Leaving cryptocurrency to your loved ones
Posted on 11th September 2023
Cryptocurrency is digital money. It’s protected by technology called blockchain which safely stores information about your transactions.
Many people are interested in cryptocurrency because banks and governments don’t control it.
You can use cryptocurrency to buy some things online but it’s also a new way to invest and save for the future. Some think the value of cryptocurrencies will go up as more people use them.
However, it isn’t yet clear how to leave cryptocurrency to your loved ones along with bank accounts, property, and belongings.
Leaving cryptocurrency in a Will
If you are thinking of investing in cryptocurrency you should plan to include it in your Will. You must make sure your beneficiaries know how to find and access you crypto assets when you die. If you don’t, your investments and savings could be lost forever.
You must do this because cryptocurrency only exists digitally. To keep it safe, it can’t be accessed without a confidential key. Normally you store your key in a digital wallet that only you can access.
If you leave your house to someone in your Will they must complete some paperwork to obtain the key. For cryptocurrency you need a way to allow your beneficiaries to find and access your private key without affecting security. Without this, no one can access your crypto assets.
In America many states allow legal access to online devices and accounts if someone dies or loses mental capacity. So far there isn’t any legislation in the UK to cover this situation. In fact, the Computer Misuse Act makes accessing someone’s digital devices without permission an offence. The Digital Devices Bill could give executors access to digital devices when someone dies but this isn’t yet law.
Including your digital assets in your Will can give legal rights and required information to transfer ownership to your beneficiaries.
To make everything as clear as possible you should describe which cryptocurrencies you own and how much you have. You’ll also have to provide information about how to access to your private key. You might choose to write a letter of wishes to keep with your Will to provide more information.
Keeping your private key safe
The security of your crypto assets depends on your private key, so you shouldn’t share the information directly. Anyone who has the key can take the assets.
You can provide a cryptocurrency access guide as an alternative. This can include information about how to find your online digital wallet accounts and usernames. You’ll also need to include instructions on how to obtain the private key.
You could write down the details and store them in a safe-deposit box, for example. You can also create a multi-signature wallet to allow others to access an account when you die.
Ideally, write your access guide assuming your beneficiaries don’t know anything about cryptocurrency or your accounts.
You should also be aware that cryptocurrencies are liable for inheritance tax and capital gains tax if they are sold for a profit.
Please get in touch if you would like to discuss including cryptocurrency and other digital assets in your Will.
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