Gifting Cryptocurrency to Your Children

Posted by Debby EhrlichDec 30, 20210 Comments

Even those who can wrap their minds around blockchain technology may still wonder how cryptocurrency fits into their estate plan. A common question crypto investors have is: Can I gift cryptocurrency to my kids?

As of this writing, the highest valued cryptocurrencies are Bitcoin and Ethereum, but crypto is an unpredictable and volatile asset subject to huge fluctuation. If you're crypto-curious, or even if you're already an expert, you should approach gifting cryptocurrency to your children carefully. There are several considerations to make.

Can You Gift Cryptocurrency to Your Children?

The short answer is: Yes.

It's important to remember, though, that giving the gift of crypto isn't quite the same as gifting your child a lump sum of money or the family lake house. It's unlikely that the value of the gift will remain the same for years to come. The hope, of course, is that your digital gift will experience exponential growth, and your kids will one day explain to their grandkids how your generosity set the future generation up for life.  

Cryptocurrency is exciting, and you might be tempted to make a modest purchase and pass it off to your kids with no more consideration than you'd put into buying a handful of scratch-off lottery tickets. A better approach would be to treat the asset like a sophisticated investment that requires protection and maintenance.

Important Considerations in Gifting Cryptocurrency

Depending on the value of your crypto-gift, it may be wise to set up a trust as the vehicle for the conveyance. A trust can help beneficiaries manage the storage of the digital currency. Trusts can also help ensure both security and access to the digital wallet, allowing for or restricting the sale or exchange of the asset in accordance with your intentions.

In addition to providing the necessary instruction and maintenance for your cryptocurrency gift, a trust can also minimize tax obligations in some circumstances. Trusts also bypass Probate, allowing for a smooth transfer of wealth upon your passing. 

Speak to an Experienced San Diego Estate Planning Attorney

Gifting cryptocurrency to your children can be an exciting and profitable investment, but you shouldn't go about it haphazardly. Even a modest gift can reap big rewards that might ultimately require sophisticated treatment. With the guidance of an experienced estate planning attorney, you can determine how the gift of crypto can be most appropriately transferred.

Call DME & Associates LLC today at (805) 312-8059 to schedule a free consultation!