Whether it’s famous cryptocurrencies or blockchain tokens, there is no restriction on how much you can hold it. Although it is an excellent way to maintain wealth, it can also pose issues involving security. In certain casesm it even adds more complexities when it comes to transferring and gifting crypto wealth. And this is where Florida estate planning comes into play. The fact of the matter is that there is a variety of factors in conventional estate planning that don’t align and don’t work with planning for digital assets in Florida and elsewhere. In fact, crypto holders need a new and modern strategy to grow, maintain, and protect their digital assets. Thus, the importance of todays topic focusing in some depth on Bitcoin, cryptocurrencies and the impact on your Florida estate plan.
Bitcoin, Ethereum, and Dogecoin – these cryptocurrencies have become famous and continue to become significant in terms of wealth portfolio. If you’re a tech investor holding one or more cryptocurrencies, it is crucial to understand how it fits into your estate plan.
Crypto Holdings and Estate Planning: Understand the Impact
In Florida, you should be able to count on estate planning lawyers to get the best advice. Oftentimes, people wonder what would happen to their cryptocurrency holdings in the event of their departure. Thus, when it comes to Bitcoin, cryptocurrencies and the impact on your Florida estate plan, you need to identify a legal expert who has evolved to meet this challenge. You need a devoted expert to help you understand the positive and negative impact of your cryptocurrencies on your Florida estate planning.
In 2022, you may have heard a dozen different stories about people getting rich through crypto investments. With the right investment at the right time, crypto has the power to make people rich. After years of crypto investing, Bitcoin continues its streak to be the top-rated and most popular among crypto investors despite some challenges on the horizon.
Valuation and Volatility
It would be fair to state that many people now believe that cryptocurrency is a powerful and valuable digital asset. But in terms of valuation, the crypto bubble can be highly volatile and that makes profitability often uncertain. Apart from Bitcoin value, the promise of blockchain, the underlying technology behind Bitcoin, operates outside of a crypto exchange.
In fact, blockchain technology is on its way to revolutionize the standard to maintain medical records, record deeds, or perform contracts. After all, the distributed ledger comes with top-notch security, cost-saving, and transparency perks that garners the attention of more investors.
Importance of Making a Cryptocurrency Part of Your Florida Estate Plan
Cryptocurrencies are inherently assets and an estate plan creates a direction in case something happens to you. Conversely, without an estate plan, your cryptocurrency investments will face probate proceedings in Florida.
Thus, when it comes to Bitcoin, cryptocurrencies and the impact on your Florida estate plan, without a proper plan, the process of inheriting these unique assets can take months or years. Not to mention, they will need to cover the legal fees. It is imperative to realize and recognize that the court can hold up your digital assets even if your family knows about access passwords and accounts.
Remember that an estate plan extends beyond your Florida last will and power of attorney in Florida. In fact, it includes important information that makes it possible for your family to take control of your estate seamlessly. Google and you will find hundreds of stories about how crypto investors lost passwords to their cryptocurrencies. And losing pass-codes of a digital asset means funds are lost for good and there is no chance of recovery.
With an estate plan, you can make sure this does not happen to your family. Through an estate plan, you can take a sigh of relief in knowing the fact that your cryptocurrencies will be properly handed over to your family if anything happens to you. You should be able to count on an experienced Florida estate planning lawyer to get the details right and craft an estate plan that accounts for all your digital assets.
Buying Bitcoin and Reasons to Have a Proper Estate Plan
By design, crypto is decentralized and that means central banks cannot be part of the process. As a result, this makes the transaction process smooth and secure. But since there is no governing body around decentralization, cryptocurrency often runs into legal issues.
Still, experts believe that it will take years before laws catch up to modern-day cryptocurrencies. In fact, in some cases, crypto laws are non-existent and that makes all the more reason to take the basic security measure and protect your investments through an estate plan.
2. Avoid Probate for Your Family
Another reason to opt for an estate plan for your crypto investments is to avoid having your family face probate proceedings. Contrary to misguided perception, it is not enough to know about the accounts and stored passwords to get access to digital assets. Instead, you need an estate plan that includes up-to-date details about your crypto investments. Besides, the last thing you want for your loved ones is to face a complicated and expensive legal probate process.
3. Blockchain Technology
Blockchain technology is also a serious reason to create a solid estate plan for your digital assets. Ultimately, you have to have a private key in order to access your digital assets in the form of a passcode. A great estate plan that states relevant information will ensure that your crypto investments are safe and will be accessible and transferrable by your family.
Take Advantage of Online Estate Planning Tools and Platforms
When it comes to technology and Bitcoin, cryptocurrencies and the impact on your Florida estate plan, you can leverage online estate planning tools to create a will or set up a new trust. In fact, several platforms now offer a thorough wealth management estate plan around digital assets. Traditionally, passing over private keys or digital assets to others goes against the sovereignty of assets. Once you look at this concept through the lens of succession planning, you will realize how fragile the custody of digital assets can be for the family.
Usually, experienced investors diversify their crypto investments and form a plan of action in an event of an illness or death. On the other hand, first-time crypt investors who invest with a low amount usually don’t have an estate plan in place and make their digital assets vulnerable.
Create a Dedicated Estate Plan for Your Digital Assets
When evaluating your Bitcoin, cryptocurrencies and the impact on your Florida estate plan, you may be deemed to have a complex crypto case. In these cases, you may require extra help establishing a Florida trustee or custodian of your crypto. You have a simple or a combination of solutions to make the estate plan robust and practical.
For starters, the best practices involve sharing private keys and the seed phrase with a trusted friend or family member. Also, make sure to divide up your private keys and seed phrase among more than one trusted friend or family member to ensure no single individual has full control over your crypto assets.
You can also create a separate Florida trust and pass the ownership of digital assets to the trust. As a crypto investor, you can assign a corporation, friend, loved one to serve as your trustee. After that, you can your digital assets in custody such as a hardware wallet or software application.
Wallet and Tax Consideration: Protect Your Crypto-Assets At All Costs
Ideally, you should go for a multi-signature wallet rather than a self-sovereign crypto wallet. Your crypto-asset estate plan must include details about beneficiaries and what they plan to do with crypto investments after complete ownership transfer. You should also take into account tax implications before you transfer and sell your digital assets in the estate plan.
Despite the type and size of cryptocurrency you’re holding, it is integral to communicate with your loved ones about how to get access to digital assets. On the surface, it can come across as complicated. So, make sure to follow the best practices and seek out the expertise of an experienced estate attorney who can help you deal with a wide range of cryptocurrency holdings.
As cryptocurrency becomes more mainstream, it makes perfect sense to consider having an estate plan that includes digital assets. In retrospect, when you own cryptocurrency, it is vital to offer clear instructions. Whether it’s Bitcoin or any other cryptocurrency, it exists in the virtual world and is bound to have a significant impact on your wealth.
With the help of a Florida estate lawyer, you can create an accurate crypto estate plan. In fact, it takes minimal cost and effort to curate a plan for your digital assets. This estate plan will give you peace of mind that your digital assets will be protected and transferred to people you love. Plus, having an estate plan for your digital assets is the best way to make sure this wealth won’t get lost.
Steve Gibbs, Esq.