Some people treat Bitcoins like currency and spend them as such. However, planning for an estate that contains Bitcoins is different than planning for an estate that contains traditional currency in the form of dollars.
Bitcoins are very popular in some circles. The original premise was that Bitcoins were to be a digital currency that people could use on the Internet in the place of dollars.
A key benefit was that Bitcoins were to be untraceable and uncontrollable by any government.
That original premise has not entirely come to pass, but many people do have large amounts of Bitcoins either for use as a type of currency or as investments.
Recently the Wills, Trusts & Estates Prof Blog pointed out that Bitcoins need to be planned for differently in an estate plan in an article titled "Some Tips On How To Plan For An Estate Containing Bitcoin."
The tips include:
- Although many people think of Bitcoins as currency, the IRS does not and has ruled that Bitcoins are property. The difference has potential tax consequences and must be planned for accordingly.
- An estate planner needs to know specifically about any Bitcoins owned to ensure that they are planned for and not lost.
- Bitcoins often require an encryption key and password for access. Consequently, those need to be passed on to the appropriate parties or transferring them to the intended beneficiary might not be possible.
- A power of attorney should specifically state that the attorney in fact has the authority to manage the Bitcoins.
- If Bitcoins are part of the assets of a trust, the prudent investor rule might require that they be diversified into other investments.
If Bitcoins are part of your estate, then contact an experienced estate planning attorney to ensure that they are identified and distributed as you intend.
Live in South Florida? I can help! Call me (305-443-3104) so I can make recommendations to protect your Bitcoins and ensure all of your assets are properly planned for in your Estate.
- I'm an exceptionally experienced Florida Bar Board Certified Estate Planning Attorney,
- I'm a Florida Bar Board Certified Elder Law Attorney, focusing on ALL legal issues related to aging,
- have prepared over 4,000 estate plans in 30+ years in practice,
- have administered over 600 estates through Probate, and
- am a Certified Financial Planner Professional™, plus
- I am also a Florida Certified Public Accountant (CPA).
Of course, if you would like more information about General Estate Planning in South Florida, I have a very informative website you are welcome to visit for more information.
Reference: Wills, Trusts & Estates Prof Blog (July 29, 2015) "Some Tips On How To Plan For An Estate Containing Bitcoin."