Apr 19, · A key part of estate planning is accounting for all your assets, including currencies—and that can be easier said than done. After all, currency itself is changing all the time. It is increasingly common for investors to consolidate their assets in the form of cryptocurrencies, with Bitcoin being the best-known example. Jun 11, · It’s wise, as part of your estate planning, to consider your Bitcoin’s depreciation or appreciation to determine how this may affect your heirs. It’s even wiser to discuss your individual situation with professional tax and financial advisors, as well as your estate planning attorney. Estate Planning is a Must, not an Option. A digital currency that uses blockchain technology to create a decentralized, immutable, public ledger. As cryptocurrencies like BitCoin, LiteCoin, and Ripple increase in circulation and longevity, estate planning attorneys are likely to see more clients acquiring these assets .
Bitcoin estate planningHow to Handle Bitcoin in Estate Planning - Bitcoin Market Journal
There are a couple of factors that make Bitcoin estate planning rather difficult. First is the secretive nature of cryptocurrency. Second is its digital nature—i.
What these factors imply is that investors must keep thorough records of their Bitcoin account details—or else, their cryptocurrency portfolios could be completely lost upon their death. Specifically, investors should maintain records of what they own; where they bought it; and where their beneficiaries might access these accounts.
Cryptocurrency investment is possible even without offering any of your personal information, which means that, without a rigorous paper trail, your beneficiaries may have no idea that you even have cryptocurrencies. A compounding factor is that Bitcoin and competing currencies are changing all the time. In the future, these markets will likely become more tightly regulated, which could actually make estate planning easier.
To speak with one of our estate planning attorneys about the nature of cryptocurrencies, or to review an existing estate plan, contact Singh Law Firm today. Your email address will not be published.
Therefore, if you were to die without communicating that you have Bitcoin, it will die with you. But you do need to develop a method for passing along the important details to a trusted representative such as your named trustee or executor. Top 10 Estate Planning Goals. However, if Bitcoin is converted to cash following your passing, it must be declared as income on an estate tax return.
Additionally, if your executor were to retain Bitcoin, see it appreciate in value, and then sell it, there is the issue of the capital gains tax. The fact that Bitcoin is currently considered personal property means evaluating for either a step-up or step-down in basis given the fair market value on the date of death. I write more on this in regards to four different types of assets here. How much Amy initially paid for the BTC is irrelevant.
Email me or give me a call with questions or to discuss your digital estate planning needs. Establish the Existence of Bitcoin Unlike a checking or saving account.
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