Cryptocurrency is all the rage right now, as most of us have probably noticed. Turn on the news, and you see it everywhere. I know I get questions about it all the time, whether it’s at a cocktail party, over at a friend’s house, or just in casual conversation. As soon as I tell someone what I do, the questions start coming. Sometimes it’s about the taxation of crypto, and sometimes it’s about the impact on one’s estate plan because of crypto holdings.
I was talking with a good friend who’s a banker the other day, and he echoed the same sentiment—nonstop questions about crypto. So we start discussing it, and it brings up this issue of privacy that’s so important to people. I made a quick comment saying, “Trust planning is the original crypto.” He looked at me, puzzled, and asked, “What does that mean?” I explained, “Because of the privacy.” He still didn’t follow, so I elaborated.
“To the extent that you have assets in your personal name, when you die, those assets have to go through the probate process. Any information that is part of the probate process is subject to the public domain. Anyone can get their hands on that; anyone can take a look at it.” He found that interesting.
I continued, “If assets are titled in the name of a trust, they don’t have to go through probate. So, a lot of people use revocable living trusts to avoid probate. There’s also other trust planning you can do to pass inheritance to beneficiaries that will avoid probate.”
This reminded me of a story from early in my career. I received a call from the executor of an estate. The executor said, “Mom passed away some time ago. Before she passed away, she had this business partner from many years ago who owed her millions of dollars. But the business partner always said he didn’t have the money to pay her back, so Mom didn’t pursue it.”
The business partner eventually passed away, and the executor called me up again and asked, “Can you get your hands on his will? I want to see what kind of assets he had in his individual name.” I said, “Sure, I’ll take a look and see what I can find.”
Before I could even start looking into it, the executor called me back and said, “Hey, I got my hands on the will. No need to look into it anymore.” I was curious, so I asked, “What did you find?” The executor told me that the business partner, who had always claimed to have no money, passed away with $30 million in assets in his individual name. You could see the full listing of his assets on the documents submitted to the probate court.
I didn’t have anything to do with it after that, but it just goes to show the importance of privacy. Maybe you live in a small community, maybe you’re high-profile, or maybe you just have a nosy family. Whatever the reason, you don’t want people all up in your business. Trust planning can help with that. It really is the original “crypto” because it helps address all those privacy concerns.