Inheritance of Cryptocurrencies

The inheritance of cryptocurrencies is a complex legal matter shaped by the unique characteristics of digital assets. Central to this issue is the so-called private key, which provides de facto control over the cryptocurrency. If this key is physically secured (e.g., on paper or a USB stick), it can be treated and transferred like traditional inheritance. However, if the private key is stored on an external server, heirs need to take legal action to request the release of data from the provider.

Clear documentation during the lifetime of the testator, detailing ownership and access to cryptocurrencies, is therefore essential. Heirs must not only be informed about the digital assets but also be technically capable of managing them. At RUGE FEHSENFELD, we advise storing access data securely and offline to minimize risks such as loss or theft.

From a legal standpoint, the transferability of cryptocurrencies via inheritance remains a partially unresolved area. The decentralized storage of data on the blockchain, coupled with the impossibility of central access control (unlike social media platforms), requires a differentiated approach compared to traditional assets. Additionally, tax considerations arise, as cryptocurrencies in Germany are subject to inheritance tax, with their value at the time of the inheritance being relevant.

To ensure an effective inheritance arrangement, it is advisable not only to draft a will that explicitly includes instructions for the transfer of digital currencies but also to seek legal counsel. This ensures that the testator’s last will is clearly documented and legally enforceable, and it helps heirs understand their rights and obligations in dealing with the digital estate.