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Thomas N. Torzewski, LLC

How does Bitcoin fit into estate planning?

Quite a few Americans have invested in the cryptocurrency Bitcoin. The rise of Bitcoin value has been quite extreme, making owners of the currency rather wealthy on paper. What happens to this digital currency when its owner passes away, though? Do loved ones get to automatically claim it? The answer is no, which is why including Bitcoin when going through the estate planning process is important for anyone in New Jersey who has it in their portfolio.

Digital assets are not automatically passed on, following a person's death. It can actually be quite difficult to access a loved one's digital assets if the proper legal protections have not been put in place. This is not just a Bitcoin problem; it is a problem in regard to all different types of digital assets.

One way to protect digital assets is by designating an electronic estate trustee. The sole role of this individual will be to manage digital accounts and assets. When it comes to Bitcoin, the only way for a trustee or personal representative to access it is with a private password. When going through the estate planning process, not only is it necessary to state one has Bitcoin, but it is also necessary to list the password or at least identify where the password to access the currency can be found. Without this information, the money will never make its way into the hands of one's beneficiaries.

When it comes to estate planning, Bitcoin and other digital assets certainly have their place. Overlooking these assets could mean a significant loss to one's loved ones. With the assistance of legal counsel, New Jersey residents can be sure their estate plans are complete and offer protections for all of their assets -- digital or otherwise.

Source: business.financialpost.com, "What happens to your Bitcoin when you die? Digital assets complicating estate planning process," Matthew Urback, Jan. 29, 2018

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