Can You Leave Cryptocurrency in a Trust or Will? — Aus Merchant
You’ve decided to invest in cryptocurrency, but what happens to that money when you pass on? When it comes to stocks or cash, passing this money down to children or a spouse is a simple legal process and has been done by countless people for centuries. Cryptocurrency, though, is an entirely new ball game, where there is little history to guide you.
In Australia, one way that cryptocurrency can be left to your loved ones is in a family trust. Not only does this help you pass on your investments to your family members, but it can be an extremely effective tax strategy and can help set a clear outline of what it is you want to happen with your investments after you’ve passed on.
Let’s break down what family trusts are and how you can ensure your cryptocurrency investments are safely passed to your surviving family.
What Are Family Trusts?
Family Trusts refer to a discretionary trust that’s established to hold a family’s assets. Usually, this is established by one member of the family to benefit multiple members within the family.
Setting up a family trust can come with many tax advantages for the family and protect their investments. Say that a family member becomes bankrupt, a family trust can minimize the impact on the entire family’s assets.
What Is Cryptocurrency?
There are currently over 1000 different kinds of cryptocurrencies on the market today, with one of the most popular being Bitcoin. Cryptocurrency is a virtual digital currency that uses blockchain technology to create a decentralized public digital ledger.
Sounds complicated, but it boils down to that there is a finite amount of cryptocurrency, and it isn’t centralized to any particular nation like traditional currency. You trade, buy, earn and sell cryptocurrency through independent portals rather than with a bank.
However, that doesn’t mean banks are entirely out of the equation. Due to the recent rise in popularity of cryptocurrency buying and trading, are beginning to offer services to buy and trade cryptocurrencies through their financial institution rather than on the web.
What Happens To My Cryptocurrency When I Die?
It’s a bit tricky to say what happens to your virtual assets when you die. You, as a Bitcoin owner, aren’t truly tied to your currency in any way. There are no deeds involved and little proof of who genuinely owns a sum of cryptocurrency.
It’s also possible that your family and heirs will overlook your virtual assets since they need to be stored on a computer, phone, or even on a thumb drive. They might not even know what they’re looking at if they do find your Bitcoin wallet if you haven’t shared your cryptocurrency investments with them.
Even if they do know what they’re looking at, Bitcoin requires a specific private key for each user to access their account. This key keeps your transactions secure while you’re alive, but if the key is lost, all of your assets are lost too.
To ensure your family reaps the benefits of your virtual investment, you need to ensure your estate plan discloses your Bitcoin or other cryptocurrency investments and provides methods to transfer the access key from you to your heirs. This could even be a simple letter with instructions in a safe deposit box.
How Does A Family Trust Affect Cryptocurrency?
Combining your cryptocurrency and a family trust is an extremely smart move for you to take tax-wise. Even though cryptocurrency is called “currency,” Australia looks at it rather than as a type of currency.
If you’re trading cryptocurrency, that trading is taxed as income. If you hold on to it, it’s seen as an investment and, thus, you pay taxes differently. By focusing on your family trust structure, you can take steps to make sure your cryptocurrency investments are split smartly between investor status and trader tax status. This means that you will not only be ensuring your Cryptocurrency investments are left behind for your family, but you’ll avoid some of the tax penalties that can come with your Cryptocurrency being seen as taxable income by storing them within a trust.
What Should I Do?
You need to ensure that you’re planning now. Rather than letting your investment go to waste, you need to ensure that your family has access to the results of your smart financial moves. Investing in cryptocurrency has never been a smarter financial investment than it is today, and it would be a shame to see it mean nothing to your heirs.
You need to work to ensure your heirs are prepared to receive these assets and any financial information that comes along with accessing these assets. This could be as simple as providing a trustee with the passcode for your cryptocurrency wallet to ensure the account can be accessed on your behalf when you pass. This is likely something that would happen if your assets were kept in a family trust.
You also need to ensure your heirs know you’ve invested in cryptocurrency and that you intend for it to be passed on. In case of a sudden passing, you want to ensure your heirs know how to find and access the money you’ve left behind for them.
Trade With Confidence
Finding a digital custody solution is necessary for private key storage capability. As a result, the question is how those private keys are controlled and are critical for defining the role of custody of your crypto assets. Whether for Bitcoin, blockchain, or DLT, the differences between crypto and institutional platforms are still evolving and require a holistic view of custody beyond just the storage of private keys.
Aus Merchant holds your cryptocurrency and you have the confidence in an institutional-grade wallet system. Our technology provider uses MPC technology, ensuring the security of your assets. We are always establishing additional integrations with decentralised finance and share-yield generating products. We believe that for mass merchant adoption of cryptocurrency for payments, custodian services will be an essential aspect. Providing merchants with the confidence to enter and benefit from this emerging financial system.
Contact us today for a review of your digital assets and how we can increase profit and keep them secure.
Originally published at https://ausmerchant.io.
