Posted on 04 Dec 2019
Millions of dollars’ worth of cryptocurrency could be lost forever as poor documentation of Bitcoin passwords means the assets cannot be inherited when an owner dies.
Slater and Gordon estate litigation lawyer Paul Kheissy said cryptocurrency was creating a new problem for people challenging wills, as it artificially inflated the value of an estate.
Bitcoin, which is a form of cryptocurrency is a virtual currency which works as a form of exchange similar to standard currency. It is acknowledged as an asset of the estate.
“To some extent cryptocurrency does artificially inflate the value of an estate. In practice, the person who is challenging the estate would need to accept that the Bitcoin may no longer be available for the purposes of negotiating if it cannot be accessed,” Mr Kheissy said.
However, unlike traditional estate such as shares, money and real estate, you can’t simply add Bitcoin to your will. It requires password/personal key access which, if not passed on, can greatly complicate the process of challenging wills.
“If the executor or administrator is unable to access your cryptocurrency, then you may be forever prevented from administering that asset,” Mr Kheissy said.
Bitcoins are stored in wallets which give the individual a place to store their cryptocurrency, the most common being, a paper wallet, an online wallet or a hardware wallet.
Mr Kheissy said each of these wallets have no third-party involvement, meaning if you forget or lose the details of your cryptocurrency passwords or pin codes, it may be lost for good.
“If the executor is not informed about the whereabouts of your hardware wallet and does not know the pin code to your wallet your cryptocurrency may be lost forever.”
Mr Kheissy cautions that the “executor or administrator may want to liquidate the cryptocurrency and convert the assets into Australian dollars before commencing negotiations” to avoid losing any cryptocurrency due to loss or failure to remember a password or pin code.
“However, without the proper passwords and personal keys it is unlikely the individual challenging the estate would be able to access the cryptocurrency funds,” he said.
Media Contact Therese Allaoui (03) 9602 6844 / 0428 994 937