It has been almost impossible to miss the rise of cryptocurrency in our increasingly digital world. For instance, I have watched far too many online videos preceded by adverts encouraging me to trade in cryptocurrencies and even while watching TV, adverts to buy and sell cryptocurrencies are plastered on every available surface. Moreover, cryptocurrencies continuously make headline news, from the volatility of the market to opinion pieces showing the positives and negatives. While some would argue there is the potential for these investments to fizzle out, they have survived thus far and I can imagine these investments regularly forming part of the estate administration process.
Valuing Cryptocurrency Assets for Probate
The obvious question then is, “how do I deal with cryptocurrency assets?” One of the main advantages of cryptocurrency is their security, as the ‘virtual wallet’ can only be accessed by the holder using a secure key. However, what about when another party has a legitimate reason to access your cryptocurrency assets? There is no central register for who owns what or how much, so you cannot simply write to a central registry for this information. In order to understand the issue with this, some explanation of the probate process is needed.
When someone dies probate will be needed if they own certain assets or a certain value of assets, this is determined by the asset holders’ internal rules. If probate is indeed required, then all their assets will need to be valued and reported to HMRC. Therefore, if there is a bank account, you can write to the banks and value this asset. Sounds simple enough, but what if we have cryptocurrency assets? The lack of a central registry means that without having direct access to the virtual wallet, valuing and indeed paying any tax due becomes impossible. Does this mean that should you die while owning cryptocurrency assets it will be forever locked?
Should I include Bitcoin details in my Will?
Careful thought is needed when investing in cryptocurrency. While we cannot predict when we will die, we can prepare for it. We can make arrangements to assist those left behind to properly administer our estates in accordance with our wishes. Simply adding the details of your bitcoin in a Will is not enough nor wise. Wills become public documents once proven so this would invite fraudsters to take advantage.
How can we help?
Should you wish to discuss the options available with dealing with cryptocurrency assets please contact Oliver Wilson at oliver.wilson@herrington-carmichael.com or on 01276 748 370.
> Article: The Importance of keeping Records for Probate
> Article: Pitfalls of DIY Wills
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
