The crypto afterlife – will my digital assets spend an eternity on a blockchain when I’m gone?
by Richard Marshall, Partner at Hay & Kilner
They say there are two certainties in life – death and taxes. Unfortunately, when it comes to crypto assets, both of these certainties can raise complicated questions.
If we dare to look our own mortality in the face, the stark reality is that our crypto assets will exist on a blockchain long after we are gone. The big question then, is what do we want our crypto afterlife to look like?
If you did not wake up tomorrow, would your nearest and dearest know the importance of the peculiarly named apps on your phone, or the value held on the often inconspicuous looking hardware wallet? Even if they did, would they know how to access any of it?
Without an understanding of where your crypto assets are held, and the knowledge of how to access them, anyone dealing with your estate will have a difficult time benefiting from the altcoin gains and NFT trades you have mastered during lifetime. It is likely in these circumstances that your crypto assets will be condemned to a life unlived in their blockchain prison after you are gone. Worse still, loved ones could be throwing good money after bad trying to locate and access wallets which may ultimately all be in vain.
Unfortunately, the truth of the matter is there is no fool proof way to leave crypto assets in these circumstances. Whilst there are digital solutions allowing you to store wallet details and private keys, and nominate to whom the all important information will pass to on death, this does not sit squarely with the current laws of the land.
In England and Wales, to leave a gift on death it has to comply with laws written 186 years ago. The current, albeit outdated, law requires gifts on death to be made by a will. The formalities for making a will are not difficult; it must be in writing, signed by the person making the will (known as a testator) in the presence of two witnesses who must also sign the will in the presence of the testator and each other.
Despite the benefits of cryptographical security and the revolutionary nature of blockchain technology, we are still very much in an analogue world when it comes to the legalities of gifting assets on death.
So, what does this mean for our crypto afterlife? Planning is key. Think about who would have an understanding of crypto assets to deal with them following your death. Create some sort of inventory of crypto assets, wallet locations and access information (all of which will be an everchanging landscape during lifetime and will require regular review), which can itself be accessed later. Finally, there needs to be the legal blueprint in the form of a will to ensure the crypto assets pass to those you wish to benefit so that they have the crypto afterlife you intend.
Of course, many people object to the thought of noting down such sensitive information during lifetime, and would rather their crypto assets be lost to the blockchain on death than run the risk of losing them during lifetime. This is completely understandable, but if that is your wish then make it known to the ones you love so that they can allow your crypto assets to rest in peace and not waste time or money on trying to access something which was never meant for them.
But if you do start planning your crypto afterlife, you can also try to mitigate the other certainty in life which ironically arises on death – inheritance tax – but that is a story for another day.