What is Bitcoin?
Bitcoin is virtual money. You purchase it with “real money” and download a digital Wallet in which you store your virtual money. An online exchange exists for those businesses and individuals that choose to deal in the form of currency. It’s value fluctuates….a lot! Like stocks, its value goes up and down depending on supply and demand. And, it is not supported by any government or banking system. Is it going to be around when you pass away? Who knows. But, Bitcoin users are pretty confident it will be.
What happens to my Bitcoin Wallet after my death?
I’ve written a number of blog entries on digital assets. Bitcoin shares many digital asset qualities, and has similar issues if you die and fail to handle these assets properly. Here are just a few complications with Bitcoin and transferring your Bitcoin Wallets upon your death.
Access: There is no bank and no bank account. So, you can’t just walk in to the local Bitcoin exchange (they’re mostly international) and talk to someone in charge. Bitcoin operators would not know personalized highly secured access information. These very complex security measures make it impossible for those who don’t have clear instructions and proper legal authority.
Specific Gift or Residue?: Bitcoin is intangible personal property, which means unless you give it directly to someone as a specific gift in your Will, it will be distributed as residue of your Estate. This is an important distinction in some cases. An attorney experienced in this area could assist you with understanding this distinction.
Knowledge of Existence: If you die and no one knows you have a Bitcoin Wallet, your family, your personal representative or trustee wouldn’t know to look for it. It would be lost forever.
Tax Issues: In short, there may be transfer taxes, capital gains, and increased/decreased basis to address. The owners of Bitcoin should understand the ramifications of these taxation rules and avoid unnecessary surprises.
The important point is to consult with an Attorney who can assist you with your estate planning through clear, documented instructions that have legal authority. Those of you who like to dabble in cutting edge, “bank-free” investment opportunities are wise to plan for how your cutting edge estate plan will distribute these investments after your death.This blog is written by Bridget-Michaele Reischl, Attorney DECORO LAW OFFICE, PLLC www.decorolaw.com
ALL READERS: This blog is not, nor shall it be deemed to be, legal advice or counsel. This blog does not create an attorney-client relationship with any reader. It is designed to encourage thoughtful consideration of important legal issues with the expectation that readers will seek professional advice from a licensed attorney.Contact Bridget-Michaele Reischl at: DECORO LAW OFFICE, PLLC 6 West 5th Street, Suite 800-D Saint Paul, MN 55102 (651)-321-3058 firstname.lastname@example.org