As digital technology develops, it’s becoming more and more important for executors to understand that assets can now take very different forms than they might be used to. One of the key ways this manifests is with the issue of cryptocurrency.
‘Cryptocurrency’ is a term used to describe digital currencies. Unlike traditional currencies, cryptocurrencies are not backed by a particular government and exist only in electronic form. The most well-known type of cryptocurrency is Bitcoin, but there are thousands of others including Litecoin, Ethereum, Zcash and Ripple.
Other types of electronic currencies such as in-game currency bought or earned in online gaming and loyalty points can also be considered types of cryptocurrency.
What are an executor’s responsibilities with cryptocurrencies?
Just like with any other type of asset, executors are responsible for assessing the value of any and all cryptocurrencies held by an estate. They will then need to distribute these as per the terms of the Will, or per intestacy rules if there is no valid Will.
Of course, assessing and distributing cryptocurrencies is likely to be far less straightforward than other types of asset. If the executors are not experienced with this type of currency, it may be wise to seek trustworthy advice from someone who is.
Gaining access to cryptocurrencies
One of the most common problems executors experience while attempting to administer estates involving cryptocurrencies is not being able to gain access. Unlike traditional currency which is usually held by a bank or building society, cryptocurrencies such as Bitcoin have no responsible body who can grant access to an executor.
Unless the person who has died has left clear instructions about where their cryptocurrency is stored and how to access it, the currency is likely to be lost forever, no matter how much it is worth.
Along with this making it absolutely vital for cryptocurrency owners to leave clear instructions for their executors, it also means there aren’t necessarily any formal actions for an executor to take in order to access the money, such as providing a proof of death or a Grant of Probate.
Gaining access to loyalty points
Gaining access to cryptocurrencies in the form of loyalty points may be more straightforward. This depends on the policies of the individual company who holds the points.
Boots Advantage Card, Nectar and Tesco Clubcard points can all be transferred to a beneficiary. However, the policies of other loyalty point schemes will differ. Executors will have to contact each loyalty point scheme with whom the person who has died had accumulated points in order to find out what their terms of service are and whether the points can be transferred.
Each company will also have its own policies about what forms of proof executors will need to provide in order to be given permission to administer loyalty points.
Gaining access to in-game currencies
Another key type of cryptocurrency are in-game currency points that have been bought and/or earned within an online game. These can hold a lot of value, especially if the person who has died invested a lot of money and time in the game.
There are many different types of in-game currency, and not all of them have any intrinsic value. However, some have much clearer value than others. This includes ‘V bucks’ in the game Fortnite, ‘Robux’ in the game Roblox and ‘Minecraft Coins’ in the game Minecraft.
Though these points usually can’t be exchanged back to traditional currency, they could potentially be used by a beneficiary or sold on to other players.
Just like loyalty point schemes, whether an executor is able to access a gaming account and formally transfer in-game currency to a beneficiary depends entirely on the policies of the company. Interestingly, Tencent, a technology holding conglomerate, is reported to have recently obtained a patent for the inheritance of digital items. This suggests there are likely to be significant developments in this area going forwards.
What can you do to prepare?
If you are concerned about what will happen to any digital currencies you own after your death, there are things you can do to prepare in advance. Whether your cryptocurrencies are in the forms of Bitcoin, Nectar points or V bucks, it’s vital to ensure your affairs would be in order should the unexpected happen.
Firstly, it’s wise to make sure you have clearly set out what you would like to happen with these assets. A specialist Will-writing solicitor will be able to help you determine what you will legally be able to pass on to your loved ones. They will also be able to incorporate these wishes in a Will.
It’s also very important to make sure you leave your executors clear instructions on how to access any cryptocurrencies and accounts. This information should be stored very securely, perhaps in a sealed paper document stored with your Will. Your solicitor will be able to advise you on this. You should not give this information to your executors before your death, but it’s sensible to let them know that you have prepared instructions for if and when they become necessary.
For more information about digital assets, take a look at our help guide.
How Roche Legal can help
We are reassuring experts who can help you with a wide range of legal matters. Please get in touch if you need legal support with:
- Trusts and Estate Planning
- Probate and Estate Administration
- Contested Probate and Will Disputes
- Powers of Attorney
- Court of Protection matters
- Presumption of Death Applications
- Missing Persons Guardianship Applications
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If you would like to discuss how you can manage your cryptocurrency assets for the future, please contact us.