March 12, 2017
Is Your Bitcoin Account Safe if You Die?
We published a blog about bitcoins and tax issues; however, there are other issues related to bitcoins that must be addressed. One of those issues is what happens to bitcoin accounts when a person dies. Who has access to those accounts and control of the assets? Unfortunately, if you do not take the required steps now, your investment in bitcoins or other forms of cryptocurrency could be lost forever if you die.
Protecting Your Bitcoin Accounts for Your Heirs
Without your private key, your heirs cannot access your cryptocurrencies. Contacting the company holding the asset may not do much good because, without the key, the company may not be able to help. Very few companies have account holders name beneficiaries who could access the account after the account holder dies. Therefore, your private key and your thumb drive wallet are crucial for your heirs to access your bitcoin account. One of your heirs or your personal representative could easily discard a thumb drive or “key” without knowing he is throwing away thousands or hundreds of thousands of dollars.
You can safeguard your bitcoin account by developing an estate plan that includes instructions for all online accounts, including bitcoin or other cryptocurrency accounts. Our Michigan estate planning attorneys are currently working with clients to preserve and protect their online accounts for their heirs. We can help you develop an estate plan that preserves digital accounts to ensure they will not be lost once you are gone or if you become incapacitated because of an illness or injury.
Steps to Protect Your Digital Accounts
The first step in protecting your digital accounts is to make a list or inventory of all accounts. When you sit down to make your list, you will realize you have many more online accounts than you thought you did because you only use a few of those accounts on a daily or weekly basis. Online or digital accounts include every account from your social media accounts and investment accounts to your file storage accounts, Dropbox files, photo storage, and email accounts. Even awards accounts and loyalty programs should be included on your list because these accounts have value.
When you have a detailed inventory of your online accounts, you must decide who will handle these accounts after your death. You may or may not want your personal representative to be the person to assume control of your digital accounts after your death. An important consideration to keep in mind when choosing the person to assume control of your digital accounts is that this person will see everything in your account. This consideration may not weigh heavy on everyone, but it is still a matter that should be given careful consideration.
To assist the person who will have control over your online or digital accounts, you should maintain a current list of accounts with updated login and password information. You may want to consider a password manager. Several companies offer password management services that can help you keep track of all online accounts, in addition to increasing the security of your accounts.
Call a Michigan Estate Planning Attorney
To ensure that your digital accounts, including any bitcoin or other cryptocurrency accounts, are protected, you must include this information in your estate plan. If you do not have an estate plan, now is the time to meet with an estate planning attorney to discuss your options.
Contact The Elder Care Firm of Christopher J. Berry, CELA to discuss estate planning with an attorney. Call 888-390-4360 or use the contact form on our website to schedule an appointment with a Michigan estate planning lawyer.