Crypto assets and estate planning


Crypto assets have, in recent times, earned greater respect as an alternative asset class. We are yet to see the mass adoption of crypto assets as “currency”, but there is a growing segment of the South African population that view crypto assets as a legitimate way to diversify, grow, or preserve their wealth.

Bitcoin and other crypto assets are, in the circumstances, becoming a prevalent feature in estate planning. The decentralized nature of these digital assets creates unique problems in this realm. These issues require a watchful approach from lawyers advising their clients on how to cater for crypto assets in their last will and testament.


There are different ways in which a person can hold and store crypto assets. The specific mode of storage has important consequences for the estate planner. A basic understanding of some of the technical aspects relating to the storage of crypto assets is essential.

Crypto assets are stored in a so called “wallet”. This is not an actual wallet, but a software program. The wallet has both a public and private key. The public key is akin to your bank account number. This can be shared with others. The private key is more akin to the PIN code used to access your bank account. Accordingly, someone that has access to your private key has access to your account/wallet and can transfer money/crypto assets to any other wallet.

For purposes of estate planning, it is important to distinguish between two types of storage, namely custodial and non-custodial storage.

Custodial Storage

·      Crypto assets are commonly bought and stored on a trading platform or exchange. In the case of custodial storage, the exchange is equivalent to a bank and it holds the assets on your behalf. Your crypto assets are stored in an integrated digital wallet, that is facilitated by the exchange. To execute a transaction, you simply send them instructions.

The exchange, however, also controls the private key to your wallet. This simplifies the process of owning crypto assets, but it means the owner effectively relinquishes control over his or her assets. It is therefore essential that one is able to trust the third-party exchange that has access to and protects the private key to your wallet.

Custodial wallets require less responsibility from the user, but purists tend to criticize this mode of storage, citing the oft quoted Bitcoin mantra, “not your keys, not your coins”.

Non-Custodial Storage

·      In the case of non-custodial storage, the owner has sole control of the private key to his or her wallet and crypto assets. These wallets can be either software or hardware based. This mode is more aligned with one of the fundamental ideas behind crypto assets in that the middleman (e.g. a bank) is completely removed from the picture. However, with greater control, comes greater responsibility. The owner of a non-custodial wallet must keep their own key and wallet secure. In this situation, a lost key may result in access to the crypto assets being lost forever (although some non-custodial wallets do have certain back up procedures).


Recoverability and transfer of ownership are the main issues. Will the executor of your estate be able to access the digital assets you leave behind? This is where the mode of storage is of particular relevance. Traditional institutions such as banks are geared to assist in the administration of deceased estates. With letters of executorship in hand, authorised individuals can easily gain possession and/or control of a deceased’s assets from banks without having to know the deceased’s pin or even account number.

The recovery of crypto assets stored in a custodial wallet would function in a similar manner, particularly in cases where the exchange implements thorough customer identity verification. To avoid potential issues, the will should include a clear description of the exchange holding the testator’s crypto assets. The duly authorised executor will be assisted by the third-party exchange in accessing the deceased’s crypto assets. The executor can, without much effort, then give effect to the testator’s wishes.

Accessing a deceased’s crypto assets is more challenging when stored in a non-custodial manner. The deceased’s will may stipulate that, “I bequeath all my bitcoin to S. Nakamoto”, but if the executor cannot access the deceased’s private key to transfer and/or sell this bitcoin then S. Nakamoto will be left empty handed and the bitcoin essentially lost forever. There is no custodian that can be compelled to assist in the recovery of these assets. A deceased that takes their private key to the grave permanently shuts off access to his or her crypto assets and they will never be recoverable.

Estate planners should therefore ensure that mechanisms are in place that allow for safe access to the deceased’s crypto assets after death. The will should (perhaps in an addendum to the main body of the will) provide guidelines on how the executor can access the private key to the deceased’s wallet. It is clearly undesirable for a testator to openly detail his or her private key in the will itself. The private key could, by way of example, be stored in a safety deposit box identified in the will. Access mechanisms can, of course, vary and estate planners should ensure that appropriate mechanisms are in place to suit the needs of their client.


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