How to manage the assets that do not physically exist
In the second part of a two part blog our Wills & Probate Solicitor, Emma Blakesley, explains what Cryptocurrency is and why Cryptocurrency owners should make wills. The first part (here) covered issues surrounding cryptocurrencies in divorce and separation
What are Cryptocurrencies?
Cryptocurrencies, such as “Bitcoin”, are virtual currencies that allow money to be transferred anonymously without the control of a regulating body, such as a bank.
The currency has no physical presence, and new units and transfers are recorded in a distributed ledger called a “blockchain”. The blockchain is stored on various computer systems around the world which are accessed using a virtual “key”. Keys are stored in a digital “wallet”, and only those with access to the key can manage their cryptocurrencies.
Transfers of currencies are identified by a series of letters or numbers called an “address” rather than by name, which can make tracing specific transactions difficult.
What happens when a Cryptocurrency owner dies?
Research has estimated that up to 3.8 million Bitcoin (worth £22.8bn) has been lost as a result of deceased owners not informing their Beneficiaries of how to retrieve the virtual currency.
The currency can be transferred directly from person to person. As such, an Executor will need to use the account to transfer the currency, just as if they were the owner. They will not require evidence of proof of death; they will own the keycode as Executor.
It is, therefore, important that a cryptocurrency owner provides the necessary information about their digital wallets. They may wish to consider creating a step-by-step guide to explain how the Executor can access the cryptocurrency and how to exchange it for cash. This information must be kept safe and secure to prevent accounts from being accessed by others, during the owner’s lifetime.
If the currency owner is concerned that their Executors may not be comfortable dealing with a digital sphere, they can appoint a “Digital Manager” in their will. The Digital Manager can be nominated to close all digital accounts, including social media and email accounts.
If you own digital assets and need any assistance with specifying how you wish for the same to be distributed within your will, please contact us today.
