Both Florida law and federal law do not see cryptocurrency as money. Instead, it’s seen as personal property, so you cannot treat it in the same way you would with paper money, insurance benefits or investments. This could have a significant impact on your estate planning.
Can a trust secure cryptocurrency?
The safest place for your crypto assets is in a revocable living trust. When creating a living trust, you retain the power to manage the assets as long you live if you so choose. After that, you pass the authority to the trustee of your choice.
A revocable trust helps avoid certain issues surrounding individuals who are given authority to use your private key to access assets and administer the trust. Cryptocurrency is usually stored in a custodial, hardware, mobile or localized software wallet. These locations and the passwords or private keys will need to be securely incorporated into the estate plan.
What happens if you’re not prepared
With a lack of planning, your assets are at risk. For example, the banking heir and former chair of the New York Republican State’s finance division bought $2 million worth of XRP, a cryptocurrency. Upon his death, the value of that investment came in at half a billion dollars. The man distributed the private keys across several banks but did not document the information. To this day, the assets are not accessible.
It’s important to make sure your estate plan and routine updates are compatible with the fast-changing times. This is the only real way to ensure that your assets remain safe and reliable.
Under current guidelines, beneficiaries receiving crypto as an inheritance could also see lifetime capital gain appreciation completely erased. Like any other asset, cryptocurrency requires unique safeguarding. Otherwise, you run the risk of great loss to both yourself and your family.