This note follows on from the practical note for the Belgian notary, which sets out how cryptoassets are held, how their presence is detected and how they are valued. It deals with the situation that arises afterwards: an object has been found, it is on the desk, and something must be done with it this week.
It concerns the technical aspects only. The deadline, the entries in the declaration and the position of the heirs fall within your own assessment.
1. The period is short, and most of it is waiting
The ordinary period for filing the declaration runs to four months for a death in Belgium, subject to the cases and extensions you will determine yourself. What matters for the technical work is how that period is consumed.
Almost none of it is spent on the technical examination, which is usually a matter of hours. It is spent waiting for third parties: a platform replying to a written request, a family member locating a note in another house, a co-signatory being identified and contacted. Those waits run in sequence rather than in parallel if they are begun late.
The practical consequence is that the identification work is worth starting in the first days, even where the file is not otherwise urgent, because it determines what has to be requested from whom.
2. What the object is, before anything else is decided
Four things are commonly found, and they are not equivalent. Establishing which one is present determines everything that follows.
A device, the size of a USB stick or a small card reader, generally branded Ledger, Trezor, BitBox or Coldcard. It is worth stating plainly, because the misunderstanding is common: the device holds no cryptoassets. It holds a key, and the key is itself derived from the recovery phrase. A device without its phrase is of limited use. A phrase without the device retains full access.
A list of words, twelve or twenty-four, handwritten, printed or stamped into metal. This is the asset. It requires the same precautions as bearer securities, and it should not be transcribed into the file.
A single long string of characters, or a QR code, on paper. This may be a private key, or an encrypted backup, or an exported file from wallet software. The three are handled differently and are not distinguishable at sight.
A string beginning with a short prefix such as bc1, 1 or 3, sometimes printed on a card. This is an address, not a key. It confers no access whatever. Its value lies elsewhere: it permits the holdings to be read, which is the subject of section 5.
3. Two failures that make a funded wallet appear empty
These two circumstances are the ones that defeat families who have otherwise done everything correctly. Both produce the same appearance, namely a recovery phrase that is accepted and opens a wallet containing nothing.
An additional passphrase. Some holders add a word or a sentence of their own on top of the twenty-four words, an option offered by most devices and sometimes described as a twenty-fifth word. The phrase alone then opens a genuine but empty wallet. The funded one is reached only with the passphrase, which is not written with the words and is frequently held only in the memory of the deceased.
A non-standard derivation path. The same recovery phrase, opened with different wallet software, may produce a different series of addresses. Older wallets and certain less common software use their own arrangement. The phrase is correct, the wallet opens, and the holdings are not shown.
The conclusion to draw in both cases is the same, and it is worth recording in the file: an empty wallet is not evidence of an empty estate. Before that conclusion is reached, the software originally used should be identified, and the existence of an additional passphrase established.
4. What to ask the family, and what not to ask them to do
Useful to establish, and generally known to someone:
- whether an additional word or sentence was mentioned, in any terms;
- which application or device was used, by name if possible;
- whether a written note exists in another location, in particular a bank safe deposit box;
- whether another person holds part of the access, which occurs in shared arrangements;
- which electronic mail address received correspondence from platforms.
Not to be requested of them, and worth saying so expressly, because these steps are taken in good faith and the losses are irreversible:
- entering the recovery phrase into any website or application offering to verify or recover it;
- resetting a device, or having a third party reset it;
- transferring the holdings to another location in order to secure them;
- photographing the words, or placing them in electronic mail or a password manager.
5. What can be established without any access
This is the point least often known, and it changes the sequence of work.
Where an address is available, the balance and the entire transaction history attaching to it can be read from the public register, by anyone, without any key and without touching the device. Where an extended public key is available, which certain wallets export for consultation purposes, the whole of the wallet can be read in the same manner.
Two consequences follow. Valuation evidence at the date of death can be assembled before the question of access is resolved at all. And the existence of holdings can be established, or excluded, without the risk that accompanies any handling of the words.
6. The order that works
- Place the items in safekeeping, in the condition in which they were found.
- Establish which of the four objects in section 2 is present.
- Read the holdings from the public register, where an address or extended public key is available.
- Write to the platforms, since their reply is the longest wait.
- Put the questions in section 4 to the family.
- Address the question of access last, once what is at stake is known.
Point 6 is deliberate. The handling of the recovery phrase carries the whole of the risk in the file, and it is better undertaken with the value known and with the passphrase question already settled.
Nakamoto.be assists with the technical aspects of estates containing cryptoassets, in support of the notary handling the file. We hold no keys, no funds and no assets, and we provide no legal or tax advice.
Questions of the kind set out above can be put by electronic mail to [email protected], indicating the reference of the file and what has been found. Where a device or a list of words has been discovered and the position is unclear, it is better to ask before anything is handled than afterwards.
