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Does cryptocurrency need to go through probate?

On Behalf of | Jan 18, 2021 | Estate Planning |

Generally speaking, assets that remain in your Colorado estate upon your death are subject to probate. The same may be true for assets that were held outside of an estate but were unable to be distributed to a beneficiary. Therefore, if you owned cryptocurrency at the time of your death, there is a chance that it may need to be included in a probate case.

How do you know if cryptocurrency was held in your estate?

If you held the currency in a taxable brokerage account, there is a good chance that it is included as part of your estate. The same may be true if it was kept in a personal digital wallet, bank account or similar type of account. However, if it was kept in an IRA, 401(k) or other type of retirement account, it would likely be held outside of your estate.

Review beneficiary designations carefully

Generally speaking, a bank, brokerage or similar type of account is considered personal property. However, it may be possible to transfer ownership of those accounts through a beneficiary designation. Designation forms are generally available through the website of the brokerage, bank or credit union where your account is held. If you have already made beneficiary designations, it is important to review them regularly. It may be a good idea to add alternate beneficiaries to increase the odds that someone is able to take ownership of your crypto holdings.

You can place cryptocurrency in a trust

Property that is placed inside of a trust is owned by the trust itself. Therefore, it won’t have to be included in a probate proceeding, which means that it can be distributed as soon as you pass away. An estate planning professional may be able to talk more about the benefits of this type of tool.

If you own cryptocurrency, it is important to account for it within your estate plan as soon as possible. An attorney may be able to help you do so in a manner that conforms with state law.