As cryptocurrency becomes more mainstream, many people want to include digital assets such as Bitcoin or Ethereum in their estate plans. A revocable living trust is a powerful tool for protecting and passing on assets—but building digital wealth with it requires extra care.
Turn to experienced trust attorney Mark Ignacio for comprehensive education and guidance on including cryptocurrency in your living trust. Together, you’ll evaluate the goals of your estate plan, how to assess the risks and rewards of digital currencies, and what strategy makes sense for your family’s intergenerational wealth management. Here’s a brief overview of what you’ll discuss.
Types of Cryptocurrency You Can Add to a Trust
Unlike traditional government-issued currencies like the U.S. Dollar or the British pound, cryptocurrencies are digital assets that exist entirely online and rely on decentralized networks for their creation and exchange. Most options use distinct protocols to “mint” and distribute new units, though some share common underlying technologies. Here are some of the most common assets you might consider.
- Bitcoin (BTC). The original cryptocurrency and the most widely recognized.
- Ethereum (ETH). A popular selection that supports smart contracts and decentralized applications.
- Stablecoins (e.g., USDC, USDT). Pegged to the U.S. dollar and often used for transactions and savings.
- Altcoins (e.g., Solana, Cardano, Polkadot). These represent a wide array of blockchain projects beyond Bitcoin and Ethereum.
- Non-Fungible Tokens (NFTs). Digital collectibles or assets tied to art, music, or virtual land that are stored on blockchains.
While all of these can be part of a trust, each one has different storage, tax, and legal implications.
Legal Framework: The Revised Uniform Fiduciary Access to Digital Assets Act
In California, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) governs how fiduciaries—such as trustees—can access and manage digital assets, including cryptocurrency. This law gives fiduciaries the legal authority to manage digital property, but only if certain steps are taken in the estate planning process.
Under RUFADAA:
- Trustees must be explicitly granted access to digital assets in the trust document.
- The owner should name a digital asset custodian, if applicable.
- The owner must provide clear instructions on how to access wallets, keys, and accounts.
4 Steps to Include Cryptocurrency in a Living Trust
Here’s the general process Mark will take you through to properly add digital currencies to your trust. Some of the terminology might seem a little confusing at first, but you can count on his clear explanations and detailed breakdowns to gain a full understanding.
1. Amend or Draft Your Trust Document
Ensure that your trust explicitly:
- Recognizes cryptocurrency as a trust asset.
- Grants your trustee authority to access and manage digital assets.
- Complies with RUFADAA.
2. Identify the Wallets and Keys
You must detail how the trustee will access the crypto. This includes:
- Hot wallets. Stored online, like Coinbase or MetaMask
- Cold wallets. Offline storage devices like Ledger or Trezor
- Seed phrases or private keys. Critical access info that must be stored securely
Never include sensitive access information directly in the trust document. Instead:
- Store keys/phrases in a secure location, such as a safe deposit box or within a password manager.
- Reference the storage location in a separate memorandum or letter of instruction.
3. Transfer Ownership
Cryptocurrency must be formally transferred into your trust. Depending on the type, you’ll:
- Use platform tools to change ownership to the trust.
- Adjust self-custodial wallets by titling the device in the name of the trust.
- Keep documentation of all transfers.
4. Regularly Update the Trust
Crypto is volatile and constantly changing. Periodically, Mark will work with you to review and update your estate plan to reflect:
- Changes in crypto holdings.
- Wallet upgrades or replacements.
- Evolving legal and tax considerations.
How San Diego Trust Attorney Mark Ignacio Helps You Avoid Possible Problems With Cryptocurrency
Unlike traditional assets, digital currencies present unique challenges, especially regarding security, access, and legal recognition. Mark provides dedicated oversight to address:
- Loss of access. If your trustee can't access the private key, the asset is lost forever.
- Tax reporting. Crypto is subject to capital gains tax, which may complicate distributions.
- Custodial issues. Exchanges may have different rules for transferring ownership to a trust.
- Noncompliance with RUFADAA. If the trust lacks proper language, the trustee may be denied access.
In this new age of investing, experience still matters. It’s critical to approach cryptocurrency opportunities with a skilled, educated trust attorney. Mark ensures your living trust fully complies with both California and federal laws, providing a solid legal foundation for your digital assets. He’ll also advise you on selecting a trustee who’s not only legally qualified but also technically capable of managing complex holdings like these.
As our 5-star Google reviews indicate, Mark Ignacio Law invests in your future with the right education and preparation that protects your family and financial legacy.
