Expert fires crypto will warning
Holders of cryptocurrency have been urged to take precautions to ensure their loved ones can access the funds if they die.
According to the Financial Conduct Authority (FCA), about 10 per cent of people in the UK own some form of cryptocurrency such as Bitcoin or Ethereum- with ownership doubling between 2021 and 2022.
It is also estimated that cryptocurrency users and investors have a combined wealth of more than £3 billion - and this number is projected to continue growing.
Craig Ridge, partner and head of contentious probate at leading West Midlands law firm Higgs LLP, warned that many crypto investors have failed to take adequate steps to ensure their digital coins aren't lost forever when they die.
“Digital assets can be left in a will, gifted or inherited, like any other asset such as property and money,” said Craig.
“However, there are crucial differences compared to leaving traditional financial assets that are held by a bank or building society.
“There is no responsible organisation that can provide access to cryptocurrency, so the owner must leave an up-to-date digital inventory that contains clear instructions to the executor and/or beneficiaries on how to access the digital key for the virtual wallet, where the funds are held.
“If the digital key code cannot be found, it is highly likely that the beneficiaries will lose access to the money, regardless of how much is involved. The fact that the level of security surrounding the virtual wallets is so high - and that the entire process is decentralised - means there is no way for a third party to get to it.”
Craig said digital inventories containing clear details on how to access cryptocurrency should be kept in a secure location but, crucially, they should not form part of the will itself.
He said: “Once a grant of probate is obtained wills are available for anyone to read. Therefore, never leave specific instructions on how to access the private key in your will.
“The access guide can be kept by your solicitor alongside the will or locked away in a safe.
“Digital inventories need to include all passwords to access computing devices, all usernames for online accounts and private keys.
“It might also be advisable to set up a Lasting Power of Attorney that includes explicit instructions on how to deal with cryptocurrency and other digital assets should you lose mental capacity.”
There are several high-profile examples of people losing access to their cryptocurrency, including the case of James Howells who accidently threw away a hard drive containing £150 million worth of Bitcoin. He believes the hard drive is now sitting in a rubbish dump in South Wales.
The dispute resolution team at Higgs LLP can offer the most up-to-date and pertinent advice about leaving cryptocurrency in wills.
Contact Craig Ridge on 01384 327258 or [email protected] to discuss.
