Putting Cryptocurrency in your Family Trust

Putting Cryptocurrency in Your Family Trust

Bitcoin and other assets supported by blockchain technology are part of a rapidly growing area of interest for folks looking for new ways to invest their wealth. If you own cryptocurrency, it’s particularly important to include it in your estate planning because it’s not a discoverable asset, like real estate holdings or mutual funds.

Dying without explicit instructions regarding the fact that you own cryptocurrency, or without providing the private keys to your digital wallet, your heirs may not know of its existence and/or be able to access it. One of the best ways to ensure this does not happen is to include your digital assets in a family trust.

Placing your assets into a trust during your lifetime, or having them transferred upon your death, is a popular tax strategy. It allows your estate to bypass the expense of probate court. A living trust, one that is created during your lifetime, is an effective long term asset-management policy, allowing you to manage and access the trust while you are alive and designate a trustee who will take over after you pass away.

Working with someone who understands both industries

Throughout the trust maker’s lifetimes, they often function as the trustee for family trusts and name a successor trustee to take over upon their death. Choosing a successor trustee to oversee either the distribution or ongoing management of the trust is riskier when there are digital assets involved.

There are numerous examples of children who have lost all the cryptocurrency left behind by their parents who did not provide the detailed specifics of their crypto accounts. Without the proper tools, the beneficiaries may also end up the victims of hackers or scammers.

Wealth management is best overseen by experienced professionals. If you have ventured into the field of digital currency, then you already know that it’s a new and complex investment that is not yet well-understood by many people. Itis of great important when selecting a trustee. It is usually a family member or an experienced professional who is involved in the digital and crypto world.

Starting the conversation

Speak with your estate planning attorney about how you can safeguard your assets and preserve your legacy for generations to come. As an asset protection attorney in the state of California, our office works with estates that include both traditional and nonfungible assets. If you have any questions about how to best structure a trust that contains cryptocurrency, please do not hesitate to call for an appointment.

Posted in Asset Protection, Updates.