New York residents who have invested in Bitcoin or other cryptocurrencies might have questions about how best to treat these assets in their estate plans. Bequeathing digital holdings is significantly more complicated than other property or cash. However, one thing that seems clear is that, when it comes to choosing to do it via wills or trusts, trusts might be the wiser choice.
A private key, which is similar to a password but unchangeable, is all that is required to get access to a cryptocurrency wallet. The fact that wills become public documents after a person's death means that, if the private key were included in a will, it would enable anyone to access the funds and purloin what they want. Another option is not to include the key in the will but to give it to the heirs and hope they would realize the importance of keeping it a secret. Claiming inherited cryptocurrency through the probate court, as is done with traditional assets, is still a bit of a gray area.
Furthermore, digital asset exchanges do not allow wallet holders to name beneficiaries, and it will be up to the heirs to prove ownership through inheritance. In contrast, trusts are typically confidential documents that do not become public and might be a better option for dealing with cryptocurrencies because they do not go through the probate process. Nevertheless, even if it is left to someone in a trust, it might be a legal nightmare to prove entitlement to a crypto inheritance.
Fortunately, an experienced estate planning attorney will know all the dos and don'ts when it comes to new and evolving laws related to cryptocurrencies. A New York lawyer can provide the necessary support and guidance throughout the process. The attorney can explain the pros and cons of including these assets in wills and trusts, allowing the clients to make informed decisions.