Bitcoin, Ethereum, Ripple, and other digital currencies have long been an integral part of many investment portfolios. But what happens to these digital assets when the owner dies? Unlike traditional bank accounts or securities accounts, cryptocurrencies present heirs with unique challenges. The law firm Cocron explains what testators and heirs should pay particular attention to regarding crypto assets.
Crypto legacy: Often undiscovered and difficult to access
Many cryptocurrencies remain undiscovered after death because there are no physical records like bank statements. Instead, only access credentials exist in the form of private keys, seed phrases, or digital wallets stored on USB sticks and scraps of paper. If these keys are unknown, the crypto assets are lost forever – even experts reach their limits in such cases.
Lawyer István Cocron warns:
“Anyone who owns cryptocurrencies should make arrangements in good time. Otherwise, their heirs risk losing their entire digital estate.”
Measures for testators – How to secure your crypto assets
Anyone who wants to ensure that their cryptocurrencies are accessible in the event of inheritance should consider the following points:
- Create an overview of your assets: Which cryptocurrencies do you own? On which platforms are they held? Do you have hardware or software wallets?
- Document access data: Private keys or seed phrases should be stored securely but accessibly – for example in a bank safe deposit box or with a trusted person.
- Adjusting your will: Access to wallets should be regulated, but the key should not be directly mentioned in the will.
- Appoint trusted persons: Specialist lawyers or notaries can be entrusted with the secure safekeeping of the access data.
What heirs can do
Heirs who suspect cryptocurrencies are among the estate should carefully examine electronic devices (smartphones, computers), USB drives, and notes. References to platforms like Binance , Coinbase , or Bitpanda can provide important clues.
If an account exists with a cryptocurrency exchange, access can often be requested with a certificate of inheritance – even without the login credentials. If the cryptocurrency assets are stored on a hardware wallet, specialized IT forensic experts or lawyers like attorney Cocron can help establish legally secure access.
Tax risks and suspicion of money laundering
Heirs should not hastily transfer coins to their own wallets , as cryptocurrency exchanges can block accounts due to suspicious IP addresses or unusual activity. Banks and tax authorities also frequently require proof of the funds’ origin.
Without clear documentation, complex blockchain analyses may be necessary to trace transactions and refute money laundering allegations.
Inheritance tax on cryptocurrencies
Cryptocurrencies are considered a taxable component of the estate . For valuation purposes, the average market value on the date of death is generally used – regardless of subsequent price fluctuations.
Problems arise when the heir has to pay taxes but has no access to the assets. In such cases, an application for deferral or remission can be submitted to the tax office.
Additionally, if inherited cryptocurrencies are sold within one year of receipt, the profit is subject to income tax. In this case, the heir assumes the tax position of the deceased. Those who disregard the holding periods risk tax liabilities.
Conclusion: Planning ahead protects your digital legacy.
Cryptocurrencies in an estate present significant legal, technical, and tax challenges . Without appropriate precautions, the total loss of digital assets is a real risk. Anyone wishing to protect themselves and their loved ones should consult an experienced lawyer like István Cocron early on to take suitable measures – ensuring that their digital legacy is not lost on the blockchain.
