1. Skip to Content
  2. Skip to Navigation
Toggle Menu

News

News
More news

Passing crypto assets safely down through the generations

14 Jun 2022

Q. How can I safely pass on my cryptocurrency assets to the beneficiaries named in my will while also keeping them secure and safe from hackers?

 

A. With their gradual move into the financial mainstream and their significant increases in value, the number of queries we’ve been receiving about cryptocurrency has been steadily increasing.

Security is obviously a key aspect to their management, with anyone who obtains the Private Key for a Crypto Wallet being able to empty it without impediment.

For this reason, many people understandably choose not to make a record, either on paper or on an electronic device, of their login information – but this decision is sadly having unintended consequences in a growing number of cases for beneficiaries named in their wills.

Whatever asset has been bequeathed to you, if you can’t access it, you can’t use it – and unlike, for example, a lost bank account number, there is nowhere you can currently turn in the decentralised cryptocurrency world to gain access to crypto assets without the login, passkey and device/platform information.

Industry research suggests that a small, but growing number of crypto assets are being lost, potentially forever, because their owners have not left any kind of accessible record of their login information.

And given that you could, for example, buy one Bitcoin in 2011 for 30 US cents, and that the same single Bitcoin was worth over $46,000 at the start of April 2022, the lost sums we are talking about could potentially be astronomical.

This issue also potentially causes problems for the executors named in a will, as they have a duty to do everything they can to get legacies to beneficiaries, and they could arguably be left in a difficult situation when deciding what to do with crypto assets that may not be recoverable.

Crypto Small

There currently isn’t an easy answer to this issue, but there are some basic steps you can take to support your succession planning.

For example, ensuring that your beneficiaries and/or professional advisors know what wallets your crypto assets are held in and on which devices they’ve been stored means they are not one day left having to search through every file in every folder on every device that you owned – and if you do decide to note down details of your Private Key, do so somewhere that is both safe and accessible.

Managing digital assets within the wider estate planning process is going to become an increasingly common need through this decade and beyond, but just as with any other asset, starting this planning process well in advance is the optimum way to get the results that you and your beneficiaries want from it.

For more information and assistance with succession planning for digital assets, please contact Richard Marshall at richard.marshall@hay-kilner.co.uk or on 0191 232 8345.