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Cryptocurrency in Estate Planning: Understanding the Basics

Cryptocurrency is no longer an unproven investment- for many it’s a significant part of plenty of portfolios. Just like any other asset, such as real estate, cryptocurrency should have directives in place to address where your funds will go and what the beneficiary may do with it.  When it comes to estate planning, cryptocurrency poses a unique set of challenges that need to be addressed with care and foresight.

Incorporating Cryptocurrency into a Living Trust

A living trust is a dynamic estate planning tool that can manage assets during the grantor’s life and provide for efficient transfer after death. Cryptocurrencies, given their complexity, are especially suited for inclusion in a living trust due to several factors:

Avoidance of Probate:

  • Assets in a living trust bypass the probate process, leading to a quicker and private distribution to beneficiaries. This is particularly beneficial for the discrete nature of cryptocurrency holdings.

 

Instructions for Digital Assets:

  • The trust can contain explicit directions on managing and distributing cryptocurrencies.
  • Detailed information on wallet addresses, private keys, and exchange accounts can be securely included.

 

Selection of a Knowledgeable Trustee:

  • The trust allows for the appointment of a trustee with cryptocurrency savvy. This ensures proper handling of the digital assets, maintaining their security and value.

 

Privacy & Confidentiality:

  • Privacy is paramount for many cryptocurrency investors. A living trust offers significant advantages in this area as living trusts are not public documents, unlike wills.



Managing the Volatility of Cryptocurrencies

Cryptocurrency values are notoriously volatile. Within a living trust, this can be addressed through discretionary trustee powers.  For instance, trustees can be granted the discretion to convert cryptocurrencies into stable assets if needed which can protect the trust’s value from the whims of the crypto market.

What are the Challenges of Including Cryptocurrencies in a Living Trust?

Despite its advantages, placing cryptocurrencies in a living trust must be done with precision and it can be quite the balancing act. At GetDynasty we can help you plan for the future because your trust must be detailed yet flexible enough to address the digital assets’ specific nature. Your instructions must be clear but also adaptable to changes in technology and regulations.  Finally, security protocols must be in place to ensure the trustee has safe access to the cryptocurrency without compromising asset integrity.

 

The integration of cryptocurrency into estate planning is essential to maintain control over these digital assets beyond one’s lifetime. A living trust offers a structured, private, and efficient way to manage and pass on cryptocurrencies, provided it is well-crafted and managed by someone with the requisite knowledge and experience. With the right setup, your digital legacy can be as secure as any other asset. Get started for free today.

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What is a Trust?

A Living Trust is a financial tool that lets you plan, organize, and protect your life. It’s a personal entity that allows you to add assets and plan out your inheritance. Eliminating legal battles, cost, and time spent by your loved ones. 

Think of it like a personal LLC that you put everything you own in. Except it doesn’t protect you from liability like an LLC does, it protects you from probate and conservatorship. 

Probate is the complicated court process (12-18 months) where a judge decides what happens to your assets after you die, become incapacitated, or are “deemed” incapable. Creating a living trust allows your assets to completely circumvent probate and immediately transfer to your loved ones. 

In addition to being able to name heirs (your beneficiaries), a Trust also allows you to assign someone to manage it (your successor trustee). Instead of going through probate, your Successor Trustee takes control of the Trust, handles your affairs, and distributes your assets according to your instructions. The person you select as Successor Trustee should be your most trusted person. Like a best friend or closest family member.

At Dynasty, we believe everyone should have a Living Trust. If you have children, assets, or plan to acquire assets in the future, you should create a Trust. That way when you buy your next home, open a bank or brokerage account, get startup shares, etc. – you can immediately title them in your trust.