Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,
Speaker 1: and this is Bloomberg Crypto at Daily Bloomberg I Heart Podcast.
Speaker 1: It's Wednesday June. What happens to your crypto after you die?
Speaker 1: Beyond the existential question of the permanence of the blockchain,
Speaker 1: the answers here aren't straightforward for estate planners. What to
Speaker 1: do with digital assets like bitcoin and non fungible tokens
Speaker 1: present a new challenge to inheritance law. There's more and
Speaker 1: more money pouring into these assets, and people are starting
Speaker 1: to think about their digital legacies. But how do you
Speaker 1: pass on something that's built on the principles of anonymity
Speaker 1: and individuality and that requires both passwords and tech savvy
Speaker 1: to access. Today, I'm joined by Bloomberg Report to Jill
Speaker 1: Shaw to explore these questions about estate planning when it
Speaker 1: comes to crypto. Jill, thanks so much for joining us.
Speaker 1: Thanks for having me so Jill. Before we kind of
Speaker 1: dive into the question of like, how to rich people
Speaker 1: apostle on their crypto, what made you interested in the
Speaker 1: story in the first place, Well, I've been thinking a
Speaker 1: little bit about wealth. I was on the wealth team
Speaker 1: at the time. And you know, a lot of people
Speaker 1: are making a lot of money in crypto, and I've
Speaker 1: been reporting a bit about people using their crypto through
Speaker 1: regular payment methods, having credit cards that are like essentially
Speaker 1: linked to their crypto, and I started to think about, well,
Speaker 1: where's all this money that people are making in crypto going.
Speaker 1: And you know, there's an entire world of wealth planning
Speaker 1: that's out there that is basically still catching up to crypto,
Speaker 1: and I wondered how that was going. And when we
Speaker 1: say wealth planning, as a person who does not myself
Speaker 1: have a wealth ploto, what do these folks do? You
Speaker 1: have entire teams of lawyers and other experts who help
Speaker 1: you structure your wealth, who help you figure out how
Speaker 1: to pay as little hole taxes on your wealth, who
Speaker 1: help you, you know, um, pass along your wealth through trust.
Speaker 1: So there are entire vehicles and industries around people being
Speaker 1: able to maintain their wealth, to reduce their tax liabilities,
Speaker 1: and then to be able to pass it on to
Speaker 1: their airs. And given that these folks have been around
Speaker 1: for a long time, they're experts in many different asset classes,
Speaker 1: but crypto as an asset class has existed for less
Speaker 1: than two decades. In your reporting, you know, you shared
Speaker 1: an anecdote of a gentleman who was like, Okay, I
Speaker 1: want to do this, and then you interviewed some state
Speaker 1: planners and they were like cool, So tell us a
Speaker 1: little bit more about that. It's kind of befuddling for
Speaker 1: people in the wealth in a state planning world. I mean,
Speaker 1: if I were to describe the estate planning world, I
Speaker 1: would say it's kind of a sleepy place. It's like
Speaker 1: a kind of stable place. And um, people don't like
Speaker 1: surprises when it comes to their money, and these people
Speaker 1: are experts in their not being very many surprises when
Speaker 1: it comes to your money. And so crypto is kind
Speaker 1: of the opposite of full full of surprises, full of volatility.
Speaker 1: And what I found was that this world is still
Speaker 1: trying to catch up to think about what this what
Speaker 1: this asset class means. Is it property in the legal sense?
Speaker 1: Is it an asset class? Is it closer to gold
Speaker 1: when they're trying to think about comparisons to other asset
Speaker 1: classes that they've helped manage before. So there's a lot
Speaker 1: of open questions. So, you know, wealth planning has clearly
Speaker 1: been around for as long as there have been rich
Speaker 1: people who need their money managed. Crypto as an asset
Speaker 1: class hasn'tly been around for, you know, less than two decades.
Speaker 1: How are those folks in that industry adapting to these
Speaker 1: folks in this industry? I have to say that as
Speaker 1: an asset class, it's like a befuddling asset class for
Speaker 1: these people. Estate planning and wealth planning is a very
Speaker 1: stable place. It's an almost sleepy industry there. People don't
Speaker 1: like surprises when it comes to their money, and estate
Speaker 1: planners and wealth planners are experts and they're not being
Speaker 1: surprises when it comes to your money. So crypto as
Speaker 1: an asset and a world is very different from that,
Speaker 1: and there's tons of volatility, and so all these people
Speaker 1: are still trying to figure out how do we manage this,
Speaker 1: how do we make sure there aren't surprises when it
Speaker 1: comes to your crypto wealth. So, in practical terms, in
Speaker 1: the story that you wrote, you found somebody who was
Speaker 1: actually trying to make sure that his airs, his kids,
Speaker 1: his grandkids would have access to his bitcoin and his
Speaker 1: n f T s. What was that like for this
Speaker 1: person who was trying to figure out how to do that?
Speaker 1: So this person is a lawyer and so probably has
Speaker 1: more knowledge than most people about how to pass along
Speaker 1: your wealth, but holds a bunch of crypto tokens and
Speaker 1: assets that need to be described in excruciating detail. Um
Speaker 1: and so one of the things that I learned over
Speaker 1: the course of the reporting is that he has a
Speaker 1: twenty five page document that lays out exactly what websites
Speaker 1: to go to, which wallets to connect, you know, how
Speaker 1: to get access to all of this. And you know,
Speaker 1: one of the things he said, like, I've tried to
Speaker 1: lay this out as best as I can, but they
Speaker 1: might need an expert to even be able to access
Speaker 1: all of it and to be able to move it
Speaker 1: around if I were to pass away. So this is
Speaker 1: kind of somebody who's comfortable taking it on themselves. He's
Speaker 1: laying out this stuff in documents. He's teaching his children
Speaker 1: how to use wallets. But in this case he probably
Speaker 1: has a smaller amount of assets. When you have a
Speaker 1: large large amount of assets, you do need experts to
Speaker 1: help you kind of figure out how to structure them.
Speaker 1: Thank you, Jill, We'll be right back. One of the
Speaker 1: other things that I find fascinating, right, like wealth planning
Speaker 1: depends on the longevity of the institutions that are involved.
Speaker 1: There's this idea that you die, but in twenty five years,
Speaker 1: the bank that your money in is still going to
Speaker 1: be operating, or the safety deposit box is still going
Speaker 1: to be accessible. Crypto has um slightly more of an
Speaker 1: ephemeral vibe to it. Sometimes it's not a place that
Speaker 1: has a particularly strong tracker code of like consistency. Things disappear,
Speaker 1: projects go to zero, Entire companies cease to exist in
Speaker 1: what feels like a very short span of time compared
Speaker 1: to you know, say a Swiss bank that's been around
Speaker 1: for hundreds of years. Is that something that wealth managers
Speaker 1: are also trying to wrap their heads around there, like
Speaker 1: this website could just not exist in a year, much
Speaker 1: less in fifteen. Look, one of the things that I
Speaker 1: realized is that most wealth managers, most estate planners would
Speaker 1: tell you to liquidate immediately that to accommodate that kind
Speaker 1: of risk. They will be like, no, let's immediately liquidate
Speaker 1: these assets into like FIAT and make sure we can
Speaker 1: fastlet alog and so you know, I think that those
Speaker 1: who have like a more complex view of that of crypto,
Speaker 1: and probably a little bit more experience. Are still struggling
Speaker 1: with that, I think, and there are solutions out there
Speaker 1: to be able to maybe transfer your assets into more
Speaker 1: stable coins things like as we've learned. So I think
Speaker 1: that it's still something that they're figuring out, and that
Speaker 1: is the biggest risk for these wealth managers. I think
Speaker 1: the quote that you had in this story is, you know,
Speaker 1: the natural inclination would be to tell clients to sell,
Speaker 1: you know, but some people won't listen. Some people will
Speaker 1: be like no, no, no, My n f T means
Speaker 1: the world to me. I would like my children to
Speaker 1: also have this monkey and fair. But valuations are hard, right,
Speaker 1: So the other elements of longevity is some kind of
Speaker 1: predictability around how much things are worth. And again, as
Speaker 1: you mentioned earlier, there's this intense amount of volatility even
Speaker 1: in a short amount of time, but also frankly over
Speaker 1: a longer time horizon. What are some of the strategies
Speaker 1: that the folks who are embracing that more complex view
Speaker 1: using to think about things like valuation. It's it's basically
Speaker 1: to treat it as property in the sense that you
Speaker 1: want a valuation and an appraisal of the value. And
Speaker 1: there are different experts out there who can do something
Speaker 1: like that. But all in all, everyone is kind of
Speaker 1: discovering this for themselves as they encounter crypto clients. One
Speaker 1: of the people that I talked to who didn't make
Speaker 1: it into this story is someone who used to be
Speaker 1: a nurse and you know, left their day job to
Speaker 1: trade crypto and has made millions in crypto. And he said,
Speaker 1: I'm basically the guinea pig for every tax professional, financial
Speaker 1: professional that I work with, And so you know, I
Speaker 1: think like treating it as property and trying to get
Speaker 1: an appraisal and then trying to work that into your
Speaker 1: understanding of the access that you'll have to pay, the
Speaker 1: vehicles that you might have to use, is the strategy
Speaker 1: right now. It does sound like perhaps the kids that
Speaker 1: were mentioned in that story, by the time they might
Speaker 1: want to pass on their cryptos to their heirs, of
Speaker 1: crypto is still around then, we don't know, there might
Speaker 1: be more infrastructure for them. But you know, right now,
Speaker 1: I'm getting the distinct impression that trial and error is
Speaker 1: the vibe of the day. Yeah, I mean, even getting
Speaker 1: people to tell you where all their crypto is. If
Speaker 1: you're an estate planner, a wealth planner, is a challenge.
Speaker 1: So if you're willing to share that, then estate planners
Speaker 1: and wealth planners have ways to accommodate accessing that crypto,
Speaker 1: making sure that there are multiple approvals in place for
Speaker 1: transactions to happen. But otherwise everyone is kind of doing
Speaker 1: it differently and uniquely to each case right now. I
Speaker 1: like that you mentioned the willingness to share, because for
Speaker 1: some people, the attraction of crypto is they don't have
Speaker 1: to tell anybody about it, which is of course in
Speaker 1: direct contradiction to making it possible for someone else to
Speaker 1: manage that for you. I remember we have reporting a
Speaker 1: few months ago about how crypto is becoming an issue
Speaker 1: in divorce cases, where there was one the question of okay, well,
Speaker 1: how do you value this as an asset? Exactly as
Speaker 1: you're saying, But also you discover, like the hidden wallet
Speaker 1: that a spouse had that mysteriously had five hundred thousand
Speaker 1: dollars in bitcoin that wasn't previously declared, So there are
Speaker 1: all kinds of ancillary, very interesting issues here. It sounds like, yeah, look,
Speaker 1: you know this anonymity that's being able to shield your
Speaker 1: wealth is basically at odds with a system that can
Speaker 1: distribute it to people when you die, and that's like
Speaker 1: probably the crux of the issue is if no one
Speaker 1: knows you have the crypto, or you forget all your keys,
Speaker 1: then how will your daughters and sons be able to
Speaker 1: access it? Question for our times. Thank you, Jill. That
Speaker 1: was a very helpful and fun explanation and appreciate you
Speaker 1: taking the time. Thanks so much. You can find more
Speaker 1: of Jill's reporting on the Bloomberg Terminal on Bloomberg dot com,
Speaker 1: or or follow Jill on Twitter at Jill R. Shah.
Speaker 1: On the next episode of Bloomberg Crypto, it's been a
Speaker 1: wild ride for crypto markets, and the main direction prices
Speaker 1: are heading in right now is down. Bloomberg Report is
Speaker 1: Muya Shan and Matt Turner join us tomorrow to discuss
Speaker 1: what's been happening to crypto tokens and crypto related stocks
Speaker 1: like coin base, and why sentiments across all of these
Speaker 1: markets feel so negative right now. I'm Stacy Marie Ishmael,
Speaker 1: and this is Bloomberg Crypto, a daily podcast from Bloomberg
Speaker 1: and I Heart Radio. For more shows from I Heart Radio,
Speaker 1: visit the i Heart Radio app, Apple Podcasts, or wherever
Speaker 1: you get your podcasts. Email your comments, questions, or suggestions
Speaker 1: to Crypto at bloomberg dot net. Find us on Twitter
Speaker 1: at Crypto. The supervising producer of this episode is Vicky Vergolina.
Speaker 1: Associate producer is zan Ab Sudiki. Blake Maples is our engineer.
Speaker 1: Original music by Leo Sidron. Bloomberg's head of podcasts is
Speaker 1: Francesco leav