As digital asset ownership becomes more common, estate planning is adapting and expanding to account for these assets. However, there are several digital asset estate myths you should consider when conducting financial planning.
Here are the top 7 digital asset estate planning myths:
Myth #1: Digital assets are not valuable enough to be included in an estate plan.
A critical misconception is that only holding a small amount of digital assets (cryptocurrencies, NFT’s, digital accounts, and intellectual property, etc.) is not significant enough to include in your estate plan. Even if digital assets are only a small percentage of your portfolio, they may appreciate significantly over time.
Myth #2: Traditional estate planning already covers digital assets.
Many people mistakenly believe that traditional estate planning documents, such as wills and trusts, automatically cover digital assets. However, conventional estate planning documents are not designed to protect digital assets. Specific provisions must be included to ensure digital assets are appropriately managed and bequeathed.
Myth #3: Third-party centralized platforms already handle digital asset distribution.
If you hold digital assets on a centralized cryptocurrency exchange (e.g. Coinbase, Binance, etc.), it’s important to find out how they handle the distribution of digital assets after death. Beneficiary planning policies may not even exist at your centralized exchange making this process unclear and cumbersome.
Myth #4: Organizing digital accounts and passwords is a waste of time.
Many people forget to include their account credentials, passwords, or instructions for recovering non-custodial assets in their estate plan. Without this information, it can be challenging or impossible for loved ones to access your assets.
Myth #5: My will and estate plan does not need a digital executor or trustee.
Estate plans often designate an executor or trustee to manage and distribute physical assets, but neglect to name someone specifically responsible for handling digital assets. Having a digital executor who understands technology and digital assets can be crucial for a smooth estate settlement process.
Myth #6: Privacy and security risks do not exist.
Providing access to digital assets must be balanced with privacy and security risks. Did you know that wills can become public record after someone passes? Including seed phrases, private keys, passwords, and/or other sensitive information about your digital assets exposed in a will can lead to unauthorized access or hacking attempts.
Myth #7: My trust and estate plan does not need to be reviewed regularly.
The digital asset landscape is always evolving. Failing to review and update your estate plan regularly to account for new digital assets, wallets, or changes in platforms can render your plans incomplete and ineffective.
Coast provides peace of mind and helps you plan to seamlessly transfer your digital assets to your beneficiaries. Sign up today for early access.
