Protecting Your Cryptocurrency

Whether you own cryptocurrency or you’re still struggling to grasp the concept, it is still an asset that requires proper handling and knowledge. Crypto can be tricky, but with the right tools, you can take steps to protect yours in a Living Trust by designating beneficiaries, leaving instructions, and documenting your access keys securely.


Cryptocurrency presents a unique challenge to the estate planning world. Unlike most other assets, cryptocurrency is anonymous and can be difficult to access – you can’t document ownership of it in the same way you would a home or bank account. You can think of it as a form of secure digital currency that has monetary value. Crypto is decentralized, meaning it is not issued by a government agency or bank.


So, how can an anonymous digital currency be protected?


As the legal system slowly catches up to include the latest in digital technology, there are some options for protecting your crypto and providing beneficiaries access to your digital wallet. Your wallet contains your cryptocurrency coins (Bitcoin, Ethereum, etc.), and in some cases, NFTs (non-fungible tokens).


Leaving Crypto in Your Will

The first option would be to document your cryptocurrency as an asset in your Will. By doing so, you can state that you own cryptocurrency, name your chosen beneficiaries, and document any wishes or instructions you’d like them to follow. 


However, there is an issue with leaving crypto in your Will: because of the potential for Wills to go through probate, Wills can become public information. A compromise in anonymity wouldn’t sufficiently protect your crypto. 


Leaving Crypto in Your Trust 

A better option would be to document your crypto as an asset in your Living Trust. A Trust generally provides protection against probate, and overall, more security as to making sure your things will go to whom you want them to. 


Since a Trust is a private document, you can have greater peace of mind knowing that only a specific group of people will have access to it. This is one way that you can keep your crypto codes secure. Without the codes, your crypto would become totally inaccessible. 


A Trust also allows you to have more control over your assets during your lifetime and after you’re gone. You can set up a system that allows you to better prepare your beneficiaries to receive your cryptocurrency. For example, you can keep your crypto inside your Trust for a certain amount of time before it is distributed to your beneficiaries – this way, they can have more time to learn more about crypto and how to manage it. 



Video: Dave explains some benefits of putting cryptocurrency into a Trust.

When it comes to cryptocurrency, there is still a lot of room for the legal field to expand. As you try to figure out the complexities of protecting your crypto in your estate plan, be sure that your chosen beneficiaries are aware that: 

  • You own cryptocurrency
  • You’d like to pass it off to them
  • They can access it in the future, given that you’ve left proper information and instructions


Simply making sure that someone is aware that your cryptocurrency exists is the difference between protecting your assets and losing them for good.  



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