Cryptocurrency and Estate Planning

It is becoming increasingly more common for people to invest in cryptocurrencies, such as Bitcoin or Ethereum. But what happens to your cryptocurrency when you pass away?

What is cryptocurrency?

Cryptocurrency is a form of virtual currency in relation to which records are maintained and transitions are verified by a decentralised system using cryptography, as opposed to through a centralised authority. Although cryptocurrency can be used like regular currency for the purpose of making payments, it is not recognised as a normal currency. Similar to owning shares, when you own cryptocurrency you hold a certain amount, with the value of holding fluctuating over time.

Including cryptocurrency in your Will

Despite being treated differently to regular currency, because cryptocurrency is recognised as an asset, it can be gifted under your Will. You may choose to give your cryptocurrency to a particular person by including a gift of your cryptocurrency to them in your Will. If you do not provide for a specific gift of your cryptocurrency in your Will then it will fall into the residue of your estate and will be given to your residuary beneficiary/beneficiaries.

Further considerations

It is important that your executor is made aware of both the existence of your cryptocurrency and provided with details on how to access it. Unlike more traditional assets, such as funds in a bank account or shares, the very nature of cryptocurrency means that there is no obvious paper trail. Cryptocurrency is stored electronically on a blockchain, and requires a private key for you to access same. Upon your passing, your executor will need details of the private keys and/or cryptocurrency wallet containing your unique keys for all cryptocurrency that you hold.

We recommend against including information about your private keys in your Will itself, as it will become a public document if a Grant of Probate is obtained, which could put your cryptocurrency at risk of being stolen. Instead, we recommend storing information regarding your private keys with your important documents, such as in an executor’s dossier, or potentially providing this information to your solicitor to be kept in their safe custody facility, together with your original Will. It is important that you ensure that any and all information regarding your cryptocurrency is kept up to date.

To assist your executors and/or beneficiaries with the potential tax implications that can arise when cryptocurrency is sold it is important that you maintain records of the purchase cost bases for all of your cryptocurrency holdings, and that you ensure that these records are easily accessible by your executor. In addition to obtaining legal advice, you may wish to also seek specialised financial advice regarding the potential tax consequences your cryptocurrency will have from an estate planning perspective.

If you own cryptocurrency and require assistance with ensuring that these assets are appropriately dealt with in your estate planning documents, please do not hesitate to contact one of our estate planning solicitors via the link below.