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Leaving crypto assets in will 'not straightforward', lawyer warns

Leaving crypto assets in will 'not straightforward', lawyer warns
Private keys can create issues when passing on crypto (Credit: Pixabay)

Cryptocurrency is a rapidly emerging investment market but as it is different from physical currency there are a number of things investors need to be aware of when leaving it in their will. 

Emma Lewin, solicitor specialising in wills and probate at Nelsons, said the key difference between crypto and cash is that the former is an intangible asset, meaning there is no physical hardcopy. 

However, cryptocurrency is still an asset and as such forms part of an individual’s estate and can be left to a beneficiary within a will.

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There are more than 300mn digital currency users worldwide with more than 18,000 businesses already accepting such payments, according to data from cryptocurrency exchange Triple A.

Research from rival exchange platform Gemini found 18 per cent of UK adults now own cryptocurrency, with nearly half investing for the first time in 2021.

Cryptocurrency is a digital payment method, where currency is held in a digital wallet, which can be accessed with a key specific to the user.

This key can either be public, allowing the user to receive transactions, or private, allowing them to move funds.

Leaving crypto as part of an estate can create issues around accessing the funds once the owner has died, Lewin said.

She said: "This isn’t quite as straight forward as it may seem, as sometimes issues may arise when a personal representative, the individual legally entitled to administer the estate, wants to gain access to the cryptocurrency to be able to transfer it to the relevant beneficiary.

"This is due to cryptocurrency being very different to other assets, such as property, where you can gain access by a physical key.

"As your private key must be kept confidential, it can be difficult for the personal representative to access a digital wallet.

"Even if it’s stated in the will who is to inherit, they may not be able to access without a private key. Therefore, it’s crucial for a contingency plan to be in place."

When grants are obtained in an estate, wills become a public document. This means it's not advisable to include any confidential financial information, Lewin said.

People can also access a copy of the will for a small fee, which could open it up to fraudulent activity. 

"Letters of wishes should also be avoided as, again, they would not be secure if the details fell into the wrong hands and are difficult to keep up to date, due to the changing of passwords and keys," she added.

When it comes to leaving cryptocurrency in a will, Lewin said people would be best placed to seek professional advice even before looking to invest.