Funding your Revocable Living Trust is a very important part of your estate planning. Funding is the process of naming your Trust as the owner or beneficiary of your accounts and assets. If you have a Trust but fail to fund it, those assets are likely to require probate–a very long and expensive court process–in order to reach your beneficiaries. The easiest way to make sure an account will avoid probate is by naming your Trust as the beneficiary of the account.
As crypto has grown in popularity and become a larger portion of many investors’ net worth, incorporating these accounts into your estate plan has become even more crucial. The two most popular venues for retail investors to hold cryptocurrencies, Robinhood and Coinbase, vary significantly in their offerings when it comes to beneficiary designations.
Robinhood allows you to designate one or more beneficiaries on your account, but the flexibility remains limited. While you can name multiple beneficiaries on your Robinhood account, the assets can only be divided equally among the named beneficiaries. You cannot designate the beneficiaries to receive unequal percentages or name contingent beneficiaries in case a named beneficiary predeceases you. Fortunately, Robinhood has recently added the option of naming a Trust as the beneficiary of your account. This is a significant development in terms of estate planning and the only information required by Robinhood is the Trust name, date, tax I.D. and email, all of which your estate planning attorney should provide to you once your Trust has been executed. Through your Trust, you can easily name multiple beneficiaries, vary amounts and percentages a beneficiary is to receive, place conditions and protections on those inheritances and name contingent beneficiaries.
Coinbase, on the other hand, lags far behind when it comes to estate planning. They have yet to even allow a beneficiary designation on your account, let alone naming your Trust as the beneficiary. This means that if your Coinbase account exceeds the probate threshold in your state (only $100,000 in total probate assets in Illinois), then your estate will have to go through probate in order to eventually reach your beneficiaries.
If you have an account at Robinhood or Coinbase, I strongly recommend considering these options and how your holdings will reach your beneficiaries in the event of death.