Summary: Although the cryptocurrency industry has not faced many challenges under unclaimed property laws, as cryptocurrency increases in popularity, states will be more likely to target cryptocurrency holders as sources of revenue. Alternatively, if you are the owner of cryptocurrency, a careful estate plan will help prevent your property from becoming an unclaimed account.
This month, Siedentopf Law has been focused on issues related to cryptocurrency and estate planning. We have discussed the importance of developing a means of passing cryptocurrency accounts to heirs as well as what can happen when account information and access codes are not properly shared with estate agents or beneficiaries. Today, we are looking at the developing issue of cryptocurrency and Georgia’s unclaimed property laws.
While the specific language varies between the states, unclaimed property laws require that companies holding intangible property — that is presumed abandoned by the owner — turn over custody of that property following a specified dormancy period. Georgia defines unclaimed property as: “accounts held by financial institutions and other businesses who have lost contact with their owner of record. Unclaimed property includes, but is not limited to: wages: savings accounts, customer refunds, accounts payable, insurance payments, shares of stock, escrow funds, royalties and contents from safe deposit boxes. Most property is reported to the [Unclaimed Property] program after five years of inactivity.” More specifically, the 2016 Revised Uniform Unclaimed Property Act defines virtual currency as “a digital representation of value used as a medium of exchange, unit of account, or store of value, which does not have legal tender status recognized by the United States.” Georgia has not yet adopted the Revised Uniform Act, and it is unclear whether cryptocurrency would fall under a catch-all definition of intangible property or perhaps under a broad definition of gift cards/certificates. How the state will categorize cryptocurrency relates to the applicability of Georgia’s unclaimed property laws (ex: the required dormancy period before the business must turn over custody).
If cryptocurrency is deemed escheatable unclaimed property, meaning it is unclaimed property that can revert back to the state, the next step is to determine whether a business is actually in control or is a holder of that intangible property. This depends on whether the business has the technological capabilities to access, transfer, and/or liquidate the account. Still, even if these two requirements are met – the cryptocurrency is deemed unclaimed intangible property and the business has the ability to access and transfer the funds – there remains the question of the businesses’ exact obligation to Georgia under the state’s unclaimed property laws. How should the holder transfer the funds? Is the holder required to liquidate the cryptocurrency account? What about changes in the value of the cryptocurrency? What exactly is the holder’s liability? Although the cryptocurrency industry has not faced many challenges under unclaimed property laws, as cryptocurrency increases in popularity and more states adopt the Revised Uniform Property Act, states will be more likely to target cryptocurrency holders as sources of revenue.
If you are the owner of cryptocurrency, a careful estate plan will help prevent your property from becoming an unclaimed account. A person with this type of investment needs to develop a means of passing the account(s) to their beneficiaries. If he or she provides this information to a trustee or executor, they should document: the type of cryptocurrency, where they purchased it, how much they purchased, where it is stored, and how to access it. The cryptocurrency owner should make sure their Power of Attorney documents are updated and explicitly allow the agent to access all financial affairs, including digital assets and cryptocurrency accounts. It is also incredibly important to identify the cryptocurrency account and provide the storage device and private key (or username and password) to access it. Without this information, no one else can touch the account or recover any of the funds from it.
If you have additional questions about cryptocurrency or want to set up an estate planning consultation, contact Siedentopf Law via our website at EstateLawAtlanta.com or by calling (404) 736 – 6066.
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