Crypto assets such as non-fungible tokens (“NFTs”), utility tokens, security tokens, digital wallets, and cryptocurrency funds are digital assets that implement public ledgers over the internet to establish ownership. While these assets can hold significant wealth, it also presents unique Texas estate planning challenges. It is critical to consider these digital assets while establishing an estate plan. An experienced Texas estate planning attorney can help individuals meet the needs of the growing number of digital assets.
Protecting Crypto Assets
Accessing cryptocurrency requires the owner to use a private key, a series of alphanumeric numbers stored in a digital wallet or cold storage. A digital wallet is a financial transaction application that runs on a mobile device and stores payment information. Cold storage refers to a physical device that keeps cryptocurrency offline. Many of these devices look similar to a USB drive. Anyone with the private key or password can purchase, dispose of, and use digital money. As such, these currencies are highly susceptible to fraud and theft.
Incorporating Cryptocurrency into an Estate Plan
Individuals should inform their family or fiduciaries of the crypto assets’ existence, where to find the assets, and what to do with them. Some options to accomplish this are sharing private keys with a fiduciary, using a hardware wallet, or using a digital-asset custodian service. Those in the custody of digital assets should also consider incorporating a digital legacy into an estate plan. A digital legacy can ensure that the appropriate parties can access the assets.
As it stands, opening an NFT or cryptocurrency account in the name of an irrevocable trust can be difficult. However, an attorney can help owners determine whether there is a way to name trust in a digital wallet or name a trust as a beneficiary of an account. Generally, this is difficult to accomplish; thus, most crypto accounts will pass through probate. As such, crypto owners should ensure that their wills, trusts, and power of attorneys include asset powers for the representative or fiduciary managing their estate.
Further, Texas enacted the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”), which provides information on the steps digital asset holders need to take when planning and administering estates. This statute enumerates what rights an executor of a decedent’s estate maintains, how to access digital assets, and how to enforce compliance if a custodian refuses to disclose relevant information.
Texas Cryptocurrency Estate Planning Attorney
The attorneys at McCulloch Miller, PLLC, have extensive experience handling the estate planning and tax implications involving crypto assets. Our lawyers understand that these digital assets are complex and continually evolving. We take a holistic approach to addressing estate planning, elder law, and other long-term care planning concerns. In addition to Houston cryptocurrency estate planning matters, we handle advance directives, estate and gift planning, gifting to grandchildren, last will and testaments, power of attorney documents, and deeds. Contact our office at 713-936-9073 to schedule an initial consultation with an attorney on our team.