Importance of a DIGITAL ASSET MEMORANDUM
Will - Updating Will - Invalid or No Will - Power of Attorney - Personal Directive
To schedule an appointment, contact our law firm at 403-400-4092 or Chris@NeufeldLegal.com
For owners of cryptocurrency (i.e., Bitcoin, Ethereum, Tether, XRP), a Digital Asset Memorandum is an essential, often non-testamentary document designed to supplement your primary estate planning by cataloging and instructing on your online life and digital assets. Unlike a traditional will, which becomes a public record on your death and is often cumbersome to update, a memorandum acts as a constantly updated directive and directory for your executors and beneficiaries. It bridges the gap between the physical world and your digital existence, ensuring that intangible property (including social media profile access, sentimental photo libraries and high-value commercial domains) is not permanently orphoned upon your passing. By clearly outlining what you own and how to find it, you provide a roadmap that prevents the logistical paralysis that often strikes families during probate.
The necessity of a Digital Asset Memorandum is most acutely felt in the realm of cryptocurrency, where the not your keys, not your coins mantra remains a harsh reality. Because digital currencies like Bitcoin or Ethereum are decentralized and rely on private cryptographic keys rather than a central bank, they are functionally invisible to traditional legal discovery. Without a memorandum that specifies the location of hardware wallets, seed phrases, or exchange login credentials, these assets are essentially deleted from the economy the moment the owner is no longer there to access them. A memorandum ensures that your digital wealth is actually transferable, moving it from a state of cryptographic lock-down into the hands of your intended heirs.
Beyond simple access, a memorandum helps navigate the complex security protocols inherent in blockchain technology. Cryptocurrency often involves multi-factor authentication, cold storage, and complex recovery phrases that can be baffling to a non-technical executor. A detailed memorandum can provide the how-to instructions for these specific technologies, guiding someone without the technical know-how through the process of safely transferring tokens without accidentally burning them or losing them to phishing scams. It creates a far safer environment for your digital legacy, ensuring that the inherent volatility and technical hurdles of cryptocurrency do not result in a total loss of the estate's value.
Knowledgeable legal counsel in these matters serves to transform a simple list into a robust legal strategy. While you might know your passwords, a lawyer understands the shifting landscape of digital privacy laws and terms of service agreements that often prohibit unauthorized account access. They can draft specific Digital Asset Clauses for your will that grant your executor the legal authority to bypass these barriers without violating anti-hacking laws. Where appropriate, your digital assets memorandum can be properly referenced in your legal documents, giving it the necessary weight to be recognized by financial institutions and courts.
Your lawyer also provides you with a critical layer of security and strategic advice, ensuring your memorandum aligns with the specific provincial laws governing digital property. In Alberta, the Estate Administration Act (Alberta) and the Powers of Attorney Act (Alberta) dictate how your representatives interact with your assets, and a lawyer can ensure your digital asset memorandum empowers them to act without overstepping legal bounds. Your legal counsel should look to structure your legal documents to provide enough information for a personal representative to begin recovery without exposing private keys in a way that risks immediate theft. Moreover, by acting as a professional intermediary, a knowledgeable lawyer can also advise on the unique tax implications of transferring crypto within Canada, such as the Canada Revenue Agency’s treatment of digital assets as a deemed disposition at death, in addition to such other consequential legal and tax aspects, which are subject to considerable legislative and regulatory transformation, both within Canada and abroad.
If you are looking at legal avenues to protect the transference of your digital assets, in conjunction with the development of your will and other estate planning documents, we welcome you to contact our law firm today at 403-400-4092 or via email at Chris@NeufeldLegal.com to schedule an initial consultation.
IMPORTANT NOTE: This website is designed for general informational purposes. The site is not designed to answer specific questions about your individual situation or entitlement. Do not rely upon the information provided on this website as legal advice in respect of your individual situation nor use it as substitute for individual legal advice. If you want specific legal advice, you need to engage a lawyer under established legal engagement procedures that have been specifically agreed to by that lawyer.
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