PROTECTING YOU, YOUR FAMILY, YOUR FUTURE | CALL US TODAY! (832) 408-0505

GP Schoemakers, PLLC

Protecting You, Your Family, Your Future

BOOK AN APPOINTMENT

Digital Assets

Cryptocurrency and Estate Planning: What You Need to Know

Cryptocurrencies have been making headlines as of late, with more and more investors wanting in on this digital currency.  Cryptocurrencies are attractive because they are unregulated, decentralized, and anonymous.  While secrecy is useful in some areas of life, when it comes to estate planning it can lead to disaster.  Indeed, your entire cryptocurrency investment can essentially disappear into thin air the moment you pass away or become incapacitated.  If you have not taken the proper steps to plan and protect these assets, your loved ones left behind have no way of accessing or recovering them.

Cryptocurrencies Explained

Cryptocurrency is a form of internet currency.  Instead of a central bank regulating the funds, encryption techniques are used to regulate the amount or units of currency.  These techniques are also used to verify the transfer of funds.  In this manner, cryptocurrency can be transferred online without a third party.  Some cryptoassets have units that are all the same (called “fungible tokens”).  Bitcoin is an example of a fungible token since all bitcoins are the same as one another.  Other cryptoassets have unique attributes (called “non-fungible tokens”).  Cryptokitties is an example of a nonfungible token since each digital “cat” is unique.

Notably, if you lose the key (i.e., the encryption) to your cryptocurrency, you will be unable to access your digital assets.  Thus, making access to your key available to your loved ones upon your death or incapacity is vital to estate planning.  This is because if there is no access to the key, there is no access to the assets.  Unlike more “traditional” assets, there is no third party to control or compel assets nor reset the key for access to these digital funds.  The software or hardware device that holds the keys to your cryptocurrency and manages your transaction is referred to as a “wallet.”

Digital Asset Estate Planning

It is important to understand that cryptocurrencies are typically a non-listed, non-vetted asset category.  In other words – cryptocurrencies are not like publicly traded stocks, which have a vetting process, legal disclosures, and are subject to other requirements.  In short, buyer beware when it comes to digital currencies.  Therefore, if you own cryptocurrency — or are thinking about investing in digital currency — understand that you will need a technical access plan (a way to ensure your successors can access your digital wealth) in addition to a legal plan in order to effectively create an estate plan that incorporates these digital assets.  And because what is going on with digital currency is evolving all the time, and quickly, it is important to touch base with a knowledgeable estate planning attorney at least once a year to make sure you and your family’s needs are being met.

Keeping your money, family heirlooms, and other values hidden from everyone in a safe in an unknown location without giving anyone the combination to the safe is foolish.  The same is true if you own cryptocurrencies and do not take the appropriate steps to protect this asset through estate planning.  Do not let life’s surprises leave your family in the dark.  Contact us today to learn about your options and how to protect the loved ones you will leave behind.

Digital Afterlife: An Estate Plan for Your Facebook Account

Did you ever wonder what happens to your digital footprint when you pass away?  Well you should, particularly if you are part of the 77 percent of Americans who go online every day.  As the internet has become more of an integral part of our lives, our information — pictures, videos, financial, emails, social media accounts, and other personal information — is constantly being stored online.  All of this information is known as your “digital assets.” While the internet has made our lives easier by allowing us to access our information with the simple push of a button, it may be difficult for our loved ones to do the same once we are gone.

Digital Estate Planning

Digital assets encompass any of your information that you store or use online — this includes social media accounts such as Facebook.  While you may not consider these digital assets as having much monetary value, they store critical information or have sentimental value.  Consequently, when you plan for your estate you should include your digital assets because they are an asset owned by you.  Indeed, when it comes to your digital assets you will have to make special advanced arrangements so your executor — the person in charge of your estate when you pass away — can access them upon your passing.  Many online providers, such as Facebook, Google, and Yahoo!, have specific procedures for handling your account upon your passing.  In order to ensure that your wishes are carried out, you must follow their rules.  Strictly speaking, providing usernames and passwords to another person, even your executor or successor trustee, may be a violation of the terms of service for many online accounts, and could cause trouble for your executor or successor trustee.  You should also consider access to your computer and back-up hard drives, tablets, and smartphones.  Being proactive is key when it comes to your digital assets so that they may be accessed when needed.  And, as with any estate plan, regularly revisiting your plan for your digital assets is key.

Coordinating Your Digital Assets With Your Estate Plans

Depending on where you live your digital estate plan may need to be formalized into a legal document.  You can then name an executor specifically for your digital assets or, alternatively, name someone with whom your traditional executor can work with in order to settle your digital estate.  Make sure to instruct your executor as to the location of your digital asset inventory for easy access.  Keep in mind that because your will becomes a public document upon your death due to probate, you should never put any of your username or password information in your will.  Instead, have your will refer to an outside document that contains all the needed information regarding your digital assets.

If you have questions about handling your digital assets and how they fit in with your existing estate plan, give us a call.  As with any estate plan, make sure to keep us and any financial advisors you have up to date on the status of your digital assets so that we can ensure your overall plan properly handles them and adapts to any changes in the law or circumstances.

Contact us today.  We’re here to help.