Crypto Inheritances Are Increasing and Raising Questions for Heirs

Often, there is only the suspicion of the heirs that the deceased owned cryptocurrencies - this must then be investigated. If the suspicion proves to be correct, the asset must be valued and a way found to access the values. It can be particularly difficult if cryptocurrencies are invested abroad.

"For about three years now, so-called crypto inheritance proceedings have been increasing," says Bernhard Haslhofer, head of the research group "Digital Currency Ecosystems" at the Complexity Science Hub (CSH), in an interview with APA. 4 to 10 percent of Austrians now own cryptocurrencies. "We know for sure about 300,000 people," says Haslhofer. However, the real number is certainly significantly higher. Exact data is difficult to find - among other reasons, because the tax compliance with cryptocurrencies is very low and the tax revenue is negligible.

If cryptocurrencies are suspected in an estate, Haslhofer, who also works as an expert, is often called in by notaries. He then works with them to search for the assets. On the one hand, hardware must be looked for - for example, hard drives on which a wallet could be stored - but also for sequences of words that could represent a private key, i.e., a password. Data carriers or emails can also be searched for keywords like "Bitpanda," which could indicate an existing account.

If there are indications that there are indeed cryptocurrencies in the estate, they must be secured and transferred to the heirs. Additionally, a financial value for the crypto assets must be determined.

Problems Especially with Cryptocurrencies Abroad

Problems could especially arise if assets are not invested in Austria, but abroad. "As nice as it sounds to be able to distribute everything around the world, it's not necessarily ideal for the heirs," says Haslhofer. The notaries in Austria could indeed make inquiries to a foreign crypto platform, but whether they receive a response is not certain. "If someone has distributed their cryptocurrency holdings around the globe, then the inquiry depends on the response ethics of the respective jurisdiction." Not in every country - this mainly concerns countries outside of Europe - are cryptocurrency exchanges obliged to respond to an Austrian court. Therefore, it is easier to stay within the domestic or at least European legal framework with crypto assets.

It also becomes problematic if hardware on which crypto assets are stored, or documents with passwords, are thrown away by the heirs. This could result in crypto assets being irretrievably lost. That would be "good for the cryptocurrency exchanges, but bad for the heirs," says Haslhofer.

Overall, the search for crypto assets is currently still a "forensic challenge," as there is not yet a standardized approach for the search - in collaboration with notaries, Haslhofer is trying to develop one. The project is already on a good path. "A standardized process is slowly being established." In a European comparison, Austria is relatively far ahead in this regard.

Proper Precaution Important

To prevent such problems, Haslhofer advises storing and managing crypto assets in a way that allows heirs to utilize them. There are two options: One can entrust a third party with the safekeeping of the assets. Every cryptocurrency exchange offers the possibility of an account through which crypto assets can be held. If one does this, it should be with an exchange within the EU. "Then the authorities also have the legal instruments to open the account of a deceased person in the course of an inheritance procedure." If one does not want to trust a third party, the storage medium should be kept in a safe.

(APA/Red)

This article has been automatically translated, read the original article here.