Cryptocurrency and Estate Planning: How to Secure Your Digital Assets
Cryptocurrency has become an increasingly important part of many Norwegians’ wealth. Whether you own bitcoin or other crypto, it is important to consider how these digital assets are to be handled when your estate is settled. However, cryptocurrency differs from traditional assets in the context of inheritance, and without proper procedures the assets may be lost forever.
What is special about cryptocurrency in the context of inheritance?
Cryptocurrency, such as bitcoin, is, simply explained, digital assets that enable direct transactions between users without the need for intermediaries. Access is controlled by private keys and passwords, and unless the deceased used a crypto exchange, there is no central entity that can assist the heirs if the information is missing. This means that the testator risks the values becoming permanently inaccessible if the heirs do not receive the necessary information.
At the same time, anyone can gain access to one’s cryptocurrency if they have the correct information. There is therefore significant risk associated with sharing private crypto details with others, which can make estate planning particularly challenging.
It is currently estimated that around 10–20% of all bitcoin has been lost due to lack of access.
You can include cryptocurrency in your will in the same way as other assets, but be specific:
- Describe which types of crypto (e.g. bitcoin, ethereum) you own
- State how the crypto is stored (on an exchange, in a software wallet, in a hardware wallet, on paper, etc.)
- Provide instructions on how the heirs will gain access after your death
Important: Do not write private keys or passwords directly in the will. This information should be stored or kept separately, so that it is only made available to the heir who is entitled to the values.
Read more: Formal requirements and practical advice on wills
For the heirs to gain access to the crypto, they must have:
- Information about where and how the crypto is stored
- Private keys or recovery phrases (seed phrase)
- Passwords and PIN codes if necessary
If the crypto is stored on a Norwegian crypto exchange, it may often be sufficient for the heirs to present the certificate of probate. In cases where the crypto is stored in more private forms, for example with a hardware wallet, you yourself must ensure that the heirs gain access to the necessary information.
One option is to store the information with a trusted person, who is referred to in the will, or with the heir who is to receive the crypto. If you do not wish to store the information with a third party, it is also possible to store the information in your own home and inform a trusted person or the relevant heir about where it is kept.
Another option is to store the information in a sealed envelope, which can be kept together with the will at the district court. However, the routines for such envelopes vary between the district courts, and before submitting it you must therefore clarify with the individual district court that the envelope is not made available to potential heirs in the same way as the will. In addition, you should consider appointing an executor, and instruct in the will that the envelope is to be sent to or collected by the executor after your death. In this way, the executor will have the final responsibility for making the information available to the correct heirs. A lawyer acting as executor will often be insured in the event that the information should go astray while in his or her possession.
If you want the estate to be administered publicly and not privately, an instruction may be included stating that the envelope is to be collected by the estate administrator.
Read more: Differences between private and public estate administration
Consider an executor with crypto expertise
Many heirs have little experience with cryptocurrency. It may therefore be wise to appoint an executor – preferably a lawyer with expertise in crypto and tax. A competent executor will ensure efficient and secure transfer of crypto, and correct reporting to the tax authorities, so that the heirs avoid problems with missing or incomplete reporting in the tax return.
Contact us for assistance
Do you have questions about cryptocurrency, tax on crypto, or estate planning? Cryptocurrency is still a relatively new area, where ordinary routines for assistance in matters of inheritance law do not necessarily apply. Our lawyers offer advice tailored to your needs, based on specialized expertise in this field.
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