As many aspects of our lives move to the digital world, the task of dealing with a loved one’s digital assets when they pass away is becoming increasingly common. Cryptocurrency is digital money which uses encryption techniques to generate currency and verify the transfer of funds. There are various forms of cryptocurrency, including Bitcoin, Ripple, and Ethereum. One of the selling points of cryptocurrency is that it’s possible to send and receive cryptocurrency without giving any personal information.
You can inherit Bitcoin and other cryptocurrencies upon death. A loved one can bequeath it to you in their estate plan like any other asset. Cryptoassets are also treated as property for the purpose of Inheritance Tax; therefore, it can impact inheritance and should be considered when writing your Will.
Some exchanges have policies in place to transfer cryptocurrency to the next of kin. Coinbase, one of the many exchange platforms for cryptocurrency, has a page on its website designed to guide Personal Representatives through accessing the deceased’s cryptocurrency. They currently ask for a death certificate, the deceased’s Will and/or a Grant of Representation, photo identification, and a letter signed by those who obtained the Grant confirming what they would like to do with the balance in the account.
Cryptocurrencies are stored in a virtual wallet. Each wallet uses a string of random characters called a public key, visible to anyone, as an address for sending and receiving the cryptocurrency. A separate private key allows the owner to access the money in the wallet. If an owner dies without passing on the private key, the wallet may be discovered, but it will not be possible to gain access to the wealth inside. Therefore, it’s advisable to ensure all usernames, passwords, and private keys are stored with a password manager and accounted for in a Will.
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