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Discussing cryptocurrency and estate planning
RICHARD WEINER
Technology for Lawyers
Published: December 14, 2018
Whether you want to or not, Bitcoin and the rest of them are intruding into the business of law. It behooves all practicing attorneys to at least be conversant in the terminology, because you may get clients who need advice on the topic. But one practice area in particular really needs to educate itself on cryptocurrencies and everything that goes along with them.
The would be estate planning attorneys, who really need to be conversant in cryptocurrency in order to serve clients who are invested in that market.
Cryptocurrencies are not like ordinary currencies. They aren’t stored in banks. They don’t have any physical presence like securities or cash. They are not subject to a court order like a bank is, because the assets—the digital wallets that hold the coins-- themselves are physically owned by the owner of the cryptocurrency. And if they aren’t accessed in a particular way, they essentially cease to exist—especially if the key dies with the client.
And there is much more to the digital currency world than just cryptocurrencies, and many more types of cryptocurrencies than just the well-known ones like Bitcoin and Ethereum.
Cryptocurrencies are a burgeoning marketplace, and well-to-do clients may very well have diversified into that world, possibly without knowing much about it themselves.
Attorney Pamela Morgan has some sage advice for avoiding the landmines in this new field here: https://empoweredlaw.wordpress.com/2016/03/09/locked-out-estate-planning. You should look at it, but here are a couple of pointers.
Here’s a simple 3-point plan to start:
1. Add a line on your asset disclosure form asking about digital currencies, virtual currencies or blockchain assets.
2. Mention digital currencies, virtual currencies or blockchain assets in your next newsletter or blog post.
3. Use this new information as a tool to reach out to former clients; ask if they need to update their estate planning documents.
Once you have a client who is invested in digital currency, there are several things to do. Make sure that the digital currency is spelled out in the estate documents. Make sure that that asset is updated as often as practicable. And make sure that the key to the digital assets is accessible to the heirs or put in a safe location like a bank safety deposit box.
And spend a weekend getting up to speed on digital currencies. It’ll be worth the time. Here’s a good explainer to start: http://www.slaw.ca/2018/10/31/ten-things-about-bitcoin-that-lawyers-should-know-on-bitcoins-tenth-anniversary/