In some ways, an estate plan can be like a treasure map. While your loved ones may not need to go on an epic adventure to find your assets, your estate plan gives them an overview of what you have and how you want your administrator to distribute those assets.
If assets are missing from your estate plan, it can be difficult, if not impossible, for your loved ones to track them down. In some cases, as can be the case with digital assets, your loved ones may not know they exist unless you include them in your estate plan.
Here’s what you should know about including your digital assets in your estate plan.
Knowing where to look
Unlike traditional bank accounts with long paper trails, digital assets like cryptocurrency do not have the same trail. Depending on how you own cryptocurrencies like Bitcoin and Dogecoin, the administrator may need to look on a specific drive on your computer.
As you create your estate plan, it is essential to include the type of asset and how your loved ones can access it. Your passwords for the account may change over time, but knowing where to look is a critical step to making the account accessible.
Taxing crypto
As cryptocurrencies have gained in popularity, so has their acceptance in everyday commerce. Now, instead of cryptic trades on the dark web, some people use cryptocurrencies to buy everyday items, like pizza.
Even though cryptocurrencies can seem like cash assets, the government sees them as property. Rather than taxing cryptocurrency as income, the IRS will value it as an asset once it is converted to dollars at a reasonable exchange rate.
Your digital assets are an essential part of your estate plan. You should talk to your loved ones about how they can support your asset distribution wishes that include your digital asset investments.