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Estate planning has long provided mechanisms for passing on bank accounts and retirement accounts such as IRAs and 401(k)s.
In most cases, the owner designates a beneficiary, which provides for a smooth transfer of assets after the owner’s death.
But what about newer digital assets, like money in your Robinhood portfolio? Or the balance of your account in PayPal? And what about your cryptocurrency — which may be protected by a private key only you have access to?
What Happens to My Crypto When I Die?
Crypto is no longer an obscure novelty. More Americans than ever before are buying digital currency.
But without a solid plan in place, your loved ones may never see those coins after you die.
There are two main ways to own cryptocurrency — and how it’s stored makes a difference in estate planning.
Two Ways to Own Crypto
- A crypto exchange: Casual crypto investors mostly use large exchanges, such as Binance and Coinbase. The user experience is similar to a brokerage firm (ie they have a customer support team).
- Crypto wallets with private keys: Hardcore crypto users prefer to hold digital currency in their own wallets. It’s considered the safest and most private way to store crypto.
Crypto Exchanges
If you hold crypto on a platform like Coinbase or Gemini, your heirs will have to go through probate — a lengthy (and often costly) legal process — to get the money out.
The same applies to crypto held on apps like Robinhood and PayPal.
Coinbase, Binance, Kraken and other exchanges don’t offer trust accounts either, so you can’t avoid probate that way.
If you have a will, your family can take it to probate court and get special documents called letters testamentary, and provide those to the exchange, like they would any other account without a beneficiary designation.
Coinbase provides a step-by-step guide on how to contact them after an account holder dies, along with a list of required documentation.
Digital Wallets and Private…
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