Since cryptocurrency is treated as property, extensive and detailed record keeping is essential.
WESTCHESTER COUNTY, N.Y. (PRWEB) February 25, 2019
According to a new report from Kaspersky Lab, more than one in ten people have now used cryptocurrency to make a purchase. As this number continues to grow, so does the importance of understanding the potential tax and estate planning consequences. Westchester County elder law attorney Anthony J. Enea, member at Enea, Scanlan & Sirignano, LLP in White Plains and Somers, N.Y., recently offered his insights on the necessity of advanced planning when it comes to Bitcoin and other cryptocurrencies.
Cryptocurrency has, by its very nature, certain inherent complexities. Among them is the issue of how to legally dispose of the digital asset upon the owner’s death. Despite most references to Bitcoin or other cryptocurrencies as “digital currency,” the IRS has made it clear that, for purposes of federal taxation in the United States, they are to be treated as “property.”
“Since cryptocurrency is treated as property, extensive and detailed record keeping is essential,” said Anthony Enea, who has spent the past three decades protecting the rights of seniors, the disabled and their families. “Contemporaneous records must be kept and income taxes paid on the transactions annually. Upon the owner’s death, his or her beneficiaries will receive the cryptocurrency at its current fair market value. The cost basis is stepped up to the date of death value as, like any other property, it is includible in the decedent’s taxable estate.”
While the name of the Bitcoin owner is not publicly recorded, ownership is tied to a specific Bitcoin address that can only be accessed by the holder of its two digital keys. One key is public and the other is private. The private key is, in essence, the secret number that allows the cryptocurrency to be spent. Generally, both keys are stored in a digital wallet by the holder. If the private key is lost, there is no way for beneficiaries to access the Bitcoin.
“Cryptocurrency can be included in a Last Will and Testament as well as a Revocable and/or Irrevocable Trust,” said Enea. “It’s volatile nature, however, makes it imperative that the executor/trustee of an estate and/or trust take all necessary steps to comply with the Prudent Investor Act and diversify the holdings in the trust and/or estate. If not, even ownership of just a little bit of Bitcoin can end up creating headaches.”
A strong leader in Westchester’s legal community, Mr. Enea is chair of the New York State Bar Association’s Senior Lawyers Section and president of the Westchester County Bar Foundation. He was named Westchester County’s Leading Elder Care Attorney at the Above the Bar Awards and Best Lawyers’ 2019 Trusts & Estates “Lawyer of the Year” in White Plains. A past chair of the New York State Bar Association’s Elder Law Section, Mr. Enea’s practice areas include elder law; Medicaid asset protection trusts; Medicaid applications (home care and nursing home); special needs planning; guardianships (Article 81 and 17-A); and wills, trusts and estates.
Enea, Scanlan & Sirignano, LLP is located at 245 Main Street in White Plains, N.Y. with additional offices in Somers, N.Y. Elder law attorney Anthony J. Enea can be reached at 914-948-1500 or firstname.lastname@example.org. For the latest news, visit Enea, Scanlan & Sirignano online at http://www.esslawfirm.com.
About Enea, Scanlan & Sirignano, LLP
Enea, Scanlan & Sirignano, LLP is an AV preeminent rated elder law firm with offices in White Plains and Somers, N.Y. The practice concentrates on Elder Law; Medicaid Planning; Nursing Home and Home Care Applications; Wills, Trusts and Estates; Guardianships; Estate Litigation; Supplemental Needs Trusts; and Special Needs Planning. Enea, Scanlan & Sirignano, LLP serves Westchester, Rockland, Putnam, the Bronx, Manhattan, Long Island and Queens and is committed to providing the highest quality legal services to seniors, the disabled and their families. Visit the firm online at http://www.esslawfirm.com.