitcoins, you can send them to your crypto wallet. Your digital wallet can be in a smartphone app, a computer, or any other physical device. Therefore, list all digital wallets you wish to include in your will so that your beneficiary can access them.
4. Include Passwords, Passcodes, and PINs in a Memorandum
A will becomes a public record after going through probate. People access digital assets via passwords, PINs, and passcodes for security purposes. Therefore, please don’t include this sensitive information in a will because it might go through probate.
Instead, create a memorandum as a separate document and reference it in the will. However, make sure that the memo is not part of your will. You can also change the memorandum at some point. Thus, if you change the access information for digital assets, you can alter the directive without affecting the will.
Here’s what your memorandum should include:
- All your digital wallets
- URLs or website names for the exchanges
- Passcodes, passwords, PINs, Keys, and usernames for accessing wallets, exchanges, accounts, and devices you associate with digital assets
Once you’ve done that, create an access guide to avoid confusion when your beneficiaries try to access your Bitcoins. Some people are unfamiliar with cryptocurrencies. Therefore, provide a detailed guide for accessing your wallets and crypto exchanges where your heirs can sell Bitcoins. Ensure that you can update it at any time and store it alongside your memorandum.