🔒Cryptocurrency Treated as Digital Asset, Not Money, in Probate Law
Your Crypto Might Not Go to Heirs Without a Plan
TL;DR
Cryptocurrency is now classified as a digital asset, not money, under probate law. This means passing on crypto after death requires explicit instructions, with custodial wallets offering easier transfer options compared to noncustodial ones.
Cryptocurrency is now treated as a digital asset rather than money in probate and estate law. This means that without explicit instructions, a deceased person's crypto assets won't automatically go to their heirs. Custodial wallets, managed by third parties like Coinbase or PayPal, offer a smoother transfer process compared to noncustodial wallets, which require DIY solutions for asset distribution. Noncustodial wallets, however, offer direct control over assets but come with the risk of losing access if the cryptographic key is lost. This change highlights the need for advanced planning to ensure crypto assets are passed on as intended.
Key Points
Cryptocurrency is classified as a digital asset, not money, under probate law.
Custodial wallets managed by third parties like Coinbase or PayPal offer easier transfer processes.
Noncustodial wallets require DIY solutions for passing on assets after death.
Losing the cryptographic key to a noncustodial wallet can permanently cut off access to assets.
Putting instructions in an estate plan is the best option for passing on cryptocurrency.
Why It Matters
If you're holding cryptocurrency, your heirs won't automatically inherit it without explicit instructions. Custodial wallets like Coinbase's make it easier to transfer assets, but noncustodial wallets require a DIY solution. Losing the key to a noncustodial wallet means losing access to the assets permanently. The best option is to put instructions in an estate plan.
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