In the modern world, family trusts are important in estate planning. A family trusts allow you to provide for your family during your lifetime and even after death. A family trust is useful in the management of estate, taxes, assets and family wealth. A grantor is a person who sets up the trust. The individual managing the trust is called a trustee. Enlisted family members are known as the beneficiaries.
Cryptocurrency has taken the financial stage by storm since the rise of bitcoin. If you have cryptocurrency, it’s therefore important to consider it when setting up an estate plan. Failure to include it in your plan may lead to its loss. You can leave your cryptocurrency to your family through a will or a family trust.
A family trust is an estate planning scheme set up by a grantor. The trust can be accessed when the grantor is alive or after death through a will. The most commonly used trust is the living trust. It is quite popular because the grantor can easily change it while alive. The grantor can also serve as the trustee and manage the assets as he/she prefers. After the death of the grantor, another trustee takes over.
Advantages Of Having A Family Trust
Several advantages come with having a trust for your family. These include:
Family trusts to protect family assets from creditors. It is a nice insurance policy for the family when trying to invest. In case the investment fails, enlisted assets on the trust are kept safe from creditors.
A trust allows you, the grantor, to save money for future use. Even after the grantor dies, a trust can ensure the family left behind is taken care of financially. It may cover expenses like the education of children listed as beneficiaries.
A trust helps in managing and solving ownership claims when the grantor dies. It helps in curbing malicious people who may fabricate claims to acquire wealth. Lack of a trust may provide a loophole to be exploited by such fraudulent individuals. It puts the family’s wealth at risk.
They protect vulnerable family members. A family trust through a trustee can help beneficiaries who are likely to make bad decisions when managing a trust. It may include decisions such as gambling and overspending.
Cryptocurrency And Family Trust
If you are a crypto investor, there is a possibility of losing your investment after passing on. It can, however, be safe by investing the cryptocurrency in your family trust. It is a prudent move because:
ⅰ) A Trust Makes Your Cryptocurrency Known To Beneficiaries
It is hard to discover the existence of cryptocurrency as an asset without its prior knowledge. The reason is that it’s an online commodity with little or no physical evidence like documents. With a trust, however, its existence and how to access it can be explained in a document.
Through a trust and a trustee, it is easy to find the cryptocurrency and where to invest it through instructions. These instructions may include what to do with the cryptocurrency and how to keep the investment going. This move minimises the chances of losing the cryptocurrency.
ⅱ) Cryptocurrency Avoids A Probate If Listed In A Trust Fund
A probate is a situation where ones’ property goes through a legal process after their death. Probate takes some time since it involves submission of the property to court before distribution. This process is time-consuming and costly.
This lengthy process may lead to losses in cryptocurrency value before the family even gets access. Such a nightmare scenario is avoidable with a trust. With a trust, after a grantors death, the trustee is allowed to access and distribute property. If cryptocurrency is part of this trust then, fast access is possible without probate. All listed property doesn’t have to undergo probate.
ⅲ) A Trust keeps Your Cryptocurrency Private
During probate, when a will is in court, information available can become a public record. This record exposes your cryptocurrency to a potential threat. The advantage of a trust in this situation is that trust documents are not public record. Only the trustee will know. This privacy helps in ensuring the security of your loved ones and the cryptocurrency is maintained.
ⅳ) Cryptocurrency Can Help In Tax Management
In a country like Australia, if you have a family trust, you don’t have to pay tax on income distributed to beneficiaries. The grantor/trustee can share the income without being taxed. Using cryptocurrency as part of the income helps avoid the taxes that otherwise target cryptocurrency.
No one knows the future. This certainty makes estate planning very important in today’s world. With the correct planning, the future lives of our loved ones can be secured. Cryptocurrency is fast gaining popularity, attracting interest from new investors exponentially. This growth makes it easy to lose your investment in case of an unfortunate event like death. Investing cryptocurrency in a family trust is one of the best ways of securing your investment.