Introduction
With recent IRS changes, cryptocurrency owners face significant tax implications starting in 2025. These crypto tax rule changes affect not only tax planning but also estate planning. If you hold crypto assets, ensuring your estate plan accommodates these new rules is critical to protecting your wealth and your family’s future. Act before December 31, 2024, to safeguard your digital and financial legacy.
Why Crypto and Estate Planning Are Now Linked
The Growing Role of Cryptocurrency in Estate Planning
Cryptocurrency isn’t just a digital investment; it’s becoming a key part of many estate plans. With new IRS rules requiring separate cost basis tracking for each wallet starting in 2025, improper management of crypto assets could result in higher taxes and unnecessary legal hurdles for your heirs. Including crypto assets in your estate plan ensures your family can access these assets and manage them efficiently, avoiding financial losses or disputes.
Potential Risks Without Crypto in Your Estate Plan
Failing to account for crypto assets in your estate plan could lead to inaccessible funds, legal complications, and additional tax burdens for your loved ones. A proactive approach ensures your family avoids these pitfalls and benefits from your digital investments.
IRS Basis Rule Changes and Their Impact on Estate Planning
Understanding the New IRS Rules
Starting in 2025, the IRS will require separate cost basis tracking for each crypto wallet. Previously, investors could consolidate basis across wallets, simplifying tax calculations. This shift increases the need for detailed documentation and careful estate planning to prevent unnecessary taxes and complications for your heirs.
Why the Changes Matter for Your Family
With the new rules, any lack of preparation could result in higher tax liabilities or difficulty transferring crypto assets to heirs. By addressing these changes now, you can secure your family’s financial future and prevent potential disputes over your digital legacy.
Proactive Steps for Crypto Owners Before December 31, 2024
1. Consolidate Your Crypto Accounts
Merge digital assets into fewer wallets to simplify compliance with safe harbor provisions. Consolidation streamlines record-keeping and ensures smoother asset transfers in the future.
2. Document and Track Your Transactions
Maintain detailed records of all crypto transactions, including purchase dates, amounts, and wallet addresses. This documentation is critical for accurate cost basis tracking and tax reporting.
3. Utilize the IRS Safe Harbor Provisions
Take advantage of the IRS’s one-time safe harbor provisions before the December 31, 2024, deadline. Use either Specific Unit Allocation or Global Allocation to organize your cost basis effectively.
4. Collaborate With Professionals
Work with a Personal Family Lawyer® and tax advisor to ensure compliance with IRS rules and integrate crypto seamlessly into your estate plan. This expert collaboration helps secure your legacy while minimizing risks.
Collaborating With a Personal Family Lawyer® for Crypto Planning
The Role of a Personal Family Lawyer®
A Personal Family Lawyer® can help integrate your crypto assets into a comprehensive Life & Legacy Plan. From documenting holdings to addressing IRS compliance, they provide the expertise needed to protect your digital legacy.
Benefits of Professional Guidance
By working with an experienced advisor, you ensure your family avoids legal disputes, unnecessary taxes, and access issues. Expert guidance offers peace of mind that your wishes will be honored and your crypto investments safeguarded for future generations.
