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  • Writer's pictureAnthony Garcia

Owning Crypto at Death Can Actually Help Avoid Costly Probate Litigation

The intrinsic transparency that many cryptocurrencies offer can help keep personal representatives honest in the administration of an estate.

One of the many exciting and fascinating aspects of blockchain technology and cryptocurrencies is how the technology leverages transparency to ensure the immutability of the data recorded on the blockchain. For most cryptocurrencies, all transactions that occur on their respective networks are public for all to see. One can perform a public search of a blockchain and discover the exact amount of any asset held by any account on that blockchain as well as important historical transaction details, such as the date and time of transactions, the recipient address, the amount transferred, and any network fees. Hence, if you know a particular account's public address on the blockchain, you can monitor that account in real time.

Once a person dies, a personal representative can be appointed in probate to administer and distribute the assets of the deceased pursuant to a valid will or by statute. One area of dispute that sometimes arises is the conduct of the personal representative in administration of the decedent's estate and accusations that the personal representative misappropriated the assets of the estate. Perhaps the decedent chose an unscrupulous personal representative with sticky fingers to administer his or her will, or perhaps that person engages in criminal fraud or forgery. Such circumstances are uncommon to be sure, but it does happen. In any event, untangling and verifying the actions of the personal representative can require lengthy and costly investigation by the heirs or devisees if a personal representative is not forthcoming. This typically involves a full-fledged litigation in the probate court, which could end up taking months or years to resolve and cost the estate thousands of dollars!

Cue crypto. If all interested parties in the administration of an estate are made aware of the public addresses of the decedent's cryptocurrencies--say, through identification of those addresses in a will or other document--those parties can keep a watchful eye on the exact balances of those accounts and where monies are being disbursed. And because it is on the blockchain, there is virtually zero chance of the personal representative conveniently missing a digit on an account balance. It's as if everyone involved has full-view access to a bank account's history in real time without having to wait for someone else to provide a bank statement that may or may not contain inaccuracies. There is an old saying that sunlight is the best disinfectant for bad intentions, and it is no different here.

Thus, digital assets can help avoid protracted probate litigation by dissuading any funny business by the personal representative, at least as to the transparent cryptocurrencies. And in the event a personal representative does stupidly decide to steal the decedent's crypto, the public nature of the blockchains makes getting away with that misdeed even more difficult. One will almost always be able to track the account to which stolen crypto was transferred. Currently, most vendors do not accept tender of cryptocurrency as payment, so a crypto thief will need to convert the crypto into fiat currencies such as USD in order to gain any benefit from the theft. As regulation of cryptocurrencies increases worldwide, the number of places where one can "exit" the crypto market without KYC verification dwindles, making it extremely difficult for thieves to enjoy the fruits of their labor. This knowledge alone may also deter would-be criminals!

As adoption of cryptocurrencies increase, a decedent's digital assets have the potential to involve very large sums of money, and the temptation to steal by persons in positions of trust can be very real. But it is the transparency and immutability that crypto and blockchain provide that help keep people honest and ensure a decedent's desires are duly and faithfully executed.

Contact me today at if you would like to discuss the creation of a Digital Asset Estate Plan for the protection and disposition of your digital assets!

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