Bitcoin Inheritance Strategies Discussed in Latest Crypto for Advisors Newsletter
In this week's crypto advisory discussion, Zac Townsend from Meanwhile outlines estate planning strategies for managing bitcoin inheritance. Peter Dunworth from The Bitcoin Adviser addresses advisor-related questions on these strategies.
Estate Planning for Bitcoiners
The bitcoin market cap recently reached $2.1 trillion, highlighting the wealth creation for holders. With potential regulatory support and institutional adoption, individuals should explore strategies to manage estate taxes on bitcoin assets.
Key points include:
- The lifetime gift exemption is approximately $14 million per individual, allowing tax-free gifting.
- Bitcoin gifting can transfer future appreciation outside the estate but maintains original cost basis for recipients.
- Funding an irrevocable trust with bitcoin allows some control while avoiding estate inclusion, but cost basis issues remain.
- Bitcoin-denominated life insurance can provide a stepped-up cost basis upon death, enhancing benefits for beneficiaries.
- Combining irrevocable trusts with bitcoin life insurance optimizes tax benefits, control, and cost basis management.
Given bitcoin's growth trajectory, these strategies are essential in mitigating estate tax exposure.
Ask an Expert
Questions addressed include the impact of the new administration on bitcoin investors and strategies for reducing estate tax exposure:
- Regulatory shifts may present both opportunities and challenges for investors with significant holdings.
- Main strategies involve direct gifting, funding irrevocable trusts, and utilizing bitcoin life insurance policies.
- Acting now can secure current valuations for future appreciation outside the estate.
Additional updates:
- BlackRock has appointed Anchorage Digital as custodian for its bitcoin ETF.
- Circle has filed for public listing.
- The SEC clarified that most stablecoins used for payments are not considered securities.