While digital assets have recently become a hot news topic, they have actually been around for decades. And, while most do not have the million-dollar NFTs or vast amounts of cryptocurrencies, like Elon Musk, many people have some cryptocurrency as part of their investment portfolio. Unfortunately, what many forget when they do their estate planning is that these digital assets should be treated like one’s other assets and planed for in that estate plan, otherwise, once one passes, they will likely be inaccessible to anyone else.
For those unfamiliar, cryptocurrency is the term used to refer to online digital currencies, like Bitcoin and Ethereum (the two most popular online currencies), that can be used to buy services and goods online and increasingly in the real world. Take the Dallas Maverick’s recent decision to accept Dogecoin and Tesla accepting Bitcoin (at least for a short period of time) as examples of these online digital currencies being used in the real world. And, the cryptocurrency market is huge, totally well over a trillion dollars, according to CoinMarketCap.
As even passive news readers can likely tell, non-fungible tokens (NFTs) are having a moment as their popularity has boomed within the last six or so months. NFTs are ways of making online content unique and sellable. For now, NFTs are mostly used to buy and sell digital art as they allow the original artist to retain their original artwork, which allows them to sell the original and copies. In turn, the technology allows the buyers to tell whether they are purchasing the original artwork or a copy of it.
Why does it matter to an estate plan?
These digital assets have value that can wildly fluctuate. Indeed, thanks to the most recent explosion in Dogecoin, many investors saw their cryptocurrency wallets expand to millions in value from relatively small investments. This extreme boom and bust cycles are a hallmark of these digital assets, which is why it is so important to add them to an estate plan. After all, just because one’s cryptocurrency wallet may have thousands of seemingly worthless coins now, who knows their value tomorrow, in a month or even in a decade. This is why it is so important to plan for their transfer now to ensure one’s heirs do not lose out on a potential fortune.
Call one’s Bridgewater, New Jersey, estate planning attorneyv. One’s attorney can add their digital assets to their plan to ensure that they are covered.