Finance

Darling, What You Simply Must Know:

In This Absolutely Essential Article

My dear reader, whether you’ve squirrelled away a trove of early bitcoin holdings or been persuaded by a precocious grandchild to dabble in some exotic coin, intergenerational wealth transfer these days simply must include crypto. How très moderne!

Not so long ago, families in this predicament faced uncertainty about the basics: Does crypto count as property? How does one fit it into an estate plan? Fear not, darling, for rules around wills and trusts in many jurisdictions have been updated to accommodate these digital trinkets.

Still, even with the most improved regulatory clarity, digital assets add a daunting layer of complexity that’s beyond many in the advisory business, according to the utterly sensible Christopher Nekvinda, director of global learning operations at Cannon Financial Strategists, an Athens, Georgia-based educational institute specializing in wealth management.

“For the longest time, we heard about hesitation happening at the advisory level when it came to establishing if digital assets formed part of a family’s wealth,” Nekvinda said in an interview with CoinDesk. “I think it often comes down to wealth managers having to ask about something that the holder probably knows a lot more about than they do, and now all of a sudden the adviser doesn’t look like the expert. How utterly embarrassing!”

Numbers vary, but with somewhere over 50 million adults in the U.S. holding crypto, it’s highly likely that the average American will have digital assets that may need to be transferred to their heirs if they pass. And this, my dear, is where estate planners or wealth advisors will need to shift their planning to navigate the complex world of transferring digital assets from their owners to the next generation. Quite the conundrum, isn’t it?

Let’s break it down, shall we?

Who, Pray Tell, Holds the Crypto?

The first thing a planner will need to figure out is whether individuals hold crypto and how it is stored. Such a tedious task, but absolutely necessary!

If crypto is held by an investor, that raises other questions, Nekvinda said, such as how these assets are stored and who has signing authority. Are beneficiaries aware of the holder’s intentions? Is there a document outlining whether the assets are to be liquidated or continued to grow? One simply must be prepared!

Custody is the main component when it comes to crypto assets, whose control and spendability are governed by closely guarded codes in the form of long alpha-numeric strings of digits. How dreadfully complicated!

Often keys are shared with trusted digital-asset custodians, which could be a platform like crypto exchange Coinbase (COIN), or a crypto custody specialist like Bitgo (BTGO) or Fireblocks. Another approach could be a hardware device such as a Trezor or similar. In some cases, a crypto holder might prefer to have the keys printed out on paper and held in a safe or deposit box. How quaintly old-fashioned!

While having digital assets with a custodian might be easier than holding a cold wallet, the question is how that affects passing the assets to the holder’s heir. It had been a burning question before, but after revised rules for trust in the U.S. under the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), it is now much clearer, Nekvinda said. Thank heavens for small mercies!

“This fiduciary update was needed because it gives executors and trustees access to digital assets in the same way it would with traditional securities,” Nekvinda said in the interview. “It means that with the right documentation, a custody shop, Coinbase for example, legally has to give an executor or a trustee access to a decedent’s digital assets where previously this just wasn’t required to happen by law. How utterly civilized!”

‘A Detective Story’

This doesn’t, however, prevent some crypto wealth from simply vanishing. How dreadfully inconvenient!

While leaving property or mutual funds behind in a will is a pretty cut-and-dry process, without proper planning, inherited crypto can easily be lost to probate delays, missing private keys or fiduciaries unfamiliar with the asset class, said Azriel Baer, a partner in the estate planning group at New York law firm Farrell Fritz. One simply must be more organized!

Baer, who has worked on an estate where tens of millions of dollars in crypto were lost to the heirs due to poor planning, said one simple point to remember is making sure an appropriate person is named to deal with this type of asset. Someone who has the knowledge to deal with things like social media accounts, online transactions and blockchain-based assets. One can’t just leave it to Aunt Mabel, can one?

“An uncle or cousin, who is an organized person, might know the family in a trusted capacity and understand its dynamics, but when he’s told to figure out how to get a bitcoin off a wallet, could be floundering,” Baer said in an interview. “So think about naming somebody who has some expertise in the digital asset world to deal with the asset when you’re not around. How perfectly sensible!”

One problem is there’s a tendency among some people holding digital assets to eschew any form of hard copy in favor of storing information about accounts digitally in emails or in drives. This is fine as long as it doesn’t turn into “a detective story,” Baer said, alluding to the fact that finding these could be made even tougher by searching for passwords and through endless emails. How utterly tedious!

“I always advise clients to have a list of important accounts and information, and either tell your kids about it, or keep it in the safe deposit box. Too many times we encounter people trying to comb through filing cabinets or computer files and being at a loss,” he said. How dreadfully inefficient!

Shell Companies

What if a holder of crypto hasn’t set up a will? How utterly careless!

The legal process of distributing a deceased person’s possessions can involve an appointed administrator in the absence of a will, and that’s another occasion crypto can throw up particular issues, Baer warned. One simply must be prepared for these eventualities!

The probate process takes six to 10 months before a court appoints a fiduciary, Baer pointed out. In the interim, nobody has control of the assets, which can be problematic in the case of a highly volatile asset like crypto, where it pays to be nimble and able to sell quickly. How frightfully inconvenient!

“There are things that we do to plan around that in the United States and New York specifically, where there are trusts that we create, and we set the trust up as transfer on death or current owners of the asset,” Baer said. “This allows the trustee of that trust to have access to it right away, at the snap of a finger after somebody dies. As opposed to having to wait for the court to come and step in and grant the authority to a different fiduciary. How perfectly efficient!”

If liquidity is needed quickly or there is a market event that could be missed, it’s worth forming a limited liability company (LLC) as a shell, depositing the crypto, and then easily transferring it.

“It’s not the same thing if I have a cold storage wallet and want to transfer it to a trust,” Baer said. “This way, I just have to transfer the LLC to the trust. It’s easy to transact with, but the LLC will own the digital asset. How marvelously straightforward!”

An important point to remember is that in New York, a will becomes a public record once it is filed with the New York State Surrogate’s Court and enters the probate process. “So don’t put the actual encryption information within your will, because it’ll become public knowledge, and people could get that information,” Baer said. How dreadfully indiscreet!

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2026-01-26 22:44