What happens to cryptocurrency when someone dies?
A few years ago there was a surge in the popularity of Bitcoin. Despite prices plummeting over the last couple of years, more and more people are still investing in cryptocurrency. Cryptocurrency is an online currency and there is often confusion about the legal status of such currency.
As of August 2018, there were more than 1,600 types of cryptocurrency, with Bitcoin being the largest. Cryptocurrency is made up of a bundle of rights, therefore is cryptocurrency actually property you own? HMRC published guidance in December 2018 stating that cryptocurrency is included when calculating your inheritance tax bill.
You can be taxed on cryptocurrency but when it comes to your beneficiaries actually claiming that cryptocurrency there are logistical and legal issues to be taken into account.
Cryptocurrency requires an online “wallet” but unlike your physical wallet which holds cash, your online wallet does not hold the cryptocurrency. Cryptocurrency holds “keys” which are needed to access the cryptocurrency.
Whilst there are many unanswered questions, what is clear is that when planning for the future, it is important to consider how your online assets will be treated and accessed should you pass away or lose mental capacity.