In today’s digital age, we are seeing more individuals concerned about what happens to their digital assets at their death. For example, a Broadway aficionado wanting to be certain their collection of show tunes, purchased on iTunes makes it to their grandchild. Like most areas of technology, advances in digital currency and music are outpacing the legislative change, while the Courts struggle to keep up.
An increasingly popular question posed by estate planning clients is the question of who can inherit your iTunes account? The short answer is – no-one. iTunes is a service provider that allows you to purchase or rent a license for digital content, but it is personal to you. Very simply it is a personal licensing agreement and you do not own the content. You also do not own the content on a CD or DVD (the artist or studio typically does), but you have purchased a piece of tangible property that can be transferred at death.
Bitcoin is a digital currency (also referred to as cryptocurrency) and digital payment system that has gained popularity recently and garnished significant attention due to its lack of regulation. Bitcoin’s website (Bitcoin.org) describes itself as using “peer-to-peer technology to operate with no central authority or banks”. It was released in 2009 and there are a number of merchants and vendors that will now accept it as payment. Cboe Global Markets Inc. and CME Group Inc., both offer Bitcoin futures trading. Bitcoins are most commonly held in a crypto currency wallet.
A cryptocurrency wallet (“Wallet”) stores the information needed to transact Bitcoins. Wallets require passwords and have security settings similar to other online accounts. To be able to access your Wallet, you would have to communicate this secure access information to another individual. If you communicate this information while you are alive, the trusted recipient could potentially access your account at any time. Alternative options include requiring Multi-signature transactions (in the realm of Bitcoin, these are often referred to as ‘M-of-N transaction’). A multi-signature transaction requires a certain number of people allowed to sign off on a transaction (for example 3 – you, your beneficiary and your agent under power of attorney or named personal representative in your will), but only requires fewer than the full number to execute the transaction (in our example, only two people are needed to execute – so it can be you and the beneficiary, you and the agent or the agent, and so forth). This adds an additional layer of security. Another option is Dead Man’s Switch, a computer program in which you create emails with your sensitive information and the program will periodically email you and require you to confirm you are ‘ok’ if a response is not received, it will send the stored emails to the intended recipients. None of these options are ideal, but attempt to provide solutions while the law attempts to catch up.
What does this mean for most individuals? Individuals should review their plans with competent professional advisors and alert them to any concerns they have regarding digital assets and cryptocurrency to ensure their plans will address their wishes and intended dispositions.
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