Cryptocurrency

How “the Internet of the Future” Is Impacting Texas Estate Planning

Published on: August 11, 2022 | By Thomas W. McCulloch

How “the Internet of the Future” Is Impacting Texas Estate Planning

For investors considering incorporating cryptocurrency into their estate plans, Web3 may already be an area of interest or curiosity—or apprehension. For others, it may be a concept completely unheard of. In either case, Web3—a decentralized form of data sharing not yet in existence—could be popping up more frequently in estate planning conversations. For now, Web3 is merely speculative, but with the speed of innovation, it’s worth considering how it may impact your estate planning needs now and into the distant future. In the same way the traditional Internet has rapidly evolved, Web3 could be the next big technological advancement to watch.

According to a recent article, Web3 is similar to the Internet we all know and have adopted in that it serves as a way of sharing data and connecting individuals. But different from the traditional Internet, Web3 would run on the blockchain, similar to cryptocurrencies. In the same way crypto assets take the middleman, such as financial intermediaries, out of financial transactions, Web3 could take platforms and companies out of the exchange of data on the World Wide Web, making Web3 truly run by the people. In a time when people are growing distrustful of the large companies such as Amazon, Google, and Facebook that coordinate and dictate our use and access to the Internet, Web3 could democratize data sharing and take the power—and our data—out of the hands of tech giants.

How Will Web3 Impact Estate Planning?

Because Web3 doesn’t yet exist, it is difficult to say how exactly it will impact or change areas with legal implications, like estate planning. If Web3 enables blockchain-based estate plans, personal smart contracts can be executed without a middleman upon a trigger event, such as death of the estate holder. Without a middleman, these contracts would be executed without going through probate court. Although this may be less costly for both the legal system and an estate and its beneficiaries, a good estate planning attorney with experience in new technologies and cryptocurrency assets will be needed to help structure these contracts and determine their tax implications.

Texas Estate Planning and Cryptocurrency

Published on: July 10, 2022 | By Thomas W. McCulloch

Texas Estate Planning and Cryptocurrency

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.

Cryptocurrency and Texas Estate Planning

Published on: May 31, 2022 | By David W. Miller

With the rise of cryptocurrency, many Texans are curious about how cryptocurrency can be implemented into various aspects of their lives—be it estate planning, investing, or other methods—along with its potential stability in the future. However, other individuals do not know the basics about cryptocurrency, including what it is or why they should potentially engage in this virtual currency. Because of this, below are explanations about the underlying nature of cryptocurrency, its potential in the future, and current government recommendations for how it should be implemented in estate planning and investing.

What is Cryptocurrency?

Cryptocurrency is a digital currency exchanged through a computer network. This computer network is often a blockchain that transmits the currency. Unlike many other currencies, it is decentralized, meaning there is not a primary government or bank used to maintain it. While one of the most infamous cryptocurrencies is Bitcoin, there are currently over 9,000 other cryptocurrencies in the marketplace.

Should Cryptocurrency be Included in My Estate Plan?

Since cryptocurrency is an asset that individuals may have, it should be included within a person’s estate plan. The individual writing the will—the grantor—should detail who should receive any cryptocurrency assets that remain after they have passed away. Cryptocurrency would then be treated like other assets in the will and provided to the designated beneficiary. As cryptocurrency is only online, it is also important for the grantor to detail how someone can actually access these records, making it easier for the estate executor to fulfill his duties and transfer the assets to the beneficiary.

Digital Currency and Its Effect on Texas Estate Plans

Published on: May 2, 2022 | By David W. Miller

Technology is constantly changing, and sometimes it is difficult to keep up with all of these futuristic alterations. One big technology that has gripped Texas—and the nation—is digital currency and assets. Because more and more people are getting involved in digital currency, the federal government has started to regulate and mitigate the risks of digital assets and their underlying technology. These pieces of legislation and regulations may be confusing to individuals just learning about cryptocurrency. Because of this, explanations to common questions about digital assets and their legislation are below.

What Are Digital Assets?

While the terms “digital asset” and “digital currency” have become more popular over the years, many individuals are still unsure of what these terms mean. Digital currencies are a form of digital money or monetary value. Similarly, a digital asset refers to financial assets that are issued or represented in a digital form through the use of a technology ledger. A digital currency, therefore, can be a form of a digital asset, along with cryptocurrencies, securities, derivatives, and other financial products. Digital assets can be exchanged across digital asset trading platforms. Digital assets have grown exponentially over the past few years: by November 2021, non-state issues digital assets reached a combined market capitalization of $3 trillion.

What Are Some Recent Laws Impacting Digital Assets?

One regulation that impacts digital assets was an Executive Order—entitled Ensuring Responsible Development of Digital Assets—recently signed by President Biden. The goal of this Executive Order is to create a national policy for digital assets by addressing the risks of cryptocurrency while also encouraging Americans to take advantage of its potential benefits. The Order directs various areas of the federal government, including the Justice Department, the Department of Treasury, and the Federal Reserve System among others, to study the legal and economic implications of creating a U.S. central bank digital currency. This would be a form of digital money with a national unit that has direct ties to a central bank.

How Holding Cryptocurrency Affects Texas Estate Plans

Published on: December 1, 2021 | By McCulloch & Miller, PLLC

With the emergence of cryptocurrency, many questions have arisen, including the impact of cryptocurrency on everyday life and the economy. However, whether someone has a small amount of Bitcoin or millions in cryptocurrency assets, many individuals do not consider how cryptocurrency assets should be incorporated into an estate plan. Incorporating cryptocurrency into an estate plan allows assets to be protected and ensures these digital goods are passed along after a person has died. Below are common questions and explanations about cryptocurrency and its role in the estate planning process.

What is Cryptocurrency?

Although the word “cryptocurrency” is used often, not many people know what cryptocurrency actually is. Cryptocurrency is a digital currency based on a network distributed across computers, and it is nearly impossible to counterfeit. Cryptocurrencies are decentralized, meaning they operate outside the control of governments. Bitcoin is the most well-known of the cryptocurrencies. Cryptocurrency is accessed through a private key, which is usually a password that only the owner of the cryptocurrency knows. Without knowing the private key, an individual cannot access, buy, or sell the money. Alternatively, some brokerage houses allow investors to purchase cryptocurrency through their existing accounts.

How Can I Incorporate Cryptocurrency into My Estate Plan?

Because cryptocurrency is digital, it is essential for individuals to include instructions in their estate plan on how to access these assets. Otherwise, if the person dies, the funds may be lost forever—or it may take years to regain access. Estate planning attorneys recommend including a list of all cryptocurrency assets an individual has, along with detailed information about the cryptocurrency’s private key and login information. This will allow beneficiaries to access digital assets and ensure they are not lost forever.

What to Know About Cryptocurrency, Taxes, and Estate Planning in Houston

Published on: September 9, 2021 | By McCulloch & Miller, PLLC

Information in this article is current as of the date of publication. The policies, regulations, and laws within are subject to change with the IRS, state, or federal legislature.

There’s no denying it: It appears that cryptocurrency is here to stay.

Once confined to hidden corners of the internet, cryptocurrency transactions are now accessible to almost anyone through popular payment platforms like PayPal. Even top financial advisors are now counseling investors who can afford some additional risk in their portfolios to invest in crypto. Indeed, earlier this month, El Salvador became the first nation to recognize Bitcoin as legal tender.