Legal News | 4.07.22
Dealing with cryptocurrency
In recent years, there has been a surge in the use of cryptocurrency, with many crypto-assets becoming household names, for instance Bitcoin. In June 2021, around 2.3 million adults in the UK held crypto-assets. However, many of these owners worry about how they can deal with these assets in their Will.
What is cryptocurrency?
Cryptocurrency (“Crypto”) is a digital asset which can be bought, spent, saved, traded or sold all on online databases. The difference between Crypto and traditional money is that it is traded on a decentralised computer network and there can often be no physical assets to represent the money.
Can I include cryptocurrency in my Will?
Like other assets, you can leave Crypto as a gift in your Will. However, it is crucial to ensure that the people you appoint as your executors are aware of your Crypto and how they can access it.
When you obtain Crypto you make a private key which is a long, sophisticated code, which gives the owner exclusive access. Without this code, your executors will be unable to access and then either sell or trade your Crypto. Arrangements should therefore be made either in your Will or in an accompanying side letter to ensure that your executors are able to access the code on your death. The code should not however be expressly recorded in your Will, or anywhere it could be found or intercepted (eg emails).
Cryptocurrency and Lasting Powers of Attorney
To cover all eventualities, including a loss of mental capacity, it would be wise for Crypto owners (like everyone else) to put in place a Lasting Power of Attorney (‘LPA’) for Property and Financial Affairs. While any Crypto that is held by the person making the LPA (‘the Donor’) will be automatically covered by the LPA, the Donor might still wish explicitly to mention any Crypto they own to ensure their attorneys are aware of its existence and that there can be no doubt as to their ability to deal with that Crypto on the Donor’s behalf.
NB. Trust Registration Service
If you are the trustee of a trust, now is the time to check whether you need to be registering the trust with HMRC’s Trust Registration Service (TRS). Following the recent introduction of the 5th Anti-Money Laundering Directive (5MLD), with a few exceptions, all non-taxable express trusts are now required to register. If you are unsure as to whether your trust requires registering, please get in touch as we can help.
If would like to speak to us regarding how to deal with cryptocurrency in your Will or Lasting Powers of Attorneys or if you need assistance registering a trust, please get in touch with your usual contact or email us at wealth@wansbroughs.com.
