Keep A Paper Trail

by Sheryll Bonilla, Esq.

My daughter likes to listen to Bloomberg News, so while we drove, she put on a podcast explaining cryptocurrency. I listened and thought this is nuts, why would anyone put their money in cryptocurrency?

There’s no paper trail or statements to prove you had the funds.  You can’t buy anything since there’s no place that accepts this currency instead of dollars. With all transactions on Discord, there’s no privacy because everyone else can see how much you deposit and withdraw.

There’s no regulations or oversight so fiduciaries act properly to account for each person’s funds and to safeguard the money. To me this libertarian “don’t tread on me” approach was full of problems.

I’m a believer in regulation. Rules and standards make sure that houses are built to live in safely and withstand weather and natural disasters as much as possible. These ensure that food is safe to eat and won’t cause illnesses and products we buy are safe to use.

Rules and standards help create workplaces and work procedures that are safe.  Regulation and agencies that enforce them protect our drinking water supplies from chemicals or pollution that can harm us or that the land we live on doesn’t cause physical harm to us.

I usually suspect that the people who balk about regulation are the ones who want to do wrong to others and don’t like being stopped from doing so.

The FTX bankruptcy proved that all the wariness was correct. Now the people who lost their funds are asking the government to replace their monies. They’re asking the very government they didn’t want to oversee the companies, regulate the processes, safeguard funds, and protect the investors.

On a subsequent podcast after the FTX fiasco became public, a British financial reporter interviewed one of its principals. Hearing his exculpatory responses, I finally said to the podcast: “Ask him! Ask him! Where are they? They know they did something wrong. I bet you they’re in countries that have no extradition treaties with the U.S.”

Almost as if she heard me, the reporter’s very next question to the FTX principal was if they all happened to be vacationing in the locations they’re in because those nations had no extradition treaties with the U.S.. No, he said, that’s just a coincidence. My daughter turned to look at me with a grin and wide eyes.

Protection by regulation aside, I told my daughter the biggest problem with cryptocurrency was its secrecy. She said that’s what these people want – they don’t want the government knowing how much they have. Big mistake I immediately told her.

With this much secrecy, what happens when the person dies? How are his heirs supposed to the money if they don’t know all the passcodes? She hadn’t thought about that. She’s too young to think about things as dying and inheriting. Then she found podcasts on two channels – financial and legal – that talked about that very issue.

Paper trails aren’t just important in the invisible currency arena. Inheritance is a major consideration.

After you die, for your loved ones to inherit, there must be proof of which financial institutions you have money at, that you have money there, how much it is, and the account numbers for the company to find the funds.

The secrecy surrounding cryptocurrency can make retrieving monies from a dead person next to impossible.  Online banking, for all its convenience, can raise similar issues.

A serviceman passed away during training at a base on Oahu. He was divorced and had only one child, who lived with her mother on the east coast.

Understandably, being military and wanting to avoid the humbug that comes with paper statements from his financial institutions, he did all his banking and investing online.

Convenient, yes, with no file folders to track or pack up to move to the next duty station.  He had not kept any paper statements of his accounts. It was all online.

After the Army notified his family of his death, they came to collect his belongings. There were no statements to show where he kept his money. He had done all his banking and investing online. The family asked Verizon and Google – his internet carrier and service providers – for access to his email accounts so they could find his money. Both companies provided the family with templates for them to obtain a court order permitting them to give them that information.

The court reviewed the templates but said that the right of privacy transcends death.  If the deceased person didn’t leave a paper trail or give them his passwords or account numbers, they were out of luck.

What’s the lesson here?

Keep a paper trail. Once in a while, print out statements from your online accounts and put them with your estate planning documents.

When you die your family at least knows where you kept your money so when they take the statements to the bank or investment company, those institutions can locate your funds to pay it to you.

Those paper statements are proof of the existence of accounts. Marriage or birth certificates can show your relation to the decedent, to confirm your beneficiary status when the bank or brokerage checks its records of who was designated as beneficiaries.

We all work hard to earn our living. When we pass away, we want to make sure our loved ones receive what we left unused. Keep a paper trail to help ensure that this happens.

This article is for informational purposes only and is not to be constructed as offering legal advice. Please consult an attorney for your individual situation. The author is not responsible for a reader’s reliance on the information contained here.

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