How we handle our money is changing. Forbes recently reported a “resurgence in value” of Bitcoin in 2019. Bitcoin is just one form of digital currency. The piece also reports cryptocurrencies as a whole are valued at over $335 billion as of June 2019.
Digital and crypto currencies are on the rise and will likely continue to grow. Entrepreneurs use this form of currency to purchase property and investors use it to diversify their portfolios. Those who own digital assets are wise to include them within their estate plans. The novelty of this form of currency could make it difficult to transfer without specific instructions. Three tips that can help better ensure this asset is treated in line with your wishes include:
- Will. One option is to include a provision within your will that explains how to handle digital assets.
- Beneficiary designation. The paperwork used for digital currency may include a beneficiary designation. This allows you to choose the next owner of the asset. This designation often trumps anything included within your will.
- Do not forget taxes. The Internal Revenue Service (IRS) and state taxing authorities are still figuring out how to handle digital currency. The IRS recently announced it was sending letters to taxpayers that may have failed to pay their tax obligations for digital assets. This shows the IRS is paying attention. As a result, it is wise to consider the tax implication of this asset and plan accordingly.
You can also help ease the transfer of these assets by keeping records of the location of the accounts and providing the information needed to access the account.
