According to Liza Horvath, president of Monterey Trust Management, she’s tackling the increasing concerns of older investors. She’s advising them on how to include this growing asset class into estate planning. With over three decades of experience in estate and trust management, Horvath addresses the specific anxieties of an 82-year-old investor regarding the handling of cryptocurrency assets by a trustee in the event of cognitive decline. It’s true, and she builds on that knowledge to help people understand key concepts like seed phrases and take proactive steps to protect their digital assets.

Horvath knows that more and more people are taking the plunge into crypto investments. She heaps accolades on the 82-year-old billionaire investor for being visionary. She argues that Congress needs to address the possible risks of digital assets and estate planning concerns. Many investors often overlook estate planning. Future users might not think about how cognitive decline may affect their ability to control their crypto assets.

This is the question the worried investor should be asking. They needed to understand whether the trustee could even manage these cryptocurrency assets should the investor become cognitively impaired. This concern highlights the distinct challenges that digital assets present to the field of estate planning in relation to access versus control. Unlike other assets, cryptocurrencies need unique expertise and specialized tools to manage.

Horvath explains what a seed phrase (or recovery phrase) actually does, and what it does not do. She describes how wallets create a new set of 12- to 24-word phrases. This seed phrase is the equivalent of a master key. It allows access to a crypto account. This is especially crucial if the private keys or hardware wallet associated with a self-hosted crypto investment are lost or stolen.

She agrees that the most important thing is keeping the seed phrase safe. For Bitcoin and many other cryptocurrencies, losing it means an irreversible loss of access to the cryptocurrency’s holdings. She recommends investors keep their seed phrases in a safe place, away from their main devices. This measure wards off unauthorized access and loss due to theft or hardware failure.

Though Horvath probably wouldn’t be the first to endorse this advice, she recommends explaining candidly to your selected trustees. By communicating with trustees, investors can ensure that their wishes regarding cryptocurrency management are clearly understood and can be executed. Be sure to provide trustees with the right information and tools to govern effectively. Have that discussion ahead of time. Share with them the location of your seed phrase and other crypto holdings, and how to access those accounts.

She would, quite rightly, make the case for bringing your crypto holdings into a full-fledged estate plan. This plan should describe concrete steps for the collection, maintenance, and deployment of these assets—an asset management strategy, if you will. And it should cover all possible contingencies, including the incapacity or death of the investor.

Horvath’s advice underscores how estate planning is changing with the digital age. However, as cryptocurrency continues to rise in adoption and usage, investors must be proactive in addressing the new and novel challenges it poses. Seeking expert advice from experienced estate planners like Horvath can help investors protect their digital assets and ensure their wishes are honored.