What are the various ways Probate Clients can include crypto in their Will?

What are the various ways clients can include crypto in their Will?

As cryptocurrency continues to become more popular, it's important to consider how you can ensure that crypto assets are passed on to the next generation. One way to secure cryptocurrency is by including it in a will or trust. This ensures that digital assets are managed and distributed according to wishes. But what exactly does this entail? Let's take a closer look at options for including crypto as part of a will and therefore tackling crypto probates:

1. Crypto assets are stored on a centralised exchange.

Centralised exchanges are platforms which facilitate the buying and selling of cryptocurrency, and function as trusted intermediaries in trades, as well as custodians. Exchanges are considered to be less secure than cold storage as with exchange you are reliant on a third party.

Questions that need to be addressed in the will:

• What centralised exchange(s)/platform(s) are crypto-assets held with?

• How many centralised exchanges does the client use?

• Do all of the centralised exchanges carry out sufficient KYC procedures for their clients? If not, what information can be included in the memorandum (below) to make sure assets can be retrieved?

• Is someone managing assets for the client on a centralised exchange?

2. Assets are stored in a cold wallet.

A cold wallet stores crypto offline, so it is not connected to the internet. Clients have full control of assets by using a ‘private key’ that consists of 12-24 words.

Questions that need to be addressed in the will:

• Which cold wallet provider does the client use?

• How many different cold wallets does the client have crypto in?

Never include private key information/passwords

A client’s will should never include information about private key as this option is not secure.

• In the same way that clients should never disclose passwords or pin numbers, they should not share their private keys.

• This is especially important because wills become public records once probate is obtained.

• Anyone who understands how crypto works could easily read the keys and use them to get all of the crypto before the rightful owner could do so.

So where do you store passwords, passcodes and PINs?

As mentioned above, a will becomes public record when it goes through probate. A memorandum on the other hand is a separate document that is not part of the will or subject to public record, yet it is referenced in a will. Therefore, the following questions should be answered in clients’ memorandums:

• What are the various digital wallets the client owns and where are they stored? (e.g., laptop, smartphone app, physical devices)

• If assets are stored on a physical device, where is it and how do you access it?

• What are the passcodes, passwords, PINs and keys that are required to gain access to the digital wallets/exchanges?

• If passwords are tied to a 2FA authenticator, what are the details needed to access a secondary device (such as a phone)?

• If you do not wish to disclose your private key details in your will, what are specific instructions to gain access to your private key?

• Does someone else, perhaps a friend or relative, have access to your private key information?

In addition, memorandums can be changed at any point. Therefore, if the information required to access a client’s digital assets changes, this can be altered in the memorandum without the legal requirements of changing a will.

By answering the above questions that apply to your specific choice of custody, and storing sensitive information in a memorandum, you can ensure that:

a. Practitioners are made aware of every crypto custodian that clients have chosen to store funds with.

b. Practitioners are given guidance on how to efficiently retrieve assets from the various storage options.

For ongoing crypto probate cases, GlobalBlock has assisted in a number of crypto probate cases to help with handling complex matters. Feel free to reach out if you need a helping hand!

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