Have you thought about what will happen to your bitcoin when you die? For many of us, the thought has at least crossed our mind. But the number of HODLers we know that have actually put in place a legally sound plan of action ensuring both the sovereignty and privacy of their holdings is very few. This is understandable. For starters, most of us don’t expect to die anytime soon. Even those of us who have planned ahead with a well-crafted testamentary device still likely haven’t considered the nuance of proper estate planning for digital assets. And there is no digital asset we know of whose custody and conveyance requires more nuance than bitcoin.
Most people think about trusts in terms of an irrevocable trust. These trusts can be an excellent tool to confer tax advantages to both your estate and beneficiaries if crafted properly. Under such circumstances, legal and equitable title must be split between trustee and beneficiary, meaning the grantor necessarily cedes either legal control or, perhaps more commonly, a portion of his equitable claim to the trust property. While this may be perfectly acceptable for some, others may balk at the mere thought of imposing any limitations on the use and enjoyment of their bitcoin while alive. Here we will examine the revocable living trust as an estate planning instrument for your bitcoin.
Do you know what will happen to your bitcoin when you’re gone? (source)
Will Your Bitcoin Be Secure If You Die Tomorrow?
For those of us that have gone through the trouble of setting up a properly executed will, there’s a tendency to treat our bitcoin in the same manner we treat dollars in an account. This may work out just fine if our assets are held on an exchange like Coinbase or Gemini, but what if they’re not? If you died tomorrow, would your next of kin know how to access your funds? Would they know what to do with the seed phrases you buried next to the tree in the backyard, or how to interpret BIP39 punched into steel?
In a…
