New Yorkers who are invested in bitcoins and other cryptocurrencies may be concerned about the future of their investments after their death. Because these are relatively new developments, many investors have not yet accounted for them explicitly in their estate planning documents. Yet digital assets, from personal profiles on social media sites to online accounts in cryptocurrencies, can be some of the most important ones a person owns.
The nature of bitcoins can make them a particular concern to deal with after death. Their very security, encryption and virtuality makes them a more difficult subject of transferred ownership rights than other traditional investments. Bitcoin owners have a key, a private password, that allows them to access a secure digital wallet. No central authority retains these keys, and the only way to have access is to obtain the key directly from the wallet holder.
Therefore, determining a method to safely store and pass on the private key along with instructions for its use can be critical to passing these assets to heirs. It can be far too easy to simply lose bitcoins when they go unclaimed. Some options that can help bitcoin owners pass on these assets include storing the relevant information on a flash drive in a safety deposit box or setting up a future transaction to an heir's bitcoin wallet. Bitcoin owners can also set up an account with a separate vaulting company that allows for a smoother transition to named heirs.
Regardless of the nature of their assets, people should have a comprehensive estate plan in place. An attorney can assist with preparing a will, and other documents that might be advisable include powers of attorney that can be put into effect if the principal ever becomes incapacitated and unable to make financial or health care decisions.