Leaving cryptocurrency in your Will
In our previous blog, we wrote about digital assets and their importance in estate planning. One such asset is cryptocurrency – a type of digital currency which is controlled independently from a central bank – which has taken the investment world by storm in recent years. You may have heard of some types of cryptocurrency already: Bitcoin, Ripple and Ethereum are just a few of the most popular forms. Some of the world’s richest people have made their fortunes by investing in cryptocurrency. For example, twin brothers and former Olympic rowers Cameron and Tyler Winklevoss began buying Bitcoin in 2012 and are now worth $3bn each.
Cryptocurrency and estate planning
According to an article in the New York Times, 20% of the world’s existing Bitcoin – worth around $140bn – is lost or inaccessible. While some of this is due to investors forgetting or losing their digital key, millions is also lost every year because investors simply fail to account for cryptocurrency in their Will, leaving frustrated beneficiaries the heir to millions of pounds worth of completely inaccessible cash.
Whilst leaving physical assets in your Will can be as simple as naming your beneficiary or signing on a dotted line, the processes involved in bequeathing cryptocurrency can be much more complex. Simply naming a beneficiary in your Will is not enough – you also need to leave behind the private key that will enable them to access your cryptocurrency. This is a long password – typically 64 characters – which is kept in the person’s cryptowallet.
How to leave cryptocurrency in your Will
The first thing you need to do is mention all your crypto assets in your Will – and leave instructions on where to find them and the devices on which you access them. Cryptocurrency doesn’t leave much of a paper trail, so if you fail to mention it, it is unlikely your family will be able to find your cryptowallet(s), even if they do know you have it. You should also identify the beneficiary or beneficiaries you have selected to inherit it.
Please be aware that you should NOT leave secure details, such as how to access your private key, directly in your Will. When you die, your Will becomes part of the public record and is accessible to anybody who wishes to see it. One way of adding confidential information to your Will is via a letter of wishes – this is a document that is mentioned in your Will, but is separate to it and remains confidential when you die. As such, it is a perfect place to record sensitive details such as how to access your private key, in addition to the usernames, passwords and PINS needed to access and deal with your other online accounts.
Keeping things confidential
When recording such sensitive information, keeping it secure until it is needed obviously a concern. One commonly recommended way is to create a ‘cryptocurrency access guide,’ which leaves your beneficiaries instructions on how to find the key. For example, you might decide to write the key down on paper and store it in a physical safety deposit box. You can then leave instructions relating to the location of the safety deposit box, and the physical key to it, in your letter of wishes.
Another way is to use a third-party cryptocurrency service to securely store your private key. The service will usually then require a death certificate and a grant of probate (like a normal bank) in order to provide access to the deceased’s account.
Let us help you secure your digital legacy
Our Wills & Probate solicitors are highly experienced in assisting their clients to manage their digital assets. For advice on how to smoothly transfer your cryptocurrency to the next generation, please call us on 0203 871 0087 or email email@example.com.