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Estate Planning involving Cryptocurrency
You may be wondering:
What happens when I die?
It depends on a number of factors including whether you own cryptocurrency personally, through a trust or company, or within superannuation.
It also depends on whether or not you have a Will.
Although you may rather not think about death, your loved ones will really appreciate it that you took the time to plan ahead as you may help them save tax.
Here’s more information from our experienced cryptocurrency accountants:
Cryptocurrency outside superannuation
Generally, ownership and control of your cryptocurrency following your death passes to your loved ones in accordance with your Will.
If you don’t have a Will, then State law will determine who gets the cryptocurrency and this may not be what you wish for
If you don’t want to leave it up to State law or burden your loved ones with uncertainty and unnecessary taxes, then come speak to us about tax effective measures to include in your Will.
For a more detailed explanation see: Is my cryptocurrency taxed when I die?
Cryptocurrency in superannuation
Ordinarily, the trustee of your superannuation fund will get to choose which of your dependents they pay your superannuation interest to after your passing.
You can choose to lodge a “binding death benefit nomination” with the trustee of the superannuation fund which provides direction on how to disburse your superannuation interest following your death.
For tax purposes, it may be more beneficial for you to direct payment to some of your loved ones compared to others.
You may also have options before you die to arrange your affairs that’ll reduce tax after you pass.
Accordingly, we suggest you speak with us to consider your situation and help us arrange a tax effective plan – leaving more for your loved ones and less for the government.
Read Key Points & Transcript
From Our Crypto Tax Course: Module on Estate Planning
video key points
- Estate planning is crucial as your wealth grows, ensuring your assets are distributed according to your wishes through a Will, avoiding default State law determinations.
- A Will should not only specify asset distribution but also aim for tax efficiency to minimise potential tax implications for your beneficiaries.
- Incorporating complexities like testamentary trusts within your estate planning can offer significant tax benefits for your heirs, suggesting a nuanced approach to wealth transfer.
- Cryptocurrency holdings complicate estate planning due to their decentralised nature and the security measures protecting them, necessitating a detailed recovery plan.
- Engaging professional advisors is recommended to create a tax-effective Will and a comprehensive recovery plan for digital assets, ensuring your wealth transitions smoothly and as intended.
Presented by: Drew Pflaum
Disclaimer: Please be aware that this video was recorded in 2021 and changes to the tax system since then mean that some of the information may be out-of-date. The information presented is general in nature and is not tax or financial advice. You may need to seek professional advice applicable to your circumstances from an appropriately licenced professional.
video transcript
Estate planning and cryptocurrency.
Quite an important topic to at least consider, and keep in mind, especially as – I would be hoping for yourself – as your wealth generates and grows (and grows) larger (and larger).
We want to have – everyone should essentially have – a Will in place.
Otherwise, when you should pass away, your estates would be administered based on the tax law. Not that, sorry, not the tax law the State law.
So each State has her own on laws on this and your wealth and assets might not necessarily go to your loved ones as you intend to, if you don’t have a Will in place.
So you should consider getting a Will in place, in any case, to make sure that on your passing that your assets go to your loved ones, and and they go in a process that you find appropriate and relevant for you.
And throughout this process you want to try and make sure that the Will and those assets going to your loved ones are tax effective.
Because assets going to your loved ones that can trigger taxing events then or later and there’s certainly, the more wealthy you are, there’s more opportunities to involve a bit more complexity within (within) the deceased estate and going forward such as testamentary trust, which can provide a lot of tax benefits down the road for your beneficiaries.
So if you’re (if you’re) looking into this (yeah) certainly get a tax effective Will done. Munro’s can assist with that and be more than happy to help you out.
And other aspects of the estate planning is a recovery plan really for your crypto.
As we know, crypto, you don’t necessarily have it all on a central place – have it all on a central exchange. You might have it in wallets, all over the place, secured by different passwords, two factor authentication and the like.
What if you should pass away and then your loved ones know that you’ve got access – you had maybe a couple hundred thousand, maybe even a million (of you’re like) – of cryptocurrency and they can’t otherwise access this. (It would be) It’s not the outcome that we know that you don’t want for your loved ones.
So do you have a recovery plan in action?
When it comes to cryptocurrency, here, as professional advisors, we’d be more than happy to help (help) set such a recovery plan in place for you.
The complexity of that depends on your own circumstances and what security you want around these things.
Most of the time you don’t want, actually, any of your beneficiaries or your executor of your estate to have access to these assets. And certainly not, us, as advisors, we don’t want access to your assets. But, we can also play a role in how we can obtain access in the event that you passed away and make sure that the assets go to your loved ones as planned.
So you want to explore your options there (plans) and then put together a recovery plan. So keep that in mind when it comes to estate planning – tax effective Wills and a recovery plan for your cryptocurrency.
Where To Begin
Advanced Tax & Asset Protection Strategies Report
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Tax Minimisation Strategies Report
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