While it may always be true that death and taxes are life’s certainties, digital assets have made financial planning more complex. Staying ahead of changing laws and regulations is important for generating wealth, which requires careful attention to planning.
If you have digital assets, you will benefit from Rustin Diehl’s LLM in Taxation from Georgetown Law and 15 years of reducing tax burdens and securing assets from legal threats. Allegis Law is available to help you with tax planning for digital assets and associated asset protection and estate planning.
Working with a knowledgeable attorney on the protection of your digital assets through a trust is important because:
Allegis Law will help you determine the best trust for your asset types and your need for flexibility and control over your assets. It is important to determine whether you will retain beneficiary status or become a grantor. Grantor status allows you to pay taxes at a lower threshold than having the trust pay at the highest tax rate.
Digital assets can be volatile and your estate plan needs to be built for both systemic and non-systemic risks considering the digital market may experience appreciation or depreciation.
As digital assets continue to be scrutinized in the legislative and regulatory landscape, the future of taxation and valuation is not entirely clear. A certified tax and estate planning attorney in Utah will help you navigate these complications and protect the financial future for you and your beneficiaries.
The Internal Revenue Service, the Securities Exchange Commission, and Congress are all interested in establishing clear authorities and requirements in the digital asset space. To date, however, neither the executive nor the legislative branch has taken much action to address digital assets with specificity. While it may seem like managing digital assets is simple because they are akin to other asset types, some of the digital assets are very new.
The reality is that a lack of understanding or updated knowledge of the laws surrounding digital assets exposes asset holders to a high level of avoidable risk. Reporting losses and gains is simple enough, but interest and penalties can add up quickly if specific rules are not followed and assets are not sufficiently protected in the correct type of trust. Similarly, transfers within and into or out of the trust must be carefully managed to avoid undesirable tax implications.
Consensus is building around the need to regulate - and tax - your digital assets. The challenges to such regulation include the need for a global approach due to the international nature of the holdings, a lack of reliable data surrounding digital assets, complications of the many transactions that occur outside of the blockchain, and the difficulties in monitoring and enforcement of digital assets of all kinds.
According to a report cited by the Office of Financial Research, cryptocurrency rose in 2021 to roughly $2 trillion in 2021, up from $100 billion in 2018. In the “crypto-winter” of 2022, those assets took a large dive. This brief history is a good example of how digital assets are on the rise and subject to volatility. Other examples of digital assets are:
There are countless ways to “store” digital assets that are not related to a traditional banking infrastructure. This includes many non-traditional financial companies that host “hot wallet” digital asset storage. However, many people choose to store their digital currencies in a “cold wallet,” essentially taking complete control of their own digital assets (making themselves the bank). Lastly, many traditional financial institutions are beginning to explore digital assets, though they differ in how much control they allow consumers to have over the cryptocurrency.
A skilled legal team focuses specifically on tax law and estate planning. We will be able to examine all of the various ways you may have your digital assets currently stored and help formulate the best plan for you and your family.
We value real, human discussion about your tax planning goals and concerns. After our initial meeting, we will determine the specific estate plan that is right for you and your assets by evaluating your current ownership structures and tax classifications. This includes accounting for your current need for the funds involved, the future you want to set through the fund for beneficiaries, and other factors unique to your estate.
That analysis will allow us to uncover risks, both known and unknown, and identify opportunities to save you money and better protect your hard-earned assets. With that information, we will design a personalized strategy to maximize your tax savings, minimize your exposure, and find the right balance of flexibility and control over your assets. Once we agree on the right plan for you, we will establish your trust and necessary entities and legal structures to establish the plan’s requirements.
As the complicated world of digital assets continues to change, you need to work with someone with tax law certification and more than 15 years of experience. Contact Allegis Law for your digital asset planning.
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