Generational wealth: How you can plan for your future with crypto
Over $84 trillion is set to be passed down from Baby Boomers to younger generations by 2045, and an estimated $6 trillion of that may flow directly into cryptocurrency. As digital assets change the way wealth is created and preserved, families are beginning to see crypto as a serious tool for securing their legacy. This article explores what generational wealth means, why it matters and how crypto can help in building and transferring wealth across generations.
Key Takeaways:
Cryptocurrency is morphing into a powerful tool for building and preserving generational wealth, offering access to high-growth assets and alternative financial systems, especially for younger and historically marginalized communities.
Effective wealth transfer with crypto requires secure storage, financial education and proper estate planning, leveraging tools like trusts, hardware wallets and digital legacy services to ensure assets aren't lost or mismanaged.
While crypto offers long-term potential, families must prepare for its volatility, legal uncertainties and technical demands.
What is generational wealth?
Generational wealth is the transfer of valuable financial assets, investments or properties from one generation to the next, intended to provide lasting economic security and upward mobility for descendants. It often includes planning through wills, trusts and financial education.
Why does generational wealth matter?
Generational wealth is a key contributor to economic mobility and the perpetuation of financial disparities. In the United States, wealth distribution is strikingly uneven, with the top 10% of earners holding a staggering 74% of the nation’s wealth, while the bottom 50% control only 2%.
This unequal concentration of wealth is often passed down through generations, with the wealthiest 2% of inheritances accounting for more than 40% of all transferred assets. Sadly, these disparities have created a vicious, self-reinforcing cycle: families with generational wealth provide their children with advantages, such as debt-free education and start-up capital, while those without struggle against systemic barriers.
It's not surprising then, that the ethnic wealth gap continues to grow, even widening in recent years. For example, between 2019 and 2022, the median wealth gap between white and Black households grew by nearly $50,000, reaching a total difference of $240,120.
Planning for and maintaining generational wealth
Preserving generational wealth ensures financial resilience and the creation of opportunity across time. Families with preserved wealth can weather economic downturns (e.g., recessions, job loss) without depleting their assets. Wealth preservation allows families to fund businesses, invest in real estate or support innovation. A majority of ultra-wealthy families sustain their status through multi-generational business ownership
While the preservation of generational wealth can provide long-term benefits, such as financial security and opportunities for investments in education, property and business ventures, it’s not guaranteed to last. A 20-year study shows that 70% of wealthy families lose their wealth by the second generation, and a staggering 90% see their fortunes dissipate by the third. This so-called “third-generation curse” often occurs due to poor estate planning and a lack of financial literacy. To lift the “curse,” families can implement strategies by setting up trusts, implementing estate planning and promoting financial education.
The process of transferring wealth is also an opportunity to instill values and financial wisdom in the next generation. Financial literacy and open communication within families are vital in order to prepare heirs for the responsibility of managing wealth.
Why crypto is entering the legacy conversation
Crypto’s decentralized nature, high-growth potential and unique advantages over traditional assets such as stocks, real estate and gold are changing the way that families approach long-term financial security.
Democratizing wealth creation: Cryptocurrency is opening doors that traditional finance often keeps shut. Instead of requiring a good credit score, having access to a bank or living in a certain part of the world, crypto investors use a decentralized system that welcomes anyone with an internet connection. This is especially meaningful for younger people and historically marginalized communities, who have long faced barriers like discriminatory lending and limited access to investment tools.
Struggling with student debt and rising living costs, the younger generations are turning to crypto as a path toward financial independence. Studies show that more than half of Gen Z and millennial investors see crypto as a key part of their financial future, especially as trust in traditional markets fades.
Platforms like Bybit are helping to level the playing field. They make it possible to start investing with just a small amount by using strategies such as dollar-cost averaging (DCA), which are available to everyone.
High-growth potential and inflation resistance: Crypto also offers strong potential for returns. Bitcoin has outperformed most traditional investments during its peak years, and is well-regarded as a store of value with its limited supply of 21 million tokens. Unlike paper money, which loses value over time, Bitcoin is seen as a way to protect purchasing power.
Ethereum and other smart contract platforms have taken things even further. With tools like staking, liquidity mining and yield farming, families can now earn passive income in ways that go beyond real estate or bonds. These innovations give people more flexible ways to build wealth.
The great wealth transfer: Over the next two decades, $84 trillion will pass from Baby Boomers to their heirs, according to a 2024 report. Around $6 trillion of that is expected to move into crypto. Millennials and Gen Z, who are more likely to own digital assets, will feature prominently in this shift.
However, proper planning for crypto inheritance is key. Unlike traditional assets, digital currencies require secure storage and access to private keys. Tools like Vault12 Guard help ensure that crypto can be passed along without relying on banks or lawyers. With smart contracts and self-custodied wallets, crypto is changing the way that families plan for the future by offering a more direct, global and secure way to transfer wealth across generations.
Risks to consider before passing crypto onto the next generation
Despite crypto’s promise, its volatility and regulatory uncertainty pose risks that differ sharply from those of traditional assets.
Volatility and market exposure: Cryptocurrencies are highly volatile, with assets like Bitcoin experiencing single-day price drops exceeding 20%. This unpredictability poses two key risks: the erosion of portfolio value before heirs can access it, and the possibility that inexperienced heirs might panic-sell during market downturns, locking in steep losses. Unlike stable assets, such as real estate or bonds, crypto demands ongoing attention for which not all heirs may be ready or equipped.
Legal and regulatory uncertainty: Crypto’s quickly changing regulatory environment adds complexity to crypto inheritance. In many jurisdictions, crypto is taxed as property, which means heirs may face significant capital gains or estate taxes. Future regulations could also impose restrictions on crypto transfers, add new compliance burdens or redefine asset classifications entirely. Cross-border issues may also arise if heirs live in countries where crypto is banned or restricted, potentially rendering inherited assets inaccessible.
Security and access risks: The decentralized nature of crypto means that access depends entirely upon private keys or seed phrases. If these are lost, improperly documented or destroyed, the assets become unrecoverable. Moreover, heirs who are unfamiliar with crypto may be vulnerable to scams and phishing attempts. Traditional estate planning tools rarely address these issues adequately. Solutions such as multi-signature (multisig) wallets and institutional custodianship can help, but they require foresight and need to be set up well in advance.
Knowledge gaps: Crypto management demands technical fluency. Heirs may struggle with various tasks, such as securing hardware wallets or navigating DeFi platforms. Even those familiar with crypto may make poor investment decisions, such as overconcentrating or selling in panic, thereby undermining long-term goals.
How to plan for generational wealth with crypto
Building generational wealth through cryptocurrency requires thoughtful strategies that combine disciplined investing with secure management and estate planning. Here are two effective approaches to consider:
Long-term crypto investment: A long-term crypto investment strategy involves holding established digital assets, such as Bitcoin (BTC) and Ethereum (ETH), in order to benefit from their long-term growth potential. Proper storage and regular investing practices ensure that your assets are protected from market volatility and security risks.
Here’s how to proceed:
Adopt a long-term holding strategy (HODLing): This strategy allows you to ride out market fluctuations and capitalize on potential long-term appreciation, despite short-term volatility.
Dollar-cost averaging (DCA): Invest a fixed amount of money regularly, no matter the current price of the asset. This strategy reduces the impact of price swings and helps avoid poorly timed investments, allowing you to steadily accumulate assets over time.
Store securely: Use secure storage solutions, such as hardware wallets or multisig wallets, in order to protect your crypto assets against theft, loss or unauthorized access to ensure that your investments remain safe.
Educate your heirs: Equip your family members with the necessary knowledge about digital wallets, private keys and security best practices. This ensures that in the event of your passing, your heirs can manage and access the inherited assets without unnecessary complications.
Estate planning with crypto-focused trusts: Estate planning with cryptocurrency involves structuring your digital assets in a way that ensures they’re transferred seamlessly to your heirs. By using trusts tailored for digital assets, you can protect your crypto wealth from unnecessary taxes and ensure it passes to future generations.
The following are steps to implement:
Establish a dynasty trust, an irrevocable trust that’s designed to last for multiple generations. It allows your assets to grow, without incurring estate or gift taxes, and helps you pass wealth across generations while minimizing the impact of taxes.
Digital legacy planning services: Use secure platforms to catalog and manage your digital assets, including crypto holdings. These services can store key information, such as wallet locations and private keys, and designate beneficiaries who will inherit your assets, making it easier for heirs to access and manage the assets upon your passing.
Regularly update estate plans: Your estate plans need to evolve along with the dynamic crypto landscape. Regularly reviewing and adjusting your estate documents ensures they reflect any changes in your holdings, your family structure or shifts in crypto regulations.
Consult with professionals: Work with financial advisors and estate planners who specialize in digital assets. These experts can help you navigate the complexities of crypto regulations, ensuring that your wealth is properly structured for transfer and your wishes are carried out effectively.
The bottom line
Cryptocurrency offers a modern path to build and preserve wealth across generations, especially for those underserved by traditional finance. With careful investment, secure storage and forward-thinking estate planning, crypto can become a powerful legacy tool. However, success requires education, strategy and the correct safeguards in order to ensure that future generations can truly benefit.
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