How to Manage Crypto Risk with a CRUT

Cryptocurrency has matured from a speculative niche to a legitimate — if volatile — asset class that increasingly appears on balance sheets, estate plans, and even in charitable giving strategies. Yet while the potential rewards are compelling, the tax implications and long-term considerations of crypto risk management can be daunting.

For investors who have realized significant gains in digital assets such as Bitcoin, Ethereum, or Solana, one of the most overlooked strategies for managing both risk and tax exposure is the Charitable Remainder Unitrust (CRUT). A CRUT can allow an investor to convert appreciated crypto into a diversified, income-producing portfolio — while deferring capital gains taxes and supporting philanthropic goals.

At Avidian Wealth Solutions, we help high-net-worth individuals navigate this intersection of innovation and prudence — helping to align charitable intent with financial discipline. Below, we explore how crypto can be integrated into a trust structure, how to mitigate crypto risk, and what role a CRUT can play in a comprehensive wealth plan. Let’s talk.

How to avoid crypto taxes with a trust

One of the most immediate challenges for crypto investors is the tax treatment of realized gains. Selling appreciated digital assets typically triggers capital gains taxes, often at rates as high as 20% federally, not counting state and local taxes. But when appreciated assets are donated to a charitable remainder unitrust, that taxable event can be deferred or mitigated.

A CRUT allows you to donate crypto directly to the trust, which then sells the asset without incurring capital gains taxes at the time of sale because the trust itself is a tax-exempt entity. The proceeds are reinvested, and the donor (you) or other designated beneficiaries receive an annual income stream for life or a set number of years. When the trust terminates, the remainder goes to a qualified charitable organization.

Here’s a hypothetical example:

• You bought Bitcoin in 2016 for $20,000.
• “Today”, that Bitcoin is worth $400,000.
• If you sold it, you might owe around $76,000 in capital gains tax.

By transferring it to a CRUT, the trust can generally sell the Bitcoin tax-free, reinvest the $400,000, and pay yourself annual income — typically between 5% and 8% of the trust’s value — while allowing you to claim a partial charitable deduction in the year of the gift.*

The result? You’ve reduced your immediate tax burden, diversified your holdings, and aligned your crypto success with a charitable legacy.

*Not a guarantee of investment return or future trust value

How to manage risk in crypto

Beyond taxation, volatility remains one of the defining features of cryptocurrency. While traditional markets fluctuate, crypto can experience double-digit swings in a single day. This volatility can make it difficult to plan around — particularly for investors approaching retirement or seeking stable income.

Placing crypto into a CRUT introduces several important risk management advantages:

• Diversification of proceeds: Once the crypto is sold within the CRUT, the proceeds can be reinvested in a diversified portfolio of traditional assets, helping to reduce concentrated crypto risk exposure.
• Income smoothing: The CRUT’s annual payout structure can transform the unpredictable nature of crypto value into a predictable stream of income.
• Philanthropic cushion: The charitable remainder serves as a built-in “long view,” reminding investors that part of their gains are advancing a purpose beyond market cycles.

However, these advantages depend heavily on proper trust administration and investment management. Crypto custody, valuation, and transfer logistics require specific knowledge — particularly since not all trustees or custodians are prepared to handle digital assets securely. Partnering with a fiduciary advisor familiar with both digital assets and complex trust structures can create a path for these benefits to be realized efficiently.

Should you put your crypto in a trust?

While CRUTs can be a strategic way to manage highly appreciated crypto, they’re not the only option — and not every investor should put their crypto directly into a trust. 

You might consider placing crypto into a trust if:

1. You hold long-term appreciated assets and want to defer taxes on the sale.
2. You want to generate income while maintaining charitable intent.
3. You’re concerned about estate taxes and want to reduce the taxable value of your estate.
4. You wish to protect and manage digital assets for future generations.

However, if your crypto holdings are relatively modest, highly illiquid, or speculative in nature, other planning vehicles may be more appropriate. Moreover, transferring crypto into a trust involves a formal valuation process — something that can be challenging given the volatility of prices and the need for accurate fair market value reporting to the IRS.

In other words, not all crypto belongs in a CRUT, but for the right investor, it can act as an effective tool to manage appreciation and crypto risk simultaneously.

Does crypto go through probate?

If crypto assets are not properly titled, documented, or included in an estate plan, they can absolutely go through probate — and in many cases, they’re at risk of being lost altogether.

Unlike traditional assets, crypto isn’t held in a centralized institution. Without clear instructions, secure key management, and a legally enforceable estate structure, heirs may have no access to the digital wallet that contains those assets.

Holding crypto within a trust — such as a revocable living trust or a CRUT — helps sidestep this problem. When properly structured:

• The trust, not the individual, owns the crypto.
• Beneficiaries are predefined, allowing for smoother transition of ownership without the delays of probate.
• Access protocols for private keys or custodial arrangements are codified within the trust documents to allow for continuity and security.

A trust, therefore, is not only a tax-efficient strategy — it’s a practical safeguard against one of the most common risks of digital wealth: loss through oversight.

Does crypto get a step up in basis at death?

In general, most appreciated assets held at death receive a step-up in cost basis, resetting the taxable value to fair market value at the time of the owner’s passing. This can significantly reduce capital gains taxes for heirs who later sell the asset.

Crypto is no exception — if it’s properly documented and identifiable within the estate. However, when crypto is held in a charitable remainder unitrust, the outcome differs slightly. Because the asset has already been donated to a tax-exempt entity, there’s no step-up in basis to pass along to heirs, since the remainder goes to charity.

This trade-off is part of what makes CRUT planning so nuanced: you’re essentially deciding between immediate tax benefits and lifetime income versus a posthumous basis adjustment for heirs.

At Avidian Wealth Solutions, our advisors can model both outcomes side-by-side, helping clients see how each approach affects their family’s long-term financial picture.

Want to integrate your digital assets into your estate plan? Let’s talk.

Cryptocurrency (and crypto risk) is a new frontier of modern investing — high potential returns, high volatility, and a regulatory environment still catching up. Wealth management, by contrast, is built on structure, discipline, and foresight. A CRUT is one of the few strategies that marries these two worlds effectively: it turns short-term gains into enduring financial and charitable outcomes.

For high-net-worth investors who have benefited from early crypto success, it may be time to ask a different question — not how much your crypto is worth today, but what lasting value it can create.

At Avidian, we assist high-net-worth and ultrat-high-net-worth families in evaluating how alternative and digital assets may fit within their estate, tax, and charitable planning strategies. Our team provides support throughout the due-diligence and trust-administration process, helping clients make informed decisions that reflect both their objectives and an appropriate level of financial discipline. 

Contact Avidian Wealth Solutions today in Houston, Austin, Sugar Land, and The Woodlands to explore whether a CRUT — or another advanced planning strategy — fits your financial picture.

Disclosure: This article is for informational purposes only and does not constitute investment, tax, or legal advice. Cryptocurrency investments carry unique risks, including volatility and regulatory uncertainty. Always consult with qualified financial, legal, and tax professionals before making any decisions regarding cryptocurrency or trust structures.

More Helpful Articles by Avidian: 

• Should I Take Social Security Early?
• How to Leverage Key-Person Insurance for Succession Planning
• The Role of Charitable LLCs in Legacy and Wealth Preservation
• What Does “Buy the Rumor, Sell the News” Mean?
• Charity vs. Philanthropy: Getting the Most from Your Donations

---

Please read important disclosures here