Navigating Crypto Assets in Trusts

Cryptocurrency is a developing area for Trustees, particularly when it comes to potential Trustee liabilities. Here are some key considerations:

1. Source of Funds: Verifying the source of funds for existing crypto assets is crucial. Trustees need to understand the origin of these assets to mitigate any potential risks.

2. LLC for Crypto Holdings: Crypto assets within a trust will almost always be best held by a Limited Liability Company (LLC). This structure can provide additional liability protection for the trust.

3. Reputable Custodians are Key: Choosing a reputable custodian for crypto assets is essential. Look for a custodian with a strong track record of security and compliance.

4. Limiting Liability for Loss of Value: Trustees should explore options to limit their liability for potential loss in crypto value. This may involve special indemnities, exculpatory clauses, or delegation of investment decisions etc.

Planning is Critical: Given the complexities of crypto assets in trusts, we strongly advise contacting us well in advance if you’re considering including them in your trust. Proactive planning can help ensure these assets are managed effectively and potential liabilities are mitigated.