Cryptocurrency in living trusts
Cryptocurrencies are digital assets that can circulate without the need for a central monetary authority like a government or a bank. Cryptocurrencies are created using cryptographic techniques that let people buy, sell, or trade them securely.
Most cryptocurrencies are protected by blockchain technology, a decentralized system that stores financial data in such a way that it cannot be changed, hacked, or cheated. There are many options available for individuals who want to invest in cryptocurrency. Some popular ones:
- Bitcoin
- Ethereum
- Binance
- Cardano
Crypto-assets, including cryptocurrencies and non-currency blockchain tokens, can hold significant family wealth, but also present some complex challenges when it comes to securing, transferring, protecting, and gifting that wealth.
Cryptocurrency is accessed through a “private key.” Typically, it’s a series of alphanumeric characters that are only known to the owner and are stored in a “digital wallet.” Including your cryptocurrency in your estate plan is the only way to be certain that your beneficiaries will be able to access it. Modern living trusts are one way to ensure that your loved ones will be able to inherit your digital assets.
There are several advantages when it comes to how cryptocurrency is handled with a living trust:
- Makes it less likely that your cryptocurrency assets will be lost after your death
- Keeps your cryptocurrency assets from having to go through probate
- Provides for a trusted individual to access and manage your cryptocurrency
NFTs are here to stay
Non-fungible tokens or NFTs, unlike Bitcoin, for example, are a type of cryptocurrency that cannot be traded or exchanged at equivalency. NFT’s are digital assets that represent real-world objects such as art, music, videos, sports cards, in-game items; much of the current markets for NFTs are centered around collectibles and rarities.
NFTs are typically one of a kind, or are one of a limited run, and have unique identifying codes. What you’re actually purchasing when you buy an NFT is the code that presents it as an image. A NFT can only be accessed by a password or personal key. However neither you nor your successor trustee can physically hand an NFT over to your beneficiaries.
Transferring wealth that you’ve invested in NFTs to the next generation is also possible via a living trust, but they will need to understand how to access cryptocurrency assets.
Privacy is key
NFTs can’t be retitled in the name of your trust, but you can transfer them on paper similar to how stocks, LLC interest, and intellectual property are handled, for example. When establishing a living trust, it’s important to know what you can and what you can’t put in a living trust.
Living trusts are part of discrete estate planning because assets held in the trust do not go through probate and remain private. As with other assets, you need to have a clear and well-planned directive for the transfer and use of your cryptocurrency after death. Our law firm has experience in cryptocurrency’s legal landscape and will ensure your coins will not be lost after you pass away .