The bitcoin estate plan
As I write this, a single bitcoin is worth more than US$8,200. It will undoubtedly be worth a different amount by the time you read this because the value of bitcoin can change quickly and dramatically.
No one can say with certainty whether this is a bubble that will burst or whether it’s a ground floor price that will rise even further. But what we can say with certainty is that cryptocurrencies today (whether it’s bitcoin or other digital currencies like ethereum or litecoin) have real value that can be used to buy things or be exchanged into hard currency.
If you are new to cryptocurrencies and remain baffled by what they are, you are not alone. I love this simplified explanation of bitcoin – it can help wrap your mind around a very elusive concept.
For a step-by-step guide to investing in cryptocurrencies, this short article is a great primer that sets out the process and the risks. And for a more Canadian-specific take on investing in these currencies, this article highlights the process and the risks.
Make a plan – it’s an asset like any other
I’m not advocating an investment in cryptocurrencies – that’s for you and your financial advisor to decide. The issue from an estate planning perspective is that thousands of Canadians now own cryptocurrencies, and their value has increased by many multiples over the past year. There are, quite literally, millions of dollars tied up in cryptocurrencies in Canada. For many, an experimental hobby, dabbling in cryptocurrencies, has become a relatively sudden source of wealth.
My previous blog in 2014 highlighted the need to ensure that your estate specifically deals with digital access and the distribution of digital assets. This appears to be even more important today with the rise in value of cryptocurrencies.
This recent article sets out some estate planning tips that relate specifically to digital currencies. It’s well worth a read, especially if you’ve taken the plunge and own these currencies.