Bitcoin Plan - April 9, 2021
Inheriting Your Financial Wisdom, Bloomberg Report, CFPB's Mortgage Protection Plan
Who Will Inherit Your Financial Wisdom?
As a Bitcoiner, I imagine you have spent some time thinking about the significant risk that exists related to passing your bitcoin to your significant other or even your children. Inheritance planning is complicated and there is risk associated with planning your future. However, most people don’t think about, or at least spend very little time thinking about, the risk associated with their heirs squandering their inheritance/financial wisdom.
To support this point, an Ohio University study shows that an astonishing 33 percent of all beneficiaries lose their entire inheritance within two years of receiving it. The interesting part of this study, at least in my opinion, is that heirs don’t lose their inheritance in calculable ways – there seems to be an endless list of risk that heirs stumble over and into. However, it is my experience that the most common risk of loss to heirs and beneficiaries is simple mismanagement.
How beneficiaries lose their way
There are a few key ways beneficiaries struggle to make the right financial decisions with their inheritances. For example, a beneficiary might not have been brought up with a strong education on the basics of money management. Or, even if the beneficiary knows what to do to properly manage their money, it can be challenging to manage an inheritance while dealing with the loss of a loved one. And bad decisions can be compounded if significant decisions are being made while grieving the loss of a loved one.
I recently worked with an individual who sold the family home immediately following the death of her significant other simple because it was too painful for her. The sale was fast and an excellent deal for the buyer, especially during this seller’s market. Its painful to hear this all-too-common story.
While a live-in-the-moment attitude can serve young people as they gain some life experience, it can be very dangerous when large sums of money are added to their lifestyle. Often, they do not have the same experience and hard-won wisdom as the generation that acquired or built the wealth.
Share your wisdom with your wealth
One of the greatest gifts you can leave your children, grandchildren, and other beneficiaries is the gift of your wisdom. Sharing the stories, struggles, and journey of success that brought you to where you are, along with the money wisdom you’ve gained, is as important as leaving a financial legacy in your will or trust.
Bitcoin alone can become just as much a burden as it is a gift if it doesn’t go hand in hand with practical guidance and the knowledge of how to store it safely. Let your beneficiaries know that they can help build a legacy of wealth that supports them throughout their lives and for generations to come if they invest the time into understanding the importance and value of what they will inherit.
Three tips to set your beneficiaries up for success
Here are a few pointers for setting up your heirs and beneficiaries for success:
Use estate planning tools like discretionary and incentive trusts. In addition to talking with your beneficiaries about financial well-being, you can also use certain types of trusts that will reward their smart behavior. Discretionary and incentive trusts are two such tools that can hold payments until beneficiaries complete college or withhold payments unless beneficiaries are proven to be clean and sober.
Talk to your beneficiaries about the right way to use their inheritances. Tips about compartmentalizing money for paying off debts and saving for the future might be second nature to you but a complete mystery to your heirs. Teach them the basics of money management and share your knowledge about smart investing. When you define a purpose for the Bitcoin you’re leaving, you enhance the meaning of your estate plan.
Bake your wisdom into your estate plan. Consider adding a supplement to your plan that includes your stories, struggles, and journey of success so your wisdom is passed to the next generation along with your wealth.
Feel free to contact me if you are interested in exploring lifetime discretionary trusts, incentive trusts, trust protectors, substance abuse protection language, and more, so that your family’s financial legacy is as safe as possible. We can even help you navigate discussions with your beneficiaries so you can rest assured that you’re doing what’s necessary to make your wealth last.
Bloomberg’s Bitcoin Report
Bloomberg published their monthly “Crypto Outlook” report earlier this week. The report detailed Bloomberg’s bullish position. This report is significant in that Bloomberg specifically and deliberated enumerates their belief that bitcoin is a superior financial product to that of gold.
You can find the full Bloomberg Bitcoin Report here.
Bitcoin News and Announcements
Best of twitter
Coinbase earnings
“In case you missed them, below are the main results from [Coinbase’s earning report].
$1.8B Revenue, $1.1B Adj. EBITDA, $730-800M Net income, $223B Assets on Platform, 56M Verified users (VU) , 6.1M Monthly transacting users (MTU)”
Credit: Ellie Frost, Via Bitcoin Magazine
CFPB Proposes “Mortgage Protection” from Millions of Homeowners
While this is not a bitcoin estate planning topic, I find it helpful to consider what Uncle Sam is doing from time to time. With everyone is talking about and expecting a real estate crisis given the state of money printing and the COVID-19 Crisis, I thought it might be prudent to share some proposed rule changes related to this topic coming from the federal government/agencies.
Early this week, the Consumer Financial Protection Bureau (CFPB) proposed a set of rule changes to, “help prevent avoidable foreclosures as the emergency federal foreclosure protections expire.” The CFPB is concerned that more homeowners are behind on their mortgages than at any time since 2010, which was the peak of the Great Recession. Industry data suggest that nearly 1.7 million borrowers will exit forbearance programs in September and the following months, with many of them a year or more behind on their mortgage payments.
The CFPB’s proposal, if finalized, would:
Give borrowers time: Nearly three (3) million borrows who are behind on their mortgages would be given the opportunity to explore ways with the lenders to make payments and avoid disclosure. This proposed rule would allow for special pre-foreclosure review periods that would seek to prohibit lenders from starting foreclosure until after December 31, 2021. However, the CFPB is considering allowing lenders to push for early foreclosures against certain borrowers if the lender has taken loss mitigation steps or made efforts to contact unresponsive borrowers. This appears to focus on primary residences only.
Give lenders options: Under the proposed rule, the CFPB would allow lenders to streamline certain loan modifications for individual who have had COVID-19 related hardships. It is worth noting that these hardship qualifications have not been defined or flushed out yet. However, it appears that this provision would only be available for modifications that do not increase a borrower’s monthly payments and extends the loan term to no more than forty years from the modification date. You read that correctly. This would permit modifications to create mortgage terms of forty (40) years to keep borrows from foreclosure and help lenders continue to receive payments.
Keep borrows informed: Under the proposed rules, the CFPB is pushing for required communication from the lender to the borrows to ensure that, “during this crisis, borrowers receive key information about their options at the appropriate time.” I must admit that this portion of the proposed rule doesn’t make a lot of sense to me.
These proposed rules have not been finalized. The comment period is still active and you should consider having your voice heard. Read more.
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Thanks for reading! @BitcoinPlanner