Guarding Your Digital Wealth
ESTATE PLANNING MEETS CRYPTOCURRENCY
Cryptocurrencies were once on the sidelines of investments, but their surge in value over the last several years has brought them to the mainstream. Today’s investors are directing billions of dollars into this asset class, and cryptocurrencies like Bitcoin and Ethereum are playing a growing role in wealth accumulation. While more people are holding cryptocurrencies, many overlook these assets in their estate plans. Because they are significantly different from traditional assets, it can be challenging even to know where to start. A great first step is to create a clear written inventory. This should include the types of wallets (cold or hot) it uses and whether your specific currencies are stored on an exchange or a piece of hardware. If you have a hardware wallet, note its storage location. If you use several apps, list each one. You’ll want to track the values of your crypto assets and keep a record of that as well. These values fluctuate too frequently for you to keep a completely accurate record, but a general estimate can help an executor understand what they’re handling. Next comes the access puzzle. Crypto does not function like a bank account. Heirs cannot call customer service and resolve the issue. They need keys, seed phrases, or login details, and those items must be kept in a secure place that remains private. Some people keep them in a password manager. Others use a paper record stored in a safe or an encrypted digital file. Whatever method you use, the most important thing is to inform your executor and at least one backup person of how to access it if they ever need to.
different chains or wallet types. Some families name a separate digital executor, while others entrust that role to a child, sibling, or advisor who understands the technology and security behind cryptocurrency. They don’t have to be a tech wizard, but you want someone who understands how wallets work, how to move coins without exposing their private keys, and when to seek professional help. For larger holdings, it may be advisable to wrap your cryptocurrency inside a structure such as an LLC held under a trust. An LLC can provide a single entity for multiple business interests and may offer an additional layer of protection from personal creditors. A revocable living trust can own your LLC interests, so your plan avoids probate and makes it easier for a successor trustee to step in and follow your instructions if you become ill or pass away. Taxes are another reason to plan. The IRS treats digital coins as property rather than currency. That means your heirs may face capital gains when they sell or trade what they inherit. Providing them with basic information, such as when you bought the asset, what you paid, and where it is held, will save your family money and time later. Like all estate planning, the ultimate goal here is to protect people as much as assets. With cryptocurrencies, that means connecting the legal pieces with clear instructions and secure access so something valuable doesn’t vanish just because no one knew how to reach it.
It also helps to consider the person who will manage these assets. A traditional executor might be uncomfortable working with
“With cryptocurrencies, estate planning isn’t just about assets — it’s about secure access, clear instructions, and making sure something valuable doesn’t vanish.”
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