Wealth transfer is constantly adapting to new forms of wealth. Today, digital assets, whether crypto-currencies, non-fungible tokens (NFTs) or other blockchain-based instruments, make up a growing proportion of wealth. Their management and transmission free of charge, by gift or bequest, raise unprecedented legal and tax issues that require careful planning. Far from being a mere formality, passing on these intangible assets requires in-depth analysis and specific precautions to secure the transaction and control its consequences. This article is part of our feature on digital assets: legal challenges and practical solutions and is designed to inform owners about gift and inheritance strategies. Anticipating these issues is a fundamental aspect of wealth management, an area in which the assistance of a lawyer skilled in commercial law and business is often decisive.
Donations of digital assets: a highly vigilant act
Organising the donation of digital assets involves navigating between uncertain legal qualifications, technical challenges and a tax system that is still being developed. The absence of a perfectly stabilised legal framework means that donors need to be extra vigilant and seek expert advice to avoid the pitfalls and guarantee the effectiveness of their liberal approach.
Essential preliminary checks (legal nature, de facto power)
Before any operation, two fundamental analyses must be carried out. The first concerns the legal status of digital assets to be transferred. Is it intangible personal property, which is the most common case for cryptocurrencies such as Bitcoin or NFTs, or can it be treated as a currency? The answer will determine the legal and tax treatment of the donation. For example, the European MiCA regulation describes certain "electronic money tokens" (e-MTs) as substitutes for fiat money. A donation of such tokens could potentially be analysed as a gift of a sum of money, subject to a nominalistic inheritance tax regime (article 860-1 of the French Civil Code), which could be an advantage in the face of volatility. On the other hand, for the majority of digital assets considered as intangible property, the rules of ordinary gift law prevail.
The second verification, which is just as fundamental, concerns the impact of technology on the legal status of digital assetsand more specifically on the notion of "de facto power". A digital asset is only really owned by the person who has technical control over it, i.e. the private cryptographic keys or access codes to the storage platform. For a donation to be valid, the donor must currently and irrevocably dispose of the donated asset. This implies a complete and definitive transfer of de facto power to the donee. In practical terms, this can be achieved by transferring the assets to a wallet belonging to the donee, or by securely transmitting the keys and identifiers. It is strongly recommended that this operation is carried out in the presence of a notary, who can record it in the deed, for example by attaching time-stamped screenshots of the transfer as proof.
The taxation of gifts of digital assets and the question of valuation
From a tax point of view, unless there is a special rule, donations of digital assets are subject to transfer tax. Under article 666 of the General Tax Code (CGI), the basis of assessment for these duties is the market value of the asset on the day of the donation. This is where a major practical difficulty arises: valuing these assets. For the most common cryptocurrencies, it is possible to refer to the average price on the main exchange platforms on the day of the deed. For the rarer NFTs or tokens, however, which do not have a liquid market, the exercise is much more complex. In these cases, valuation has to be carried out on a case-by-case basis, which can create uncertainty. Another question concerns NFTs: should we value the token itself or the asset (physical or digital) that it represents? The second approach seems more coherent, but the debate is not settled.
The pre-sale donation strategy to optimise taxation
A tax optimisation strategy known as "donation before transfer" should be considered with the utmost caution. This involves a parent giving digital assets to a child, taking advantage of tax allowances (up to €100,000 per parent and per child every 15 years). The child, now the owner, can then sell the assets. The capital gain on the sale will then be calculated on the basis of the value of the assets on the date of the gift, and not on the date of the parent's initial acquisition. This mechanism may make it possible to purge a large part of the unrealised capital gain. However, the transaction must be based on a genuine liberal intention and not be motivated exclusively by tax considerations. If this is not the case, the tax authorities could reclassify it as an abuse of tax law under article L. 64 of the Livre des procédures fiscales, with potentially very heavy penalties. It should also be noted that the specific allowances for gifts of sums of money (provided for in articles 790 G and 790 A bis of the CGI) do not a priori apply to gifts of crypto-assets, as the latter are mainly qualified as intangible assets and not as currency.
The dangers of manual donation of digital assets
The technical ease with which digital assets can be transferred from one portfolio to another encourages the practice of manual donation, i.e. a gift without any formal act. Although the manual donation of intangible assets is accepted by case law, this practice should be avoided for digital assets. It presents considerable risks. From a tax point of view, if the gift is revealed late to the authorities, the gift tax will be calculated on the value of the asset on the day of the declaration, which may be much higher than its value on the day of the gift, in accordance with article 757 of the CGI. From a civil point of view, the absence of a deed makes it difficult to prove the date, value and intention of the gift, opening the door to future family disputes. Even if an additional agreement can be drawn up after the fact to formalise the gift, it does not have the stabilising properties of a notarised gift, particularly a shared gift.
The choice of a modified donation or a shared donation
A notarial deed is essential to secure the transfer. A simple gift, in the form of a notarial deed, can be modified to counter the effects of volatility. Specific clauses can be inserted, such as a fixed ratio clause that sets the value of the donated property for the purposes of calculating future inheritance, or a reinvestment clause that obliges the donee to convert the assets received into a less volatile asset. These mechanisms help to limit future imbalances between heirs.
However, the most protective solution is the shared gift. This deed makes it possible to give and divide one's assets between one's presumptive heirs during one's lifetime. Its major advantage, enshrined in article 1078 of the Civil Code, is that it freezes the value of the assets given on the date of the deed for the purposes of calculating the inheritance reserve and the available portion. This crystallisation of values avoids any revaluation on the day of death, thus preventing conflicts that could arise from fluctuations in the value of digital assets. It provides unrivalled legal certainty and family peace, provided that all the heirs with reserve rights receive a share and accept it.
Legacies of digital assets: anticipating succession
In addition to gifts, the presence of digital assets in a person's estate makes it necessary to anticipate their transfer by way of succession. The will then becomes the central tool for ensuring that one's wishes are respected and, above all, that they can be technically carried out.
The legal nature of digital assets and their impact on the legacy regime
As with gifts, the legal nature of the asset bequeathed determines its regime. If the asset is described as money, the legacy is considered to be a bequest of a sum of money, which is only executed up to the amount of the net estate assets, as provided for in article 785 of the Civil Code. In the majority of cases, the digital assets will be intangible property that is the subject of a specific bequest. The main difficulty will be not so much legal as practical: how can we guarantee that the heirs or legatees will actually be able to take possession of the assets? Private keys and access codes are not mere "accessories" to the legacy within the meaning of article 1018 of the Civil Code; they are the sine qua non of its execution. The will must therefore provide a secure mechanism for their transmission.
Choosing the most appropriate form of will (holographic, authentic, sealed, international)
The choice of testamentary form is strategic. Writing information as sensitive as private keys directly into a holographic (handwritten) or even authentic (notarised) will is extremely risky in terms of security and confidentiality. A transcription error could also make it impossible to access the assets.
The most prudent solution is not to mention the codes directly in the deed, but to indicate where they are kept securely (for example, in a physical safe or a digital safe offered by a trusted third party). For this reason, two forms of will appear to be particularly suitable. The sealed will, drawn up by the testator and then presented closed and sealed to a notary, guarantees absolute confidentiality. The notary draws up a suscription deed but is unaware of the contents of the document. The international will offers similar flexibility and security. These forms make it possible to reconcile the expression of the testator's wishes with the need to protect access to his digital assets.
Transferring digital assets free of charge is a complex exercise that lies at the crossroads of family property law, taxation and technology. An unprepared approach can lead to major disputes and financial losses. To ensure the security of your gifts or to prepare your estate with peace of mind, it is essential to be assisted by a lawyer. Our firm can help you analyse your situation and put in place the most appropriate solutions.
Sources
- Civil Code
- Monetary and Financial Code
- General Tax Code
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