What is Involved in Investing in Cryptocurrency?

Investing in cryptocurrency
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Investing in cryptocurrency can have financial and estate planning impacts.

Making investments is a risky business by definition.

Even so, stocks and bonds and other investments are a common and necessary practice for outpacing inflation and for preparing for retirement.

With the introduction of cryptocurrency, the landscape of investing looks a little different now.

According to a recent Monterey Herald article titled “Help! My dad is investing in cryptocurrency,” cryptocurrency is an uncomfortable topic for many.

Investing in cryptocurrency is growing in popularity.
Investing in cryptocurrency may complicate estate planning.

Most people simply do not understand it.

For this reason, they are concerned about their loved ones investing in this area.

In its early years, many people wondered whether cryptocurrency was simply a fad.

Since its infancy, it had grown to become a significant investing and purchasing tool.

There are currently more than 8,000 different types of cryptocurrency.

The value of these represent billions in assets.


People can utilize their cryptocurrency to purchase real estate, airplanes, and even Tesla automobiles.

Banks are now permitted to take custody of digital currency under recent regulations.

Also, a credit card company is working on a system where digital cash can be spent using a debit or credit card.

The IRS now requires owners to report income on cryptocurrency as well as on capitals gains from a sale of crypto for the assessment of taxes on these assets.

Although investing in cryptocurrency is becoming more common, it can also complicate estate planning.

When purchasing cryptocurrency, people receive a digital key.

These digital keys are strings of symbols, numbers, and letters and represent the currency on a secure ledger.

There is no replacing this key.

Once it has been lost, the holdings can no longer be accessed.


A variety of means exist for storing these keys.

If you (or a loved one) are investing in cryptocurrency, you should be familiar with how these keys are stored and how to access them.

Estate planning for crypto should involve decisions about how heirs will inherit the assets.

Should the account be liquidated and placed in a trust prior to death or liquidated after death and become part of the estate?

Perhaps the decision has been made to simply give portions of the crypto to heirs without liquidation.

If the crypto is owned at the time of death, it will need to be valued as part of the estate.

If the assets in the estate are more than $12.06 million for an individual, the estate will owe federal estate taxes.

The state may also levy taxes.

Neither Kansas nor Missouri has its own estate tax or inheritance tax.


Instructions regarding your cryptocurrency should be provided in your estate planning documents.

If no estate plan exists, schedule an appointment with an experienced estate planning attorney as soon as possible.

Reference: Monterey Herald (Feb. 19, 2022) “Help! My dad is investing in cryptocurrency”

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