Adam Swayne

Every year, millions of pounds worth of cryptocurrency are lost forever because the owners of the currency failed to put a plan in place to leave it to loved ones. A 2020 study by the Cremation Institute indicated that 89% of cryptocurrency owners were concerned about what would happen to their cryptocurrency when they die. Despite this, many still fail to make a contingency plan to ensure that it can be passed on.

Like any other asset, cryptocurrency will form part of the deceased’s estate and so can be left to beneficiaries in a Will. While it may seem obvious, including details of your cryptocurrency in your Will is one of the most important steps you can take. If you do not specifically identify your cryptocurrency as a bequest, it will fall into your residual estate along with everything else not specifically bequeathed in your Will.

For most items, this is not an issue - tangible property, such as cars, books, and jewellery, will be evident, and bank accounts will have a paper trail. However, cryptocurrency may be otherwise impossible to discover and could easily be overlooked. You should, therefore, clearly set out any cryptocurrency you own, and what you would like to happen to it on your death.

The main challenge of leaving cryptocurrency in a Will is ensuring that it can be accessed and subsequently transferred to the intended beneficiary. Unlike other assets, a private key will be required to access cryptocurrency. This key will give access to the cryptocurrency ‘wallet’. If no consideration is given to the inheritance of cryptocurrency it is highly likely it will be lost. Without the access key it is impossible to access and transfer cryptocurrency. Even where a beneficiary is named in your Will to inherit the cryptocurrency, they will not be able to access the ‘wallet’ without the key.

This makes planning the succession to your cryptocurrency challenging as an essential element of the inheritance of the currency is the passing of the access key.

To ensure the security of your cryptocurrency ‘wallet’ it is essential that the details of your cryptocurrency key should never be included in your Will. Specific instructions on how to access the key may also be risky as access keys are changed regularly and often require a second device to access.

The best way to ensure that cryptocurrency assets are kept safe but also accessible by beneficiaries is to consider how the cryptocurrency is stored in your lifetime.

One option is to purchase and store cryptocurrency at a cryptocurrency bank. The cryptocurrency bank will manage the key to your cryptocurrency on your behalf. You must then leave details of the cryptocurrency bank with your beneficiaries so they can request access.

Specifically designed cryptocurrency inheritance solutions are also available online. These services allow for two independent parties to come forward and retrieve the funds on behalf of the deceased.

Alternatively, you might consider creating a digital inventory with detailed instructions on how to access the ‘wallet’ using the access key.

This method will require any devices used to access the ‘wallet’ to be identified and kept aside until the cryptocurrency has been transferred. If drafting a digital inventory, it is essential that the inventory is kept secure. As noted earlier, it will also need to be updated regularly to account for password changing.

Each individual’s situation will be different and there is no method that is perfect for everyone. It is therefore important to consider the method best suited to your personal circumstances.

Many people will not be comfortable owning cryptocurrency, even if the value is set to increase over time or if you leave clear instructions about how to manage it. The process of obtaining cryptocurrency can be challenging so, in some cases, it may be better to leave your beneficiaries the value of your cryptocurrency investment in your Will, as opposed to the cryptocurrency itself. In order to do this, you must leave your cryptocurrency in a way which will allow your executors to take access.