Who will (or will they) receive access to the cryptocurrency that you accumulate during your lifetime? Is it necessary to prepare for leaving the digital world? DeCenter tried to understand the problem of inheritance.
A few years ago, a young American, Matthew Moody, died in a plane crash. His father, Michael Moody, knew that his son was mining Bitcoins, but the private keys for accessing funds were known only to the miner himself. Before the father stood the ominous question of restoring access to the Bitcoins, and whether it was possible to formalize the right to inheritance if no will had been drawn up during life.
The decentralized and unregulated character of Bitcoin means that access to cryptocurrency wallets is impossible without private keys. In addition, one cannot know for sure what is stored "under lock and key." It may be a huge state or a small investment, since crypto wallets can contain an unlimited number of unique addresses, and without knowing the exact address, one cannot find the funds.
In the case of Mike Moody and the "legacy" of his son, there is still no final solution, since U.S. law does not regulate certain items related to the inheritance of cryptocurrency in the event that a will had not been drawn up and the private keys were kept only by the owner. Officially, one cannot hack the system, so all the Bitcoins and altcoins will be gone.
"There is no authority that would help restore crypto wallet data. The coins will be left in the system," said Nolan Bauerle, director of research and analysis at CoinDesk, in a commentary for Bloomberg Technology.
The Problem of Inheritance and the Infocommunication Code
Despite the rapidly growing market, the ICO practice remains legally unregulated, and no one knows if a token acquired during the ICO will be treated in a manner similar to IPO investments.
According to Vitaly Vetrov, managing partner of the law firm Vetrov and Partners, the forthcoming Infocommunication Code of the Russian Federation should help regulate the system and will contain, among other things, a manual on the ownership of electronic money.
"Given the ambiguity and legal uncertainty of assets as property, cryptocurrency will be part of the estate. It is advisable to resolve the issue of the status of a cryptocurrency and the nuances of making certain transactions. At the moment, the bill on digital money and rights is being discussed. It will allow one to make various transactions with the property under discussion, as it does not contain prohibitions and restrictions on the transfer of cryptocurrency by inheritance," Vetrov commented.
Anton Pushkov, managing director of the Skolkovo Legal Support Center, agrees with the opinion that the forthcoming Infocommunication Code will help resolve the issues on the network economy.
"The token is not unique on the legal landscape. Previously, there were immaterial securities, they were uncertificated, but they gave the right to demand from the issuer the right to receive a share of the profits. It was possible to issue a will for them," Pushkov said at #DECENTER CRYPTOEVENT 2018 a week ago.
Tokens, however, are not securities, and the state, first of all, needs to specify the form of ownership of electronic coins, stresses Roman Yankovskiy, who is a partner at Zarcin, Yankovskiy, and Partners; a venture lawyer; and a lecturer at the Moscow State University.
"It is necessary to determine the status of cryptocurrency, to establish what they refer to—property or property rights—to establish rules for their purchase or sale for cash," Yankovskiy is sure.
Advice to Cryptocurrencies Owners and Their Heirs
The owner of the cryptocurrency must make sure to make a will.
Michael Moody, the father of the deceased holder of the Bitcoins, first of all, advises young businesspeople unfamiliar with the new digital currencies to be better informed about the steps that need to be taken to ensure access to their investments to themselves and future heirs. That is, it is necessary to prepare and agree in advance all documents on the transfer of property in emergency and irreversible situations in order to simplify the process of re-issuance of assets to another owner.
Cryptocurrency must be part of the hereditary estate.
In the event that someone else (an outsider who is not entitled to inheritance) received the key and relatives are trying to sue them, the court, in deciding whether to issue a decision, will base its decision on whether the cryptocurrency is part of the hereditary estate. "The inheritance includes property rights, except those that are directly related to the deceased (Article 1112 of the Civil Code of the Russian Federation). In the absence of the law, however, the court can, by analogy, apply the same argument as in the case of including Bitcoins in the bankruptcy estate, when the judge rejected the application because of the lack of rules on crypto assets and did not agree that the cryptocurrency is related to property rights," Roman Yankovskiy states.
The heir after the death of the owner proves their rights.
In view of the fact that cryptocurrencies will be part of the estate, the heirs can, by law or will, qualify for electronic coins. "Accordingly, the heirs, through the notary and (or) through the court, must prove the need to include cryptocurrencies into the estate and transfer of rights to it from the original owner (testator) to the heirs," says Vitaly Vetrov.