GameStop stock is currently the subject of a massive trading war between Wall Street Hedge Fund managers – who shorted the stock – and a decentralized group of individuals who collectively decided to run up the stock’s value, largely based on a now-deleted Reddit thread. Nokia, Naked Brand, and AMC have shot up in similar spikes. American Airlines, hit hard by Covid-related travel restrictions, unexpectedly rocketed up 50% over the past two days.
Traditional stocks aren’t the only ones moving. Cryptocurrency trading is booming, with Bitcoin spiking to over $40,000 earlier this month. Other alternative digital coins are making comparable massive gains and losses.
Trading apps have in some cases introduced additional variables into an already unpredictable market. Robinhood, one popular app, recently suspended trading on several stocks that have gone wild over the last few days, including GME, NOK, NAKD, and AMC. This unexpected action has resulted in panic selling by some traders, while others hold their shares in the hope that the spike will continue.
It’s a volatile market.
Whether your portfolio is diverse and stable, or you are a day trader surfing the spikes, you need to protect your gains. In the short term this means taking profits, diversifying, and weighing risks. In the long term this means putting those assets in a revocable trust.
No one knows when the game of life will stop. Your money won’t do you any good when you pass away, but it will make a huge difference to the loved ones you leave behind. Do it wrong, and a hefty chunk of your estate will go to legal fees and to Uncle Sam’s coffers. Do it right, and your wealth will seamlessly transition to the beneficiaries you have chosen.
Stocks are relatively simple to add to a trust. Cryptocurrency is more complicated because it is entirely digital. It’s important to leave the key to your digital wallet in the hands of a reliable successor. This means including a “digital assets” provision in your trust. It also means leaving instructions with account or app login information in a secure location where a successor will be able to use it to access and manage your digital assets.
Finally, you might have tens or hundreds of thousands of dollars invested in cryptocurrency via an app on your computer or phone, but that value may not be readily apparent to others. Robinhood, Stash, eToro – to a non-investor these are just apps with funny names. Loved ones may not know that they are trading apps potentially housing huge investments.
If you have a stock portfolio, cryptocurrency, or other digital assets that you want to put into a trust, contact us today at (916) 525-7980 for a free estate planning consultation.