In the fast-paced world of cryptocurrency, fortunes can change overnight. In a recent conversation, Bespoke Co – founder Matthew McClintock, a legal expert and advisor to high-net-worth individuals in the crypto space, and Crystal Wampler Bespoke’s Client Services Associate and guest host of the show delve into the significance of understanding the evolving landscape of crypto assets, the potential impact of Bitcoin ETFs, and the crucial role of behavioral finance in wealth management.
Listen to the conversation on the AFO | Wealth Management Forward Podcast with host Rory Henry.
The Dawn of Retail Investment in Crypto
McClintock emphasizes the significance of the evolving landscape of crypto assets, particularly in how it affects retail investors. He notes the challenges that everyday investors face when dealing with cryptocurrency exchanges, from navigating complex protocols to grappling with custody solutions. However, with the emergence of Bitcoin ETFs, McClintock sees a potential turning point. These ETFs could provide retail investors with easier access to Bitcoin price exposure without the complexities of owning and managing the underlying asset.
The Role of Trusts in Crypto Wealth Management
As crypto wealth grows, McClintock highlights the importance of trust structures in estate planning and asset protection. He discusses the various trust vehicles available, from revocable trusts to dynasty trusts, and emphasizes the need for creative solutions tailored to the unique challenges posed by crypto assets. McClintock also explores the role of private trust companies in providing custodial solutions for digital assets, offering increased security and flexibility for affluent crypto investors.
Navigating Behavioral Challenges in Crypto Wealth Management
Crystal asks: “How do you navigate these new millionaires and billionaires, how do you help them navigate their new wealth?” In managing newfound crypto wealth, McClintock underscores the importance of behavioral finance principles. He emphasizes the need for advisors to approach clients with respect, curiosity, and zero judgment, acknowledging the significance of their wealth journey. McClintock encourages clients to explore questions of legacy, impact, and personal fulfillment, guiding them in crafting a holistic wealth management strategy aligned with their values and aspirations.
The Future of Crypto Wealth Management
Looking ahead, McClintock remains optimistic about the potential of Bitcoin ETFs to drive further adoption and investment in the crypto space. He anticipates a significant demand shock on Bitcoin as ETF sponsors acquire assets to back ETF shares, potentially leading to accelerated growth in crypto markets. However, McClintock also stresses the importance of prudent planning and risk management, urging investors to consider the broader implications of their wealth decisions.
As the crypto landscape continues to evolve, understanding the intersection of legal, financial, and behavioral factors will be essential in helping clients achieve their long-term financial goals while embracing the opportunities presented by digital assets.
The surge in cryptocurrency adoption necessitates proper estate and legacy planning for crypto assets. Despite an uncertain regulatory environment, investment in blockchain-based systems continues in the U.S., and other regions have already enacted crypto-related legislation.
Safeguarding Digital Legacies
A significant number of investors, especially younger ones, possess crypto assets in various forms, requiring advice on estate planning. Often, these investors don’t recognize the need for formal planning due to crypto’s volatility and their perceived wealth. Legacy planning for digital assets differs from traditional assets. The technical aspect, ensuring heirs can control the assets, is more critical than the legal planning. A team like Bespoke can add value by preparing the inventory, creating a tech-focused legacy plan, and educating heirs on the use of keys and investment philosophies.
Unraveling the Complexities of Crypto Asset Planning
Crypto asset planning also presents unique challenges like regulatory ambiguity, rapid innovation, and cost basis considerations. An asset’s potential to increase rapidly in value underscores the importance of legacy planning. Ultra High Net Worth (UHNW) individuals in crypto face additional difficulties, such as tax issues complicated by basis considerations and jurisdictional questions, requiring crypto-literate advisors and attorneys.
In summary, as cryptocurrencies rise in prominence, the role of financial advisors in guiding clients through estate and legacy planning for digital assets becomes vital. It’s essential for estate plans to accommodate digital assets efficiently and legally, requiring a strategic blend of tech-native wealth transfer and protection plans, coupled with collaborative efforts with legal and tax professionals.
The following information is intended for general educational purposes only and should not be construed as legal or investment advice.
Wealth Actually: Crypto and NFT Estate Planning Update with Matthew McClintock (Part 2)
Matt returned to Frazer Rice’s “Wealth Actually” podcast to expand on their 2020 discussion surrounding inter-generational wealth transfer issues for individuals with large cryptocurrency holdings. The last time Matt and Fraser spoke, “Bitcoin was around $10,000 . . . By August 2021 it was valued in the $48,000 range (having spiked over 60K!). Many other cryptocurrencies and digital assets like Non-Fungible Tokens (NFTs) have seen similar value increases.”
In this podcast, Matt discusses:
What is different around legacy planning in the crypto world since October 2020 and August 2021?
What is involved with estate planning in the white hot NFT space?
How does one properly staff the roles in crypto estate planning structures?
