One of our podcast listeners asked: “Is it possible to open a Binance account that is funded by a trust account? If so, does that by default make that particular Binance account a trust account with the beneficiaries named on the bank account that is used for funding it?”
Great question! To answer it, we need to break it down a bit:
What is a trust account?
There are a lot of different names for a trust account at a bank: ITF (in trust for), Totten trust, TOD (transfer on death), POD (paid on death), and other similar names. Basically, it is beneficiary designation that is added to your bank accounts.
It’s the same concept as life insurance policy: when you completed the forms, you most likely named who gets the account when you die. They become the beneficiaries on this particular policy.
A trust account at a bank is not the same as creating a Trust for estate planning purposes. I believe the question here is: “Does the Binance account take on the beneficiary designations that are on the original bank account?”
Do beneficiary designations transfer with funds?
The answer is NO. If you send money from your Citibank bank account to a Vanguard account to buy some stock, the Vanguard account does not automatically inherit your Citibank beneficiary designations. You’d have to fill out forms at Vanguard to name beneficiaries.
Beneficiary designations do not follow the dollars. That’s the case for moving from bank account to crypto exchange, as well.
How to name beneficiaries on cryptocurrency exchange
A main reason is most likely due to the fact that the laws are not set up for that yet. Therefore, cryptocurrency exchanges don’t offer that feature. So, you will need to make a Last Will and Testament or move your crypto off the exchange to a wallet that can be governed by your revocable trust or your will.
Should I write a book on What Happens to Your Crypto When You Die?
I would love to put all of this into a booklet, but since things are changing so fast with cryptocurrency, I’d have to make sure there are enough high-level concepts that won’t change every month. As we’ve discussed, cryptocurrency is still evolving.
If you have a question about this topic, please reach out to me. Questions like the one help us understand what people need to know!