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It’s all fun and games until your NY estate is locked out of your $500 million crypto account; Estate of Matthew Mellon

11
Oct

By Jason Stern

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As a NY estate lawyer with more than two decades of experience I always advise my clients on the importance of setting up a NY estate plan.  Setting up that NY estate plan almost always begins with the drafting and execution of a NY attorney drafted will.  Whether they have a net worth of $100,000 dollars or $10 million dollars a NY attorney drafted and supervised will is always the best place to start.  However what happens when you have digital assets in your NY estate what do you then?  

Having owned digital currency myself I can tell you investing in cryptocurrency is unlike any other asset class.  Currently valued at $2 trillion dollars, crypto currency is quickly becoming one of the most widely held asset classes in existence today.  It is estimated that at least fifty million Americans at the very least, own the most common of all crypto currencies Bitcoin.  That does not even include investment in the remaining 6,000 other types of crypto currencies available today.  To make investing in digital assets easier each day there are newer and simpler ways to invest in digital assets such as Index Funds.  That is not to say that crypto assets are risk free. Crypto assets bring with them entirely new obstacles unlike any other asset class we have ever known. These challenges are most apparent in the context of your NY estate planning.  First, there is a transfer of digital currency, usually in dollars to your digital wallet.  These days many investors can easily deposit money into their Coinbase account which acts as almost any other money market account would.  However once in Coinbase, unlike your money market account, you may not be able to designate a beneficiary onto your account. Additionally many crypto currencies may only be available for purchase on foreign exchanges such as Binance whose base of operations is in China. This can create additional complexities in retrieving the assets of your NY estate as well.  

The single greatest danger to your NY estate from crypto assets are your passwords or private keys as they are known.  In fact, if you do not leave a detailed list of your crypto assets AND your private keys for each of your digital wallets, your executor or your NY estate lawyer will have absolutely no way to ever retrieve your digital assets of your NY estate.   After several large scale hacks which cracked into numerous crypto exchanges, causing direct losses in the tens of billions of dollars, many crypto currencies are now downloaded onto thumb drives for added security, insulated from such widespread theft.  However, if your thumb drives and accompanying private keys are not known to your executor, your NY estate assets can be lost forever.

Estate of Matthew Mellon

In the early years of crypto, Matthew Mellon, heir to the Mellon Banking fortune, and formerly NYS banking finance committee chairman, purchased $2 million dollars of a crypto asset known as XRP or Ripple.  In 2018 the 54 year old financier, who was a savvy investor dropped dead of what has since been speculated to be heart failure in his Cancun Mexico hotel room.  In the short while he held onto his digital investment, Mellon’s $2 million dollar XRP investment had grown into a half billion dollar fortune at the time of his death.  Unfortunately for Mellon’s estate, nobody other than Mellon possessed knowledge of the locations for his digital wallets where he kept his XRP or the pass keys for those digital wallets.  

Matthew Mellon was hardly an inexperienced investor tinkering about blindly in the crypto world. Rather Mellon was a shrewd financier with a pedigree in banking that dated back more than a century.  If Mellon could make a half billion dollar mistake with crypto what chance does the average investor have in protecting their NY estate from the loss of digital Ny estate assets? 

As a NY estate lawyer I am sensitive to the issues of each of my clients and digital assets are no different.  It is not only a great idea but also necessary to leave a list of your digital assets in an envelope with each passcode with the location of each of your digital or mobile wallets in a safe place wherever you keep your NY attorney drafted will.   If you think NY estate blunders cannot happen to you, you are wrong.   Perhaps investing in a physical safe to store your digital wallets and pass keys is a good way to begin protecting your NY estate from a digital disaster that can become very real.  While your executor can always crack open your safe, no one can crack open your digital wallets of your NY estate after you are gone without your pass keys and digital wallet information.  

If you or someone you love is thinking about protecting their NY estate you may want to know what options you have under the NY estate law.  Feel free to call an experienced NY estate lawyer at The Law Offices of Jason W. Stern & Associates, at (718) 261-2444 for a free consultation.  Our NY estate lawyers have 60 years of combined NY estate law experience handling these often complex NY estate cases in the counties of Queens, New York, Kings, Bronx, Westchester, Rockland, Nassau, Richmond, Orange and Dutchess.

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