Accounting for bitcoin in an estate plan

Accounting for bitcoin in an estate plan

| Jan 23, 2018 | Estate Planning |

Bitcoins are a virtual currency that some Ohio residents may have heard of. Those who own this currency control it through a virtual private key. If the owner doesn’t disclose where this key is, the assets could effectively be lost forever. The same is true if there are no instructions for how to use the key to access the coins.

This is similar to not having a key to open a safety deposit box. However, a bank would eventually clear it out to save space, which means someone may eventually get what is inside of it. Conversely, the value of bitcoin is largely based on the fact that there is a limited supply of it. Therefore, if coins are lost, the others still in circulation become more valuable. To ensure that bitcoins are not lost when a person dies, the owner should take steps to educate potential beneficiaries about how to access them.

In some cases, it may be possible to store the key to a bitcoin wallet inside of a safety deposit box. It may also be possible to create shared accounts through exchanges such as Coinbase. People who own them can request a transition from one wallet to another at a designated point in the future.

Generally speaking, the distribution of assets may be easier when both the owners and their beneficiaries understand how they will be handed down. This may mean that the beneficiaries are told in advance where they can obtain their inheritance or where to find instructions for how to access it. This is an often overlooked part of an estate plan, and an attorney can in many cases help clients carry it out.