With increasing numbers of people acquiring crypto assets, as well as the rise and importance of social media in our daily lives, it has never been more important to consider what might happen to these digital assets in the event of our death. Recent tales of forgotten passwords and lost Bitcoin millions are a useful reminder that we should consider our digital assets, alongside our more traditional assets, when making arrangements to cover what should happen in the event of our death.

The world of crypto assets is growing at a rapid rate. With the market surging and potentially high-value digital assets being available in the crypto world, the need to protect your digital assets in the event of your death is vital. A crypto asset is a term often used to describe digital and online currencies, tokens and coins. Remember that with many crypto assets, if you lose it, it is gone (and it is almost impossible to recover it). Today, there are thousands of them and the crypto world is constantly evolving. Crypto currency is just one such asset, being a digital form of currency (electronic money rather than physical money). Common examples are Bitcoin, XRP, Ethereum and Litecoin. These digital currencies are intangible e-money, existing electronically, hosted and held in online platforms. Some are regulated and some are not. When someone dies, if there is no obvious evidence of crypto assets, they may never be located or collected. By its very definition, ‘crypto’ (‘hidden’) ‘currency’ (‘money’), this type of asset looks like it is never intended to be found.

Crypto assets are designed specifically to prevent any access to against the owners will. A secure virtual ‘wallet’ is required to store, send and receive crypto currency. Unlike traditional money, the currency itself is not actually held in the wallet, it is stored and maintained in an online ‘ledger’. The wallet holds the private ‘keys’ which the owner needs to access and deal with their crypto currency. It is vital that the owner’s chosen wallet is secure to ensure that their crypto currency is safe. Alarmingly, if someone loses their private key or dies unexpectedly, there is no mechanism in the crypto world to restore a private key to access the funds and there is no central port of call for help, no government intervention or any other solution.

Most of us recognise the importance of making a valid Will to ensure that our physical assets (property, personal possessions, shares, bank accounts) pass down to our loved ones, but what about your crypto assets? It is almost impossible to inherit crypto assets if the deceased owner did not share their private keys or personal wallet information with someone before they died. However, most people do not and should not share this information, as it goes against the very principle and privacy concept of cryptocurrency ownership.  Every crypto owner has to ensure the safety of their own funds. This is a huge responsibility for crypto owners and this is why inheriting crypto assets is such a problem. However, if you do not share details about your crypto with someone, then on your death, your family, executors and beneficiaries cannot and will not ever gain access to your digital assets.

The digital world estimates that the total amount of lost or ‘dead’ Bitcoins is close to 4 million coins, (equivalent to over 20% of the Bitcoins in circulation, or more than $40 billion in value). It is not known how much of this belongs to deceased people, and how much is simply lost (forgotten passwords, key chains or lost seed phrases).  Sometimes crypto investors die with a fortune in their digital wallets, untouchable by the family they leave behind.

So how do you ensure that in the event of your death, your executors or heirs can find and deal with your digital assets? How can you bequeath your crypto funds without compromising your private information (e.g. account credentials, seed phrases or private keys)? How do we help grieving families who are trying to recover the crypto assets of deceased relatives?

When someone dies, their personal representatives take on the task of locating the assets and liabilities of the estate by following a paper trail and making contact with relevant third parties to register the death and deal with the post-death requirements. Some of these third parties may require a grant of probate before the assets can be dealt with. Once the assets are collected into the estate, any liabilities are settled (including payment of any inheritance tax or other tax liabilities) and then the residuary estate (what is left) is distributed to the beneficiaries, either under the terms of the deceased’s Will, or according to the rules of intestacy if there is no Will.

If someone dies and they have left instructions on how to access to their computer and their wallet, their executors may be able to log in and deal with the crypto currency after their death. However, if someone dies without doing this, there is very little which can be done to access their crypto assets.

Happily, we are able to advise you on how to take control of your digital assets on your death.

• We can review your Will with you to ensure that your digital assets are covered, and ensuring that specific reference is made to digital assets. Detailed wishes or instructions as to how executors should deal with digital assets can be included in a side letter of wishes.
• You can leave a hard copy schedule of your digital assets with your Will and it is advisable to update this regularly as your circumstances change.

• Passwords for digital assets should be stored separately and securely. You could consider using a “password manager” that has specific provision for sharing these passwords with a trusted loved-one in the event of your death.
• Some digital assets come with intellectual property rights and require specific advice. We can assist with this.
• Where possible, try to back up your digital assets onto an external hard drive.
• We can provide guidance on how to deal with social media and other online accounts.

In comparison, our ‘social’ digital assets are more simply dealt with. In our social media world, many of our digital assets hold sentimental value and a lifetime of memories (photographs and documents stored on a computer, tablet, mobile phone or laptop, stored virtually in the cloud or uploaded to social media sites such as Facebook, Instagram, Snapchat, Twitter or YouTube). Books, music and other media are easily purchased online. In the gaming world, a player’s virtual account can be sold, or a YouTube account can generate income from interaction with subscribers. Many of these online accounts have user terms to provide some assistance on how to protect your accounts in the event of your death. We can simplify this process for you.

If you have any questions or want to ensure that your digital assets are discovered and dealt with on your death. Please call us, 01604 887455 and speak to Rebecca Walker or Claire Beard.