DIGITAL ASSET PROTECTION

According to the wonderful IRS, a Digital Asset is defined as “any digital representation of value recorded on a cryptographically secured, distributed ledger (blockchain) or similar technology. This includes, but is not limited to cryptocurrency, meme coins, and NFT’s regardless of whether they are bought, sold, owned, transferred, or traded on a centralized or decentralized platform.

As cryptocurrency is quickly becoming the economic system of the future while completely transforming economic systems worldwide, it’s important now more than ever to protect your cryptocurrency assets.

At Ancient City Law we understand that Digital Asset protection is a new area of law that is being established and changing daily. That’s why we work hard to provide you with the tools necessary so you can make the best decisions on how to protect your digital currency assets.

WHAT ARE CRYPTO CURRENCY ASSETS?

The Encyclopedia Britannica defines cryptocurrencies as “decentralized currencies, meaning they’re neither issued nor governed by a central bank that have no tangible form and operate on a public ledger called a blockchain, which records all crypto transactions.” The purpose of blockchain encryption is to “make all transactions immutable and secure from tampering, counterfeit, and other forms of fraudulent transactions”.

HOW CAN MY CRYPTOCURRENCY ASSETS BE PROTECTED?

There are three basic ways Ancient City Law can help you protect your Digital Assets. These ways are by a Digital Asset LLC., Digital Asset Estate Planning, and Digital Asset Protection.

Digital Asset, LLC.

A Limited Liability Company (LLC) safeguards its owners from personal liability related to business debts. If your Digital Assets are tied to an LLC, your personal assets remain protected in the event of lawsuits or financial claims against the company. However, maintaining clear financial separation between personal and business accounts is crucial to uphold this protection.

Digital Asset, LLC. Pro’s:

Write off Relevant Expenses:

With an LLC you may be able to write off relevant expenses, such as electricity costs for Bitcoin mining. Additionally, you may be able to write off casualty losses related to events like scams or wallet hacks.

Protect Owners from Liability:

Owners of an LLC are generally not personally liable for business debts and obligations. This liability protection can be invaluable, especially in businesses with high-risk volatility like crypto, meme coins, and NFT’s.

Protect Owners Privacy:

One of the biggest concerns for Digital Asset investors is their anonymity. Your Digital Asset, LLC. can be set up in a way that maximizes the protection of your privacy because your name may not be tied to the LLC in some State’s Public Databases.

Crypto LLC Con’s

Cost of Formation and Maintenance:

There is a cost to set up your Crypto LLC and maintain it annually. These costs include, but are not limited to attorneys’ fees, filing fees, and annual accountant fees. However, many believe that the asset protection an LLC can give you is more than worth the cost.

Detailed Record Keeping:

If you have an LLC, remember, it’s imperative you keep your LLC assets and bank accounts separate from your personal. If you don’t, your LLC veil of protection may be pierced and open your personal assets up to liability. In order for this to be done properly, you will need to keep detailed record keeping.

Limited Insurance Options:

Because the world of Digital Assets is growing and evolving so quickly, all of the surrounding industries are doing the same like insurance. Unlike traditional businesses, Digital Asset-related LLCs may have a hard time finding insurance companies willing to cover the risk for things like cyber theft, or smart contract failures.

CRYPTO ESTATE PLANNING

Just like it’s important to do proper estate planning for your regular assets, it’s imperative you do the same for your Digital Assets because as a Digital Asset investor you can make a huge amount of money overnight. More importantly, we are all required to be good stewards of everything God has given us. This stewardship principle includes while we are on the earth and when we are not.

That’s why here at Ancient City Law, we do Digital Asset Estate Planning by creating Digital Asset Trusts, Digital Asset Wills, and Digital Asset Power of Attorney’s.

DIGITAL ASSET TRUST:

Trusts are great asset protection and management tools because they allow you to manage your Digital Assets during your lifetime and after by clearly laying out the plan how they will be distributed after you go to be with the Lord. More importantly, with certain Trusts, you can change or revoke them at any time while maintaining the full benefit and control of the Digital Assets you put in them.

Some of the characteristics of a Digital Asset Trust are:

Asset Custody:

One characteristic of a Digital Asset Trust is that it typically serves as a custodian for your digital assets while holding private keys or access to wallets that contain your Digital Assets. This maximizes your storage security and protection against loss or theft.

Investment Management:

Another characteristic of a Digital Asset Trust is that it allows you to actively manage all of your Digital Asset holdings while maintaining the full benefits. This includes, but is not limited to buying, selling, staking, trading, and using your Digital Assets as collateral in order to maximize returns and achieve your specific investment objectives, which are outlined in your Trust’s mandate.

Risk Mitigation:

Another characteristic of a Digital Asset Trust is that it normally includes detailed security measures and risk management protocols to protect your assets against hackers, fraud, or other threats. This includes, but is not limited to implementing multi-signature authentication, cold storage solutions, using devices like a Trezor Hardware Wallet or YubiKey, and third-party audits.

DIGITAL ASSET TRUST BENEFITS:

There are several benefits to having your own Digital Asset Trust. However, the biggest ones are as follows:

Avoiding Probate:

Whenever someone passes, and they have assets, in order to transfer their assets, their estate must go through probate. While Probate may be required under certain circumstances, the goal is to avoid it if possible because you must hire an attorney to go through the process, and once your court case is opened, it becomes public record.

However, when you have a Digital Asset Trust, the digital assets in your Trust don’t have to be probated, and the details of the Trust are completely private, unless there is litigation because a beneficiary is not happy.

Privacy and Confidentiality:

By placing your Digital Assets into your Digital Asset Trust, you are creating the highest level of privacy and confidentiality that may not be possible with direct ownership. Unlike probating a Will, administering a Trust after you pass typically occurs privately, which maintains the confidentiality of your asset and distribution details.

Complete Asset Management and Control:

Placing your digital assets in a Digital Asset Trust gives you complete control over your beneficiaries, how your digital assets will be distributed, and when. While transferring ownership of your Digital Assets into a Digital Asset Trust no longer allows you to be the owner, as Trustee of your Digital Asset Trust, you maintain complete control of your digital assets. This control includes but is not limited to maintaining the authority to withdraw them from your Trust, adding digital assets to your Trust, changing beneficiaries, changing beneficiary distribution amounts, and the ability to withdraw all digital assets and close your Trust.

Distribution Over Time:

With your Digital Asset Trust you can designate the distribution of your digital assets over time rather than by an immediate lump sum distribution.

Special Protections:

One of the key benefits of a Digital Asset Trust is that you can put special provisions in place to protect the distribution of your Digital Assets. For example, if you have a child who has, or has had a substance abuse issue, you can put special parameters in place to redirect their distributions to inpatient substance abuse treatment if their struggles continue.

DIGITAL ASSET LAST WILL AND TESTAMENT:

A Last Will and Testament is basically a legal document that communicates your final wishes with regards to your Digital Assets. More importantly, it specifically lays out what you want to be done with your assets, who you want to receive your assets, the percentages they will receive, and who you want in charge to ensure your wishes are carried out.

In Florida, in order to carry this out after you go to be with the Lord, your estate has to be probated.

Will Pro’s:

• Gives you peace of mind knowing how your assets will be distributed.
• Gives you control over what happens to your digital assets once you pass.
• Allows you to change beneficiaries, the distribution of your assets, the percentages of the distribution of your assets, and who you want to be in charge of your distribution as the circumstances of your life change.
• Decreases the chances of family turmoil because your wishes are clearly defined.
• If you pass without a Will then the distribution of your digital assets will be determined by the Courts.
• Provides protection for your children or grandchildren.

Will Con’s:

• Your assets have to be Probated.
• Your estate will have to retain an Attorney to do the Probate.
• Probate can take years depending on the issues.
• Distributions will be immediate rather than long-term.
• Probate cases are public record once they are opened with the Court.

While there are some Con’s to having a Digital Asset Will, the benefits far outweigh them, especially if you don’t have a Digital Asset Trust.

CRYPTO POWER OF ATTORNEY:

A Florida Digital Asset Power of Attorney is a legal document that allows someone that you choose to make financial decisions on your behalf.

There are 4 basic Power of Attorneys:

1. General Power of Attorney: A General Power of Attorney provides the person you choose with broad authority to handle a wide range of financial transactions and legal matters on your behalf.
2. Limited Power of Attorney: A Limited Power of Attorney provides the person you choose with authority for particular tasks or transactions, usually for a specific timeframe or purpose.
3. Durable Power of Attorney: A Durable Power of Attorney is similar to the General Power of Attorney, but remains in effect even if you become incapacitated. It ensures that the person you designate can continue to manage your affairs without interruption. The Durable Power of Attorney takes effect as soon as it is executed.
4. Springing Power of Attorney: A Springing Power of Attorney is similar to the others, but it does not take effect until an event triggers it. This allows you to maintain control over your assets until the event occurs.

CRYPTO ASSET PROTECTION

One of the questions we are asked most at Ancient City Law is how can I protect my Digital Assets from things like lawsuits, creditors, and divorce?

Digital Asset Protection is basically using various legal tools to protect your Digital Assets. Out of all of the States in the nation, Florida is considered to be one of the best for Digital Asset Protection because of the creditor exemption laws. That’s why at Ancient City Law, we work hard to create a specific plan that is tailored to your specific needs in an effort to maximize the protection of your Digital Assets.

Your customized plan includes using tools like Trusts, LLCs, Prenuptial Agreements, Postnuptial Agreements, Insurance Policies, Homesteads, Life Insurance, Retirement Accounts, and Proper Titling and Transferring of Assets.

If you don’t have a Digital Asset Protection Plan in place, call Ancient City Law today and schedule a consultation.

So why should you call Ancient City Law today to discuss your Digital Asset Protection Plan? If you don't, you could lose all of your digital assets to creditors, a lawsuit, or a divorce.

WHAT IF I ALREADY HAVE SOME OF THESE TOOLS, BUT THEY DON’T INCLUDE DIGITAL ASSETS?

At Ancient City Law we come across Clients who already have some of these tools in place, but they don’t include Digital Assets, or they need slight changes. Often times these Clients have a good Digital Asset protection foundation but need some simple modifications.

That’s why at Ancient City Law, we offer modification services to modify your existing Digital Asset protection documents. Whether it is changing beneficiaries, Trustees, Executors, or the specific instructions on how you want your Digital Assets distributed, we are here to help.

Contact Ancient City Law today and let us help with your Digital Assets protection needs.