While not susceptible to online attacks, cold wallets do run the risk of being lost or destroyed.
On the other hand, a cold wallet is entirely offline and private keys are written down or printed, or stored on a piece of hardware like a USB drive. One way users can protect their private keys is to get a crypto "wallet," which can be "hot" or "cold."Ī hot wallet is connected to the internet, meaning private keys are stored on an app and kept online, making them more convenient to use but also vulnerable to hacking and online attacks. In Ontario, for example, it is zero for the first $50,000 of an estate and 1.5 per cent after that. Probate, or inheritance, tax rates vary across Canada. Known as the "multiple wills" strategy, Atin says this is often used for assets like shares in a private company. Since cryptocurrency doesn't require a government-validated will - all you need is the account holder's key - a separate will can be drawn up just for that asset, which doesn't require a probate tax payment. If a beneficiary tries to take money out of a bank after the account holder dies, for example, a government-validated will is needed in order to transfer those assets and then a probate tax is charged. The Canadian-based website Bitbuy also has a similar policy.Īnother option, for tax purposes, is for a cryptocurrency holder to create a second will dictating whom they would like to transfer their crypto assets to in the event of their death. Some cryptocurrency platforms allow people who inherit or become the owner of a deceased family member's account to access it.Ĭoinbase, for example, will ask those requesting access to their loved one's account for a death certificate, last will and testament, and a valid government-issued photo ID of the requestor. "We're early on in this and despite a lot of thinking on the topic by lawyers and privacy people and all of that stuff, we don't still have a solution," he said.
The decentralized nature of cryptocurrencies makes tracing their ownership or conducting an audit virtually impossible without the private key.Įntrusting someone with a password is one way, and perhaps one of the only ways, to ensure these assets are not lost forever, although even this raises security concerns, Atin says.
Individuals use their private key, like a password, to access their cryptocurrency such as Bitcoin or Ethereum. 'Bitcoin widow' sounds off on accusations, the missing millions and her new book."The money is gone if they can't get at it."
"People don't think about it when they open it, but cryptocurrency is a huge issue," Jordan Atin, senior associate counsel at Hull & Hull LLP in Toronto and an adjunct professor at Osgoode Hall Law School at York University, told CTV News.ca in a phone interview on Monday. Many big tech companies, such as Facebook, Twitter and Apple, have ways of allowing loved ones to remove or memorialize a person's account once they've died.īut when it comes to financial assets in the digital space, like cryptocurrency, ensuring someone can access it after the owner is dead is crucial before it's too late, one estate and trust law expert says.
More Canadians are likely faced with the task of deciding what to do with their digital estate once they're gone, whether that means protecting their cryptocurrency or leaving their social media accounts in someone else's hands.