Preserve Your Crypto Legacy: Securing your digital fortune for future generations

Cape Town - Although cryptocurrencies are on an upward trajectory in South Africa, a cryptocurrency wallet is worthless without its key or password. That was the reality for a 24-year-old Bitcoin-holder in 2021, who, after mining 20 Bitcoin for more than ten years when the cryptocurrency was still only worth a few cents, lost his wallet key and access to around R14.18 million in Bitcoin. Not only did he lose millions, but he also lost a considerable legacy that he could have left for his loved ones.

This may be an extreme example, but it proves the value of timeous conversations with your financial planner and ensuring you include all your online assets, from social media accounts to photos in the cloud and your digital crypto wallet keys and passwords, in your will. That way, you can ensure your loved ones are provided for.

Brandon Sylvester, Client Relationship Manager at Sanlam Trust, says, “In the digital age, the importance of a last will and testament extends beyond tangible assets. Today, a will must also encompass digital assets, from sentimental cloud-stored photos to digital investments like cryptocurrency. A financial adviser should provide guidance on the process of leaving cryptocurrencies and other digital assets in their will. A will becomes a public document once it is lodged with the Master. Therefore, it cannot include the private keys and passwords in the will itself. It may however provide for the location or contact person that has access to the up-to-date keys and passwords.”

Sylvester further states that, “Terms of service agreements with the online service provides may restrict the transfer of digital assets. Therefore, applicable laws relating to privacy, cybercrime, and data protection must also be considered. In South Africa, these laws include the POPI Act, FIC Act, and ECTA.”

Your crypto legacy

Cryptocurrency is a rapidly growing asset class. With the increased uptake of Bitcoin, Ethereum, and others, South Africans are building significant digital wealth.

For example, a recent TripleA survey reveals that 46% of South Africa’s 5.8 million cryptocurrency owners each hold more than R10 000 in crypto assets, while 12% own more than R100 000.

Cryptocurrencies are not automatically passed on to beneficiaries after death. So, when left unaccounted for in a will, they may disappear into the digital ether, causing unnecessary loss and complications during already challenging times for loved ones.

How to leave cryptocurrency in your will

You must explicitly include all your digital assets with detailed instructions:

• Cryptocurrency specifications: Mention each type of cryptocurrency you own as regulations governing cryptocurrencies can vary.
• Access details: Provide detailed instructions to access these digital assets but, do not include the private key, username and passwords to your digital wallets in the will. This should be stored elsewhere, where a trusted person may provide the executor with access to it. Ensure that you update the access details if it changes. Without this, the assets are impossible to retrieve.
• Nominate an executor: The executor of your will should be trustworthy and tech-savvy enough to handle cryptocurrencies.
• Seek legal guidance: Considering the legal intricacies surrounding cryptocurrencies, you should seek advice from a reputable institution where you can speak to a financial adviser knowledgeable about digital assets.

Additional digital assets

Sylvester suggests speaking to a financial adviser about all the digital assets in your portfolio, not just your crypto assets. These can range from your online photographs to social media accounts. "Influencer accounts with large followings hold considerable value. People should treat them as such by stipulating how they want beneficiaries to handle these channels upon their death, leaving instructions and passwords with trusted family members or friends.”

By including these assets in your will and specifying how beneficiaries must manage them, you can ensure your online legacy lives on the way you want it to.