Direct Cremate

What Happens to Digital Currency After Someone Dies

Do you or a loved one own cryptocurrency? Learn what happens to digital currency once a person passes away and how to make sure it isn’t lost.
Close up of Bitcoin and Cryptocurrency stock market exchange candlestick chart. Red bearish divergence indicator

The death of a loved one involves a lot of financial management. There can be investment accounts and bank accounts along with tangible assets and real estate. In the last few years, another financial consideration has come about. Now the next of kin or executor might have to figure out what to do about digital currency after a loved one passes away.

Digital currency, also known as cryptocurrency, is a type of currency that’s all-electronic. It’s used and accessed online or offline through a digital wallet, which requires a whole other process of securing. And more people are faced with that task now that over 106 million people own cryptocurrency. If you or someone you know are one of those people, this quick guide helps shed light on what happens to digital currency once the owner dies. 

Check the Will 💸 for Directives on Digital Currency 

Like other assets, the first step that should be taken is to consult the will of there is one. Digital currency can be inherited, but claiming the asset isn’t as straightforward as traditional currency. Up to 20% of digital currency is essentially lost simply because benefactors aren’t able to access it.

The will needs to contain certain directives about any existing digital currency if it’s going to be inherited. Without specific information, cryptocurrency will sit in a digital wallet gaining value with no way of being used after the owner’s death. 

What Type of Digital Currency Exists

First and foremost, the will should state that cryptocurrency exists and what type of cryptocurrency it is so the executor knows to track it down. Bitcoin is the most popular type of digital currency, but it is far from the only cryptocurrency. 

Where Cryptocurrency is Stored 🪙

It’s critical that the benefactor or executor know where the digital currency is located. Digital currency isn’t regulated like a conventional bank account. That means the owner of the digital currency is tasked with storing it somewhere on their own. This can make it difficult to locate cryptocurrency, even if you know it exists.

The will should clearly state how to locate digital wallets or online exchanges where cryptocurrency is stored. A digital wallet can be located on a computer or certain device, which should be included with the will. 

Who Should Inherit the Digital Currency

Like all other assets, the will needs to specify who should inherit the digital currency. However, it may still be up to the executor to gain assess to the digital funds. 

🔑 Private Key, PIN and Password Information for Cryptocurrency

Hopefully your loved one provides a few other important pieces of information. Unlike other monetary assets, a private key is required to access the deceased’s cryptocurrency wallet. The private key is a type of password that’s a 256-bit long string of numbers and letters. There’s also something called the seed phrase. This is a worded representation of the private key that’s 12-24 words. Digital wallets may also require a PIN code to gain access. 

For security reasons, all of this information should not be contained in the will. A last will and testament becomes public record during the probate process. That means including password, private key and PIN information could compromise the security of the cryptocurrency. 

This sensitive information should be included in a memorandum for the will. Not only is a memorandum not part of the public record, it can also be updated more easily than a will if the passwords or digital wallet changes. 

The biggest problem is that 39% of cryptocurrency owners haven’t created a way for benefactors to access their digital wallets. But that doesn’t mean 61% of cryptocurrency owners have included the asset in their will. Just 22% of owners that have a will have included information about their digital currency. Even if they want their next of kin to gain control of the cryptocurrency, without detailed directives that’s impossible. If you own even a single Bitcoin your will needs to be updated or you should look into using a crypto inheritance platform so that the asset isn’t lost.

Direct Cremate makes planning a cremation simple so that the family can put their attention to more pressing matters like securing funds from all financial accounts. We’re available 24 hours a day by text or email to help assist with the process.