What is included in a loved one’s estate? Often you have no idea unless listed as the personal representative in a will or appointed to wind down an estate by the probate court.
Some property is not difficult to identify (i.e. the home that a parent owned, vehicles, a motor home or a jewelry collection) during the estate administration process. Figuring out title and outstanding liabilities that exist are probably the main issues. For other types of assets – cryptocurrencies such as Bitcoin or Ethereum – accessing the contents of a digital wallet may be the problem.
A Colorado story
Last year, a young man passed away in Colorado without an estate plan. His family discovered he had been investing in Bitcoin when they reviewed his bank account transactions. There were a number of debits to Coinbase, one of the largest wallet and exchange services for digital currencies.
Back in 2013, blockchain Bitcoin cost as little as $13. This year the value of the currency has fluctuated widely reaching a high of $5,000 and current values holding closer to $4,200. A new currency has also come onto the scene Bitcoin Cash as blockchain Bitcoin split in two.
The security system built to access a digital wallet may come as a surprise. Each account has a “public key,” a string of random characters (for example 1CC3X2gu58d6wXUWMffpuzN9JAfTUWu4Kj). You use this to send or receive Bitcoin, but you need a “private key” to access the contents of a wallet. This private key is a similarly long string of randomly generated characters.
Understanding what might be a key
First off, this type of story illustrates why everyone should have an estate plan regardless of age. Write or store passwords for digital accounts in a secure location accessible to loved ones as well.
The amount in the Coinbase wallet was substantial, but the family could not find the private key that would allow them to access to the contents. This family was able to work with Coinbase to confirm the existence of the wallet and work to transfer the contents.
In some situations, a private key might have been a discarded memory drive or written down but without any explanation. Without other documentation the contents could be lost at the death of their owner.
When winding down the estate of a loved one, seek the counsel of an estate administration attorney. Working with a professional who handles these matters on a regular basis can be one way to avoid problems.