Cryptoassets in Estates

Executors are facing new challenges when it comes to the administration of a loved ones estate in the form of cryptoassets and digital currency.

There is estimated to be around 130 million users of bitcoin alone with the crypto market now being
worth around $1 trillion in value. Unlike a standard bank account, access to such assets requires online log in details, access to a particular App on a deceased’s phone or their ‘virtual wallet’ and it is unusual for there to be a bereavement team to contact for assistance. As the asset exists purely virtually the Courts have had to establish a whole new form of identity for these assets outside of the term ‘property’ in English Law.

The starting point to deal with a deceased’s digital and crypto asset is to look at what devices they
had. Crypto and digital assets can be stored on hard-drives, laptops, tablets, smart phones and
hardware wallets. If the Personal Representatives are then able to locate these cryptoassets they
will need the key entries to be able to access them. In a digital wallet the account holder of the
cryptoassets will have a public and private key to be able to access and conduct any transactions.
Essentially a public key is like an account number which is used to identify the user and the private
key is like a pin number which only the owner will have access to. It is therefore advised to see if the deceased stored these keys anywhere such as in any paper trails or digital files. It may not always be that simple to find these passcodes/keys however if you are able to locate them it is advised that an expert accesses these accounts as Personal Representatives may not have the knowledge to do so and may not be covered for any losses to the estate.

It may also be the case that the deceased owned cryptoassets through third party intermediaries
who safeguard those assets on their behalf. A further complication that must be overcome.
The value of a cryptoasset does count towards the deceased’s estate for inheritance tax purposes
and so it is important to locate these assets to avoid making any false representations to the
revenue.

Once access has been obtained, the cryptoasset can be transferred to another wallet, for example to a beneficiary of the estate or to the executor, or it can be converted to currency to be cashed out.

Bitcoin reports that more than 4 billion bitcoins have not been located or accessed when dealing
with a deceased’s estate. Without any key information the likelihood is that these cryptoassets are inaccessible and lost forever.

Maples Solicitors are now encouraging clients to prepare what is referred to as a ‘digital will’. This is a document setting out exactly what crypto assets an individual has and all details in relation to access to those assets included the virtual keys. This digital will also include passwords to mobile telephones, email passwords and all other potential online and security information that the
executors will need to access virtual currency or online only accounts belonging to the deceased.
The digital will is safely stored with the original will and can be updated at any time without need to update the original will. It is hoped that practical steps such as these will assist Executors in the future.

If you have any queries or concerns in relation to cryptocurrency, the administration of an estate or
your own will then please contact one of the members of our Private Client Department:-

Jamie Dobbs- jamie.dobbs@maplessolicitors.com

Jane Mawer- jane.mawer@maplessolicitors.com

Faye Blair- faye.blair@maplessolcitors.com

Or telephone the office 01775 722261 and ask to speak with one of the team.