Yes. And if you’ve built up significant crypto holdings inside an LLC, you should probably think about this.
Most crypto business owners spend a lot of time thinking about wallets, Custody solutions, and tax optimization. Fair enough. But Estate Planning? That usually gets pushed to “someday.” The problem is that crypto assets create unique complications when you die or become incapacitated, and having your LLC owned by a trust solves most of them.
Why This Matters for Crypto Specifically #
Crypto LLCs face problems that traditional businesses don’t. Your membership interest in that LLC might control access to multisig wallets, Exchange accounts, DeFi positions, or Staking arrangements. If something happens to you and your LLC gets stuck in probate, those assets could be locked up for months while courts figure out who controls what.
Probate is also public. Do you really want a court record listing your crypto holdings and business operations? For most people in this space, the answer is no.
The Revocable vs. Irrevocable Question #
You have two basic Options here.
A revocable living trust lets you keep control of your LLC while you’re alive. You can change the trust, take assets out, modify who gets what. When you die, the LLC passes to your beneficiaries without going through probate. Simple.
The downside: creditors can still reach assets in a revocable trust. If someone sues you and wins, they can go after your LLC membership interest just like they could if you held it personally.
An irrevocable trust puts more distance between you and the assets. Once the LLC is in there, you don’t control it anymore (at least not directly). Creditors have a much harder time reaching it. But you’ve also given up flexibility.
Asset Protection Trusts: The Middle Ground #
This is where things get interesting for crypto holders with real money at stake.
An asset protection trust (sometimes called a self-settled trust) is a specific type of irrevocable trust that lets you keep some benefits from the assets while still protecting them from creditors. You can remain a beneficiary of the trust even though you technically don’t own the assets anymore.
Not every state allows these. The main ones that do: South Dakota, Nevada, Delaware, and Wyoming. Wyoming tends to be popular with crypto businesses anyway because of its favorable LLC laws.
With an asset protection trust owning your crypto LLC, you get:
- Probate avoidance. Your LLC transfers according to the trust document, not through the courts.
- Privacy. No public record of your holdings or business structure.
- Creditor protection. If someone sues you later, they generally can’t reach assets you transferred to the trust before the dispute arose. (There are exceptions for fraudulent transfers, but that’s a conversation for your attorney.)
- Continuity. If you’re incapacitated, the successor trustee can keep operations running. This is especially important for crypto businesses where access to keys and accounts needs to happen on specific timelines.
The Fraudulent Transfer Exception #
One thing to understand: you can’t transfer assets to an asset protection trust after you already know about a lawsuit or claim against you. Courts will undo that transfer.
The protection works when you set things up before problems arise. If you’re already being sued or know a claim is coming, it’s too late for asset protection planning.
Who Should Consider This? #
Anyone with substantial crypto holdings in an LLC should at least talk to an attorney about trust ownership. It’s particularly worth considering if you:
- Hold significant positions that would create estate tax issues
- Have business partners or investors who need clarity on succession
- Work in areas with higher liability exposure (DeFi development, Exchange operations, advisory services)
- Want to keep your holdings private
- Have complex Custody arrangements that require specific knowledge to access
Getting This Set Up #
The trust document needs to clearly specify how crypto assets should be handled, who has authority to access what, and how transitions should work. A trust that doesn’t account for the technical realities of crypto Custody isn’t going to help much when it actually matters. This isn’t DIY territory. You need someone who understands both crypto and Estate Planning, because the intersection creates specific issues around Custody, key management, and operational continuity that generic trust documents don’t address. Digital Ascension Group is here to help connect you with the professionals you need.
