When a person dies, their money, property, shares and other assets will form part of their estate to be passed to the beneficiaries under their will. But what about cryptocurrency, such as bitcoin?
What is bitcoin?
Bitcoin is a form of digital money that was created in 2009. Just like physical currancy, individuals and companies can use bitcoin to buy and sell goods and services. When it started out one bitcoin could be purchased for 0.001p, but at the time of writing (October 2018) it is worth a staggering £5,059.32. It is easy to see how someone who invested in bitcoin in the early days could now be sitting on a very valuable asset.
Bitcoin differs from physical money in a number of key respects:
- Bitcoin doesn’t exist physically and is not controlled by any bank or organisation.
- It is created in a process called “mining”. This is achieved by a computer running complicated mathematical equations to create a small fraction of a bitcoin.
- Bitcoin is stored in a virtual wallet made secure by an unbreakable code in the form of a “private key”, which only the owner knows.
Can bitcoin be inherited?
Bitcoin and other forms of cryptocurrency will form part of the owner's estate when they pass away, so it can therefore be inherited. And as bitcoin forms part of the deceased's estate it will need to be considered when calculating inheritance tax.
However, because of the unusual and unique nature of cryptocurrency special precautions need to be taken. In particular, anyone dealing with the administration of an estate that includes bitcoin must be careful not to dispose of or ignore the “private key”. Without this key it is impossible to access the wallet, thereby preventing the bitcoin holding from being valued, sold or transferred.
Making provision for bitcoin in your will
If you own bitcoin yourself it is also prudent to ensure that your will is drafted properly to minimise the risk of difficulties arising after you die. Provision can be made in your will for the private key to be safely stored, allowing your executiors access to it upon your death.
How can we help
If you are dealing with an estate that includes bitcoin among the assets then we can assist you with administering the estate and dealing with those bitcoin assets. We can also assist people who hold bitcoin and wish to ensure that their will makes proper provision for their bitcoin to be successfully transferred to their beneficiaries after their death.
We are experienced Inheritance solicitors and have helped numerous clients at all stages of the inheritance process; from preparing wills, administering estates and dealing with any inheritance disputes that arise.
If you require help with any issue involving bitcoin inheritance then please contact us on 0808 139 1599 or email us at email@example.com