How do I best ensure my heirs receive my cryptocurrencies?
Cryptocurrency soared in popularity and value in recent years. As more of our economy has moved to the digital world, it is perhaps no surprise that our currency is becoming digitalized. Digital currency allows for ease of transfer at any time of the day. Over $335 billion is now held in cryptocurrencies. With the increasing popularity of cryptocurrencies, laws and regulations have had to evolve to address concerns. Of special concern with digital currencies is what becomes of them when the owner passes away. Our Tampa estate planning lawyers discuss the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) and how you can prepare your digital currencies for the next generation below.
RUFADAA
The RUFADAA, which has been passed into law now in most states, including Florida, regulates digital account ownership. Currently, the IRS maintains the position that cryptocurrencies are not in fact currencies. They are instead treated akin to goods. As digital assets, cryptocurrencies are regulated by a number of laws on the federal and state level.
One major issue addressed by RUFADAA is the right of fiduciaries when the digital asset holder dies or becomes incapacitated. Per RUFADAA, the online management system will take precedence over other instructions concerning your account. If you have a beneficiary designation on your online account, this designation will take precedence over wishes set out in your will or trust.
Complicating the issue further, terms of service agreements (TOSAs) can also dictate who will have control over your digital assets upon your death. Many of us will not even recognize that they are accepting a TOSA, as these terms are typically quickly scrolled through and agreed to so that you can proceed with setting up the account.
Given the complexities of passing down your digital assets, it is important that you consult with an estate planning lawyer for help ensuring your assets are protected. Digital currencies can potentially be lost forever if you do not take action to make sure your heirs have legal access to the currencies and the correct information to actually access the cryptocurrency, usually consisting of the private key. Your estate planning lawyer will assist you in planning for the important transfer of your digital assets to the next generation.