If you’ve built substantial wealth in crypto, the next challenge is making sure it survives the transfer to the next generation without taxes taking an outsized bite.
Traditional estate planning gets complicated fast when crypto enters the picture. Current federal exemption limits provide some protection, but they won’t last forever. Your rapidly appreciating digital portfolio needs a different approach than your parents’ stock and real estate did.
The “Squeeze, Freeze, and Please” methodology offers a framework that works particularly well for crypto-heavy portfolios. These are wealth preservation strategies that acknowledge both the opportunities and risks that come with digital assets.
The Estate Planning Window in 2025
Estate planning got more interesting in 2025. The federal estate tax exemption now sits at $15 million per individual, up from previous years. That’s $30 million for married couples.
But these exemptions create planning windows, not permanent solutions. Market volatility can push your net worth past exemption thresholds faster than traditional planners expect.
Digital assets add another layer of complexity. Custody arrangements, access protocols, and valuation methods all impact how these strategies work in practice. A theoretically sound plan becomes worthless if trustees can’t actually execute transfers when needed.
The “Squeeze” Strategy: Getting More Through Available Exemptions
The Squeeze focuses on getting maximum value through available exemptions. You’re not avoiding taxes. You’re using the exemptions Congress put in place.
Family Limited Partnerships (FLPs) and Family LLCs are the main tools here. Assets transferred into these structures can qualify for valuation discounts based on lack of marketability and control.
Non-voting units in a Family LLC can transfer at 20-40% discounts to fair market value. That discount lets you transfer more economic value while staying within exemption limits.
For crypto portfolios, Family LLCs offer additional operational benefits. Centralized governance prevents individual family members from making impulsive trading decisions during volatile periods. Professional management can maintain institutional relationships with qualified custodians and OTC desks.
The documentation matters more with digital assets. Your operating agreement should specify who can authorize transfers, how multi-signature procedures work, and what happens when key personnel become unavailable. Seed phrases and hardware wallet access can’t be afterthoughts in the estate plan.
Gifting to Trusts with Operational Clarity
Strategic gifting works best when assets move into trust structures rather than directly to individuals. Trusts provide asset protection and ongoing management across generations.
When trusts hold crypto positions, custody planning becomes part of tax planning. Who can move assets? How do approvals work? What happens if a signer dies or becomes incapacitated?
Self-custody requires trustee access planning that doesn’t create unnecessary security risks. Seed phrases, hardware wallet locations, and multi-signature procedures need written instructions that trustees can actually follow.
The “Freeze” Strategy: Controlling Future Growth
The Freeze aims to lock in current asset values while moving future appreciation outside your taxable estate. This matters when you expect significant price growth.
Intentionally Defective Grantor Trusts (IDGTs) are one of the most powerful freeze tools available. These trusts are “defective” for income tax purposes but effective for estate tax purposes.
You continue paying income taxes on trust assets, which reduces your taxable estate. Meanwhile, assets grow tax-free in the hands of trust beneficiaries. The trust structure removes assets from your estate while you retain income tax liability.
For rapidly appreciating crypto positions, IDGT sale structures can lock in today’s value while future upside accrues outside your taxable estate. This works well when you believe current prices undervalue long-term potential.
If your portfolio generates new units through forks, airdrops, staking, or validator rewards, trust terms should address how these events are handled. Your administration process needs to stay clean and enforceable as the crypto space evolves.
Grantor Retained Annuity Trusts (GRATs) for Volatile Assets
GRATs allow you to place assets in trust while retaining fixed annuity payments for a specified term. Remaining assets pass to beneficiaries at the term’s end, potentially tax-free.
The key: setting annuity payments that align with IRS Section 7520 interest rates. This minimizes the taxable gift amount, sometimes to nearly zero.
Crypto volatility cuts both ways in GRAT structures. Your planning team should model different price paths and build trust administration procedures that include rebalancing and custody controls matching the GRAT term and annuity schedule.
Concentrated positions may require operational risk controls, like limiting who can authorize transfers and using institutional-grade custody where appropriate.
The “Please” Strategy: Strategic Philanthropy and Liquidity
The Please approach combines charitable giving with liquidity planning to address remaining tax liabilities after implementing Squeeze and Freeze strategies.
Life insurance becomes a strategic liquidity source rather than simple protection. Irrevocable Life Insurance Trusts (ILITs) own policies outside your taxable estate, providing cash to cover taxes without forcing asset sales.
This matters when much of your net worth sits in crypto. Your heirs may face tax obligations without wanting to sell long-term positions at unfavorable prices. Life insurance provides liquidity that preserves investment strategy.
If you hold assets across multiple exchanges or custodians, your plan should include consolidated inventory and transfer protocols so trustees can actually access and value assets when needed.
Charitable Lead Trusts and Digital Asset Donations
Charitable Lead Trusts (CLTs) provide annual payments to charity for a set period, after which remaining assets revert to beneficiaries. This setup offers immediate tax benefits while reducing the taxable estate.
Many crypto investors donate appreciated digital assets to support causes while keeping the rest of their plan intact. The operational detail you cannot skip is execution: who transfers the asset, where it goes, how it’s receipted, and how valuation is documented.
Charitable deduction rules for crypto can be complex, but the tax benefits often justify the administrative effort for high-net-worth families.
Making It Actually Work
These strategies work best when they’re integrated rather than implemented piecemeal. A Family LLC might hold diversified crypto treasury positions, including assets at qualified custodians, OTC desk relationships, and fiat reserves.
Documentation around valuation method and timing matters when underlying assets are crypto. Your team should document consistent approaches for pricing, exchange source selection, and how you treat thinly traded tokens.
The custody infrastructure has to match the legal structure. Trust terms that look perfect on paper fail if trustees can’t execute transfers in practice.
Common Implementation Challenges
Most failures happen at the operational level, not in strategy design. Trustees discover they can’t access assets when needed. Valuation methods aren’t documented consistently. Multi-signature procedures aren’t trustee-ready.
Building a successful plan requires thinking through the entire operational chain: from initial transfers into trust structures, through ongoing management and rebalancing, to final distributions to beneficiaries.
Questions to Answer Before You Start
Before implementing any of these strategies, think through these operational questions:
- Who currently has access to your crypto holdings, and how would that change under trust management?
- What happens to staking rewards, validator income, or other yield-generating activities?
- How will trustees handle forks, airdrops, or other token distribution events?
- What custody infrastructure supports your trust structures?
- How do you maintain institutional relationships while assets are held in trust?
Getting these wrong can undermine otherwise solid tax strategies.
Getting Started
The Squeeze, Freeze, and Please methodology provides a framework for preserving crypto wealth across generations. But framework isn’t enough. You need implementation expertise that understands both traditional estate planning and digital asset operations.
Contact Digital Ascension Group to discuss how these strategies might work for your family’s specific situation. We focus on bridging the gap between tax planning and practical crypto operations.
Where This Goes Wrong
We’ve seen families implement elegant trust structures only to discover their trustees couldn’t access the underlying crypto assets when needed. One client’s GRAT nearly failed because the family office couldn’t execute the required quarterly rebalancing trades. Their custodian required signatures from trustees who were traveling internationally.
The best estate tax strategy is the one that actually works when you need it to. Technical sophistication means nothing if the operational details aren’t bulletproof.
That same family now runs an operation where trust management, custody procedures, and tax planning all work together. Their next-generation family members understand both the investment strategy and their roles in maintaining it. That’s what successful wealth transfer looks like in practice.
