Probate and the Problem with Cryptocurrency
At the age of 21, Matthew Mellon, a member of the famous family of bankers, inherited $25 million through a trust created for his benefit. Illustrating the dangers of giving that much money to someone so young, Mellon developed costly habits, and passed away at the age of 54 on his way to rehab.
If that was the entire story, Mellon would be a good cautionary tale about why it is important to carefully structure large inheritances to limit risks including making addiction issues worse. However, there is much more to the story as the Wills, Trusts & Estates Prof Blog discusses in “Matthew Mellon’s Cryptocurrency is Being Held in Probate.”
At some point, Mellon became heavily invested in cryptocurrency, which eventually made him a billionaire. At the time of his passing, his cryptocurrency holdings are believed to be worth around $100 million. However, the problem with cryptocurrency is it can be extremely volatile.
Since his passing, Mellon’s holdings have already fluctuated more than 30% in value. Before Matthew’s heirs can receive the holdings, his estate must first go through probate. Ordinarily, it would take a long time for the cryptocurrency to be transferred through the court-monitored probate process. However, Matthew Mellon’s estate is seeking permission to sell the cryptocurrency now in case the value of the holdings crashes.
Mellon presents another cautionary tale as well. If you have a lot of cryptocurrency, you should create an estate plan to ensure your cryptocurrency will not need to go through probate. This ensures your decision makers can quickly and efficiently protect and preserve your assets in the event of your passing.
Reference: Wills, Trusts & Estates Prof Blog (May 20, 2018) “Matthew Mellon’s Cryptocurrency is Being Held in Probate.”