Is Your Cryptocurrency Safe? How to Shield Digital Assets
Creditors, hackers and frivolous lawsuit filers could be coming for your cryptocurrencies. These essential estate planning and asset protection strategies could help.


As cryptocurrencies like bitcoin surge to unprecedented values — having crossed the $100,000 mark earlier this year — both seasoned investors and newcomers are pouring billions into this thriving asset class.
The SEC’s approval of spot bitcoin ETFs and the creation of the Strategic Bitcoin Reserve (SBR) by President Donald Trump, has only accelerated this trend, inviting greater mainstream adoption and wealth accumulation.
Yet, despite these meteoric gains, many holders of cryptocurrency have given little thought to the estate and asset protection opportunities available to safeguard their digital investments.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you own, plan to own or know someone who holds cryptocurrencies, now is the time to consider strategic legal planning.
By implementing the right structures and tools, you can shield these valuable assets from estate taxes, potential creditors and unforeseen lawsuits.
Here are five critical strategies to consider:
1. Structure your holdings through LLCs and asset protection trusts
One effective way to protect your cryptocurrency is by placing it in a limited liability company, or LLC, and then into a properly structured trust — whether a foreign or domestic asset protection trust.
This arrangement helps ensure that your digital assets remain off-limits to potential creditors, providing a powerful safeguard in the event of litigation.
2. Reduce the incentive for litigation
With millions of lawsuits filed every year, wealth often attracts unwanted legal battles. Taking proactive steps to diminish the financial incentive for someone to target your holdings can deter frivolous claims.
Properly executed asset protection strategies can minimize the visibility of your cryptocurrency, making it more challenging for creditors to pursue your assets.
3. Craft an estate plan tailored to cryptocurrency
Many estate planning attorneys are not yet equipped to handle digital assets. Working with a law firm experienced in cryptocurrency estate planning ensures that your wills, trusts and other documents account for the unique challenges and opportunities presented by digital currencies.
Proper structuring can prevent excessive estate taxes, allow for seamless transfers to heirs and preserve your wealth for future generations.
4. Maintain comprehensive records
In the cryptocurrency world, meticulous record-keeping is invaluable. Detailed transaction histories simplify tax reporting and strengthen your position if the legitimacy of your ownership is ever questioned.
Numerous software solutions can streamline this process. For example, Node40 can help you keep precise records of all your cryptocurrency purchases, sales and transfers.
5. Employ secure storage solutions
“Not your keys — not your bitcoin” is a common refrain among longtime investors. To truly protect your digital assets, prioritize secure storage methods.
Hardware wallets or reputable online wallets can help safeguard your coins against hackers, theft and other threats.
Consider integrating these secure storage solutions into your broader estate and asset protection plan to ensure a smooth transition of your holdings to heirs.
Achieve long-term security for your digital wealth
As the cryptocurrency landscape evolves, so do the legal frameworks and strategies needed to protect these assets.
By taking the steps outlined above and working closely with an experienced legal team, you can safeguard your investments against estate taxes, creditors and potential lawsuits — ensuring your holdings remain intact throughout your lifetime and pass on as a lasting legacy.
The information in this article is for informational purposes only and does not constitute legal or tax advice.
Related Content
- Eight Types of Trusts for Owners of High-Net-Worth Estates
- Digital Estate Planning Guide: Get Your Digital Assets in Order
- What Happens to Your Crypto Assets When You Die?
- Crypto in Your Retirement Account? It's Not a Crazy Question
- How Spot Bitcoin ETFs Work: Are They Right for You?
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Jeffrey M. Verdon, Esq. is the lead asset protection and tax partner at the national full-service law firm of Falcon Rappaport & Berkman. With more than 30 years of experience in designing and implementing integrated estate planning and asset protection structures, Mr. Verdon serves affluent families and successful business owners in solving their most complex and vexing estate tax, income tax, and asset protection goals and objectives. Over the past four years, he has contributed 25 articles to the Kiplinger Building Wealth online platform.
-
Greed, Fear and Market Volatility: A Financial Adviser's Guide to Keeping Emotions Out of Investment Decisions
Don't panic! And don't be so confident in the stock market that you overlook risk. Instead, be logical. Your retirement security could depend on it.
-
Want a Financial Adviser Who Shares Your Faith? Look for One With a CKA Designation
Financial professionals with a Certified Kingdom Advisor certification are committed to integrating biblical principles with sound financial advice.
-
Greed, Fear and Market Volatility: A Financial Adviser's Guide to Keeping Emotions Out of Investment Decisions
Don't panic! And don't be so confident in the stock market that you overlook risk. Instead, be logical. Your retirement security could depend on it.
-
Want a Financial Adviser Who Shares Your Faith? Look for One With a CKA Designation
Financial professionals with a Certified Kingdom Advisor certification are committed to integrating biblical principles with sound financial advice.
-
S&P 500 Hits New High on Jobs Friday Eve: Stock Market Today
The S&P 500 hit a new all-time closing high and most of the stocks in the Dow Jones Industrial Average were up the day before a critical jobs report.
-
SPACs, SMRs and How to Invest in the Nuclear Insurgency
Big nuclear deployments are in process, but small modular reactors could be a better way to meet rapidly rising electric power demand.
-
Is a 'Working Retirement' the Key to Happiness for Men?
You may want to reconsider your retirement game plan if you're a man.
-
10 Ways to Stay Safe From Grandparent Scams and Other Fraud, Courtesy of a Financial Planner
Scams are increasingly hard to detect, and anyone can be fooled, from older people to educated professionals. Here are 10 ways to avoid becoming a victim.
-
This Is How the Student Loan Bubble Is Primed to Pop, From a Student Funding Expert
Fueled by easy money, inflated tuition and high default rates, the student loan bubble mirrors the 2008 subprime mortgage crisis. We could be headed for a potential financial collapse. What can we do?
-
Big Tech Names Rise Above Broad Weakness: Stock Market Today
Some familiar names enjoyed solid rallies on the resolution of outstanding questions, but macro uncertainty hangs over the broader market.