Moving digital assets into a company or trust structure before a significant liquidity event, such as a dramatic increase in value, can offer various advantages and disadvantages.
Trusts, in particular, offer strong asset protection. In the face of personal liabilities such as lawsuits or bankruptcy, assets held within a trust are generally more secure.
Trust structures can offer tax benefits. In some jurisdictions, trusts and companies are subject to different tax regulations and rates, which may be more favourable compared to individual ownership.
Capital gains tax might be minimised if assets are sold within a certain type of trust or company structure.
A trust allows for a seamless transition of asset ownership in case of the grantor’s demise, ensuring that the beneficiaries are taken care of according to the grantor's wishes.
By transferring assets into a company or trust, you might benefit from professional management of the assets, ensuring they are handled strategically.
Depending on the trust type, you might lose some control over the assets, as the trust or company becomes the legal owner. This is often seen as a positive as person liability is removed.
Establishing and maintaining a trust or company structure can be costly, involving legal, administrative, and management fees.
Trusts and companies face stringent regulatory and compliance requirements, which might complicate management.
Changing the terms of a trust or the structure of a company might be challenging and less flexible compared to personal ownership.
Deciding whether to transfer digital assets into a company or trust structure before a significant liquidity event should be a decision made with careful consideration. Please see our directory of professionals to find someone to talk to in your jurisdiction.
