Cryptocurrency is an increasingly popular method of online payment. It is best understood as a form of currency that exists as a digital asset, with no paper or coins. One of the main benefits is it is secured in such a way that it is near impossible to forge or double-spend.
Cryptocurrency, the most well known is Bitcoin, operate within blockchain technology. Blockchain is a method of ensuring the integrity of the data, essentially decentralising the storage of the data in a way which means that no single organisation or individual (like a bank) can have overall control.
While digital currencies are relatively new they still form part of your estate when you die. They’re classed as digital assets similar to frequent flyer points or gaming credits so you want to make sure they’re included in your Will.
There are two key things to consider about this digital legacy.
- You will need to properly define Bitcoin or any other digital currency in your Will. If you already have a Will you Will need to check and make amendments if they are not covered.
- The other important factor to consider is how your beneficiaries are going to access your bitcoins.
Passing on digital currency is more complex than passing on money stored in a traditional way such as a bank or savings account. Instead Bitcoins are stored in an encrypted electronic wallet. This wallet can be accessed only by an electronic key or password.
Unlike banks and building societies, cryptocurrencies do not store names and addresses against the electronic wallets, so aside from the electronic key there is no way to identify who a wallet belongs to.
It’s vital then to make sure that you keep a secure copy of the key for your executors. Without it, it Will be virtually impossible for them to access the wallet and the money Will be lost.
You could consider entrusting the key with a secure storage service, in a safety deposit box or with your executor or a trusted family member. The main thing here is that it needs to be someone you trust as you are handing them access to your money.