Pay Dirt

What Should I Do With This Sliver of Bitcoin My Evil Ex Left Me?

I’d be a little sad to lose it.

A hand holding a coin with a B on it.
Photo illustration by Slate. Photo by Boyloso/Getty Images Plus. 

Dear Pay Dirt,

My ex gave me an odd gift not long before we divorced: a small fraction of a Bitcoin. It’s currently only worth about $2,500, but to me it has sentimental value. (Honestly, I think of it as “asshole tax.”) I enjoy being able to participate in the crypto gamble without risking money I earned, especially since some people predict that Bitcoin may someday be worth even more astronomical sums. But I’ve recently started hearing about cryptocurrency IRAs, and I began to wonder if it would be possible to put my fractional Bitcoin into a Roth IRA so it could grow (or crash, whatever) tax-sheltered. I also might like to diversify with other currencies and put an occasional $50 in.

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I’m 42, debt-free except for a very low-interest mortgage and car loan, and I have a small emergency fund, a more-or-less permanent job, and several retirement safety nets. I don’t need that $2,500 for anything. Do I leave my fractional Bitcoin in its Coinbase account? Or sell it, cough up the taxes, and invest it in a crypto IRA?

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—A Real 21st-Century Keepsake

Dear Keepsake,

In order to invest your bitcoin into an IRA, you will need to open a self-directed individual retirement account (SDIRA), not a Roth. In both a traditional and Roth IRA, you have standard investments as options. Standard options include mutual funds, money market accounts, stocks, bonds and cash. SDIRAs, on the other hand. allow for non-standard investments, such as commercial real estate and, now, bitcoin. With SDIRAs, you can have a more diverse portfolio that is tax sheltered.

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SDIRAs aren’t all upside, though. SDIRAs are self-directed, which means the custodian (financial institution) that houses your account cannot give you any financial advice. You, and you alone, are responsible for anything you do or don’t do. You can be hit with fees, taxes and regulations you had no idea about and quite often, custodians that offer cryptocurrency are not backed by the FIDIC like traditional custodians. That means you can lose everything, which may be emotionally devastating given that you say your fraction of a coin does have sentimental value. However, if you’re an experienced investor, you could make extraordinary financial gains.

You already have a pretty diverse portfolio, going into the bitcoin game, so I would keep going with your current strategy. Try out new investment strategies and continue to educate yourself with the ongoing market to see where you feel most comfortable. You can always open a cryptocurrency IRA later on down the road, after you have built up more of a bitcoin nest egg and the market is more established.

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Dear Pay Dirt,

My sister has been unemployed since 2016, and had a patchy work history before then. She’s currently living with our elderly mother, who doesn’t want to retire and still works outside of the home. When we were younger, my sister was vocal about wanting to become a stay-at-home mom and write in her spare time, but unfortunately that has fallen by the wayside. She’s now in her 50s, single, with no children, and has no retirement funds. I don’t think she wants to work. She’s had several offers, but for various reasons (overqualification, no promotion possibility, COVID, etc), she hasn’t accepted any of them. She doesn’t want to work service jobs. She gets income from sporadic freelancing and very small royalties from self-publishing, so she’s virtually supported by our mom, who pays all the bills.

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I’m afraid for my sister’s future, especially what would happen after mom’s death. Mom would have money in her retirement accounts, but I don’t know how long the money would last with my sister. There’s the house, but if we sell, she’d probably have to rent. I don’t want my sister to be destitute, and I don’t mind getting a smaller inheritance, but I have two teenage children and my own retirement to look after. What should I do to ensure that she will be OK once our mom’s gone, without jeopardizing my own financial health?

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—(Don’t Want to Be) My Sister’s Keeper

Dear Sister’s Keeper,

You aren’t alone in having a parent who supports your adult sibling. According to this study recently published by CNBC, 45% of adults surveyed who have adult children have admitted to currently supporting them financially. You are not obligated to take care of your sister, just like your mother isn’t, so it’s nice that you do care what happens to her after your mother dies.

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My advice is to ask your mom about it, and leave your sister out of it. Take your mother to lunch, or another neutral meeting place and ask how her estate planning is going. You can say that you are doing your own end of life financial planning, and want to make sure she is prepared since she is currently caring for your sibling, and she does own property. Since she may also be thinking the same thing, she may feel relieved in knowing she’s not alone in figuring out this issue.

If she’s open to discussing it further, be honest, without putting your sister down. Share that you’re okay receiving a smaller inheritance, if that means your sister is taken care of, since you cannot provide the same financial support your mother now does. You genuinely care about your sister—I can tell from your letter—and your actions will reflect that.

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Your mother may freeze up and not want to discuss this, which is normal.  A lot of parents do not like to discuss their estate plans with their children, for various reasons. If the conversation goes south, let it go, and change the subject. It may be frustrating but at the end of the day, there is only so much you can do. Instead, focus on what you can. Prepare for hard conversations by reviewing potential scenarios with a therapist who specializes in codependency, and can help you establish boundaries, so you’re ready when the time comes, whatever the situation may be.

Dear Pay Dirt,

I am an older, single woman with no children. I have an IRA and a few other assets that are substantial. Most of my siblings are equally well-off (if not more so), as are their children. My current will leaves everything to another sibling who is not as well off, but comfortable, and who knows I’ve currently left everything to them.

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This sibling’s politics do not align with mine, and I want to change my will to leave percentages to my preferred charities, while still leaving a substantial part of my estate to them. The thing is that I used the same lawyer my sibling uses to redo my will. Yes, there are attorney-client privilege issues, which I understand. And yes, I get that I can change lawyers to redo my will. But do I tell my sibling about the changes in my will, and if yes, how do I do that?

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—Document Dilemma

Dear Dilemma,

It’s my opinion that you’re never obligated to tell someone about changes in your will, unless it drastically affects their livelihood or would give them additional responsibility. For example, I would definitely tell someone if they were the executor of my will, because that’s a huge job they may not even want. I would also tell someone if I changed my will if they were depending on an inheritance from me to support them after my death.

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Since neither of the scenarios sound like your situation, I guess my real question is this: Why are you holding your sibling’s political views against them? Now, if they are flying Confederate flags and burning crosses, I get it. But short of that, if you are thinking you might make this change (and then tell them about it) to get back at your sibling for a political disagreement, I don’t think it’s worth it. You can agree to disagree and move on from there.

If you are insistent that you want to move forward, let your current attorney edit your will to include your new changes. Casually let your sibling know that you have changed your will to include financial contributions to charities close to you, but that nothing further is needed from them at this time. If your sibling asks “Why the change of heart?”, you can simply share that you’re building a legacy, and then end the conversation.

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Dear Pay Dirt,

I’m in my mid-20s, live in an expensive city where about half of my income goes to rent, and have less than $2,000 in savings. I work three gigs, have never had a 401k, and have only a murky idea of what I’m doing career-wise.

I recently received an unexpected inheritance of $20,000 from a family member who passed away. This is a huge amount of money for me. After using about $1,000 to get some long-needed dental work done, I know I should save the rest—most for retirement, and some for emergency/short-term savings. But I don’t know how to go about choosing the best accounts to put this in and how to start investing for the first time. I want to hire a financial adviser, but a couple friends have said that’s a waste of money and I can research all my options myself online. What do you think?

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—What Do I Do With This Money?

Dear What Do I Do ,

Financial planners get such a bad rap. While most financial planners are in the business of making themselves money by selling you financial products their firm provides, not all of them are commissioned financial planners. Some are what’s called fee-based, and I highly recommend them to someone in your position.

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Fee-based financial planners do not make money off commissions or get any kickbacks from suggesting a certain financial product. Instead, you can actually trust their recommendations since there is no conflict of interest. Another fun fact is that most fee-based planners are fiduciaries, which means they legally have to put your best interests first AND need to pass a CFP exam. The people on the internet telling you what to do with your money do not. They are also most likely getting an affiliate sale when you click on products they recommend.

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Since you are just starting your financial journey, and have a good chunk of change, go to a professional. Getting set up for success with a planner will help you feel empowered, instead of feeling frazzled. You won’t regret it.

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