“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.” – US Senator Thomas Carper.
Senator Carper’s statement above is vindicated by the fact that the term “cryptocurrency” is extremely hard to define. Put as simply as possible, it is a digital currency which operates in cyber space, independently of any central bank.
There are many who think that cryptocurrencies are a gimmick and doomed to fail. However there are others who think that they are the hottest investment opportunity out there. The aim of this article is to explore these investments from an inheritance point of view.
What happens to a person’s cryptocurrencies when they die? This is an issue which is starting to emerge in both the cryptocurrency and legal communities. On the face of it, cryptocurrencies should for the purposes of wills and probate be treated as any other investment. There is no reason why their value cannot be inherited by another person, whether by Will or through an intestacy. The problem is how to achieve that.
What is required here is not just a change in the law in some areas, but rather a way to navigate the innate decentralisation and anonymity of cryptocurrency itself. As at June 2018, it is estimated that around twenty billion US Dollars’ worth of Bitcoin alone has been lost because their owners died without anyone knowing about their investments. And this is only Bitcoin’s numbers.
An illustrative case is that of Matthew Moody, a US resident and Bitcoin enthusiast who died in an aeroplane crash in 2013. The problem caused by his early passing was the fact that he did not give anyone the details of his Bitcoin Wallet. Now, five years later, his beneficiaries are still looking for ways to access Mr Moody’s investment, which could now be worth a fortune considering how much Bitcoin has grown in value since the investment was made.
The nature of cryptocurrency makes it quite hard to pass on your details, especially to someone who isn’t very “tech-savvy”.
Perhaps the simplest way of dealing with this problem is to simply write all of your details down and hand them to your chosen beneficiaries or executors. On the face of it, a single piece of paper containing private keys, exchange login details and associated accounts could take care of things in one fell swoop.
There are risks involved in writing your cryptocurrency details directly into your Will. Remember that your Will becomes a public document after probate is granted. This could reveal the details of your investments at a dangerously early stage. Also if a beneficiary or executor accessed your account without being able to prove you have permitted this they could fall foul of the Computer Misuse Act 1990.
There are many ways of trying to ensure that your cryptocurrency passes to your loved ones after you pass away, a lot of which involve making specific arrangements with the investment provider, but each one has its own obstacles and downsides which may make them unsuitable for a given person for a number of reasons.
Unfortunately the anonymised and deregulated nature of cryptocurrencies makes it a minefield for us lawyers who wish to give good advice on how to pass them on to your heirs and loved ones. This is likely to remain the case until a more tightly regulated regime takes over.
It is however essential that each cryptocurrency investment is considered in relation to the jurisdiction it is regulated by, its value and the currency type in relation to inheritance. Should you wish to discuss leaving cryptocurrency investments in your will, please contact our Wills and Probate specialist solicitors on 0161 6155554.