Estate Lawyers Caution that Cryptocurrency Should not be Treated like any Other Asset

Cryptocurrency is becoming more mainstream, and with more clients appreciating Bitcoin’s and other’s unique investment attribute, estate planners should be aware of the potential pitfalls. Attorneys and their clients want to be sure to transfer the assets appropriately upon death while also not giving up the keys prematurely.

Pamela Morgan, an attorney and author who founded Empowered Law and trains lawyers about cryptocurrency and blockchain technology, says “It’s an opportunity to grow your client base­—to attract new people who never thought about this before.” Because it is such a new area, some estate planning attorneys may need to fully immerse themselves in cryptocurrency to be comfortable with the subject matter.

When a person buys bitcoin, it’s associated with crypto-graphic public and private keys. The public key identifies that specific bitcoin and all of its transactions on the blockchain—a public ledger that records transactions on a network of decentralized computers across the world. The private key is the owner’s secret and proves ownership and authorizes transfers. The private key remains secret until the owner passes away, or else anyone could steal the cryptocurrency.

Cryptocurrency can be held in online exchanges, software wallets or hardware wallets, each needing a slightly different planning perspective. Hardware wallets are similar to USBs and an estate plan merely needs to spell out where the device is located and the necessary seed phrase.

See Angela Morris,  With the Rise of Cryptocurrency, Estate Lawyers Caution that it Shouldn’t be Treated like any Other Asset, ABA Journal, November 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.