Cryptocurrency is becoming a popular way to store wealth – it’s anonymous, doesn’t require a bank and therefore usually has low fees.
If you own any cryptocurrency, it is worthwhile considering how you might include it in your will. Despite being relatively popular, cryptocurrency is still a concept that many people find confusing, so it’s understandable if you’d prefer to avoid thinking about putting it into your will. But, your cryptocurrency is just as important as all of your other property, and you don’t want your loved ones to miss out when you pass away. This article will provide a guide as to how you should include your cryptocurrency into your will, however it is recommended that you seek legal advice for your individual circumstances.
What is cryptocurrency, anyway?
Cryptocurrency is a digital currency, which means it doesn’t exist in a physical state. This is quite different to money in a bank, because although this is not physical, it has the potential to be if you take cash out at a shop, a bank or from an ATM. Cryptocurrency uses encryption to create digital tokens, which people can then purchase. There are usually only a limited number of tokens available. Our previous article relating to cryptocurrency in family law matters provides more information about it, as well.
Can cryptocurrency be included in a will?
The Wills Act 1970 (WA) stipulates that a will may, amongst other things, dispose of property that the person was legally entitled to at the time of their death. The next question is: is cryptocurrency legally regarded as property?
The Property Law Act 1969 (WA) tells us that ‘property’ includes real and personal property, with real property being land and buildings, and personal property being all other things that a person can own. Personal property can be tangible, for example a book, a bag, or cash, and it can also be intangible. Examples of intangible personal property include money in a bank, shares and cryptocurrency. Therefore, yes – cryptocurrency can be included in a will.
What do I need to keep in mind when including cryptocurrency in my will?
- The value of cryptocurrency changes
Firstly, it is important to consider that, like shares, the value of your cryptocurrency is not static; it can change on a day-to-day basis. Therefore it is recommended that you do not include in your will details of the exact value of the cryptocurrency you own, because it is likely that the value will change.
- Cryptocurrency is hard to find
One of the advantages of cryptocurrency – that it’s anonymous and difficult to track down, can prove to be a disadvantage when it comes to including it in your will. In order for anybody to access your cryptocurrency, they will need information about where it is stored and passwords not only for your cryptocurrency itself, but also for your email addresses and any other devices or platforms that you use to access it. If you’ve chosen to keep your cryptocurrency in numerous digital wallets for enhanced security, then they will need the passwords for all of the locations that cryptocurrency is kept.
The issue with this is that if you record all of this information in your will, it may compromise the safety of your cryptocurrency. What if somebody steals your will, or even just gains access to it and takes down the information? There is a fine line between protecting the interests of your loved ones when you pass away, and protecting the security of the assets that you own now.
At Lynn & Brown Lawyers, we offer the option, (at no fee if your will is made with us) to keep your will in safe storage until you pass away, upon which time your executor will be able to collect your will, with identification and a death certificate. This service will provide you with piece of mind in knowing that your cryptocurrency, and everything else contained in your will, is safe.
- Your family may prefer legal tender
At this stage cryptocurrency is not legal tender, meaning it cannot be used to pay debts or to pay for items at the shopping center, for example. When you pass away, your family may prefer to obtain your assets in the form of legal tender, rather than digital currency. According to ASIC, it is possible to buy and sell some kinds of cryptocurrency (such as Bitcoin) for cash through special ATMs. This is not possible with all forms of cryptocurrency, though, so you should check out whether it is possible with yours. If it is possible, it would be a good idea to leave instructions with your will as to how to do this. Additionally, you should consider leaving instructions about how to manage your cryptocurrency in general, because as mentioned earlier, many people do not really understand how it works.
The death of a loved one can be extremely stressful and when you die, your executor will have a lot of important tasks to undertake, such as selling assets, closing bank accounts, paying any debts you may have and notifying your beneficiaries. Being an executor can be quite overwhelming, so including a bit of information about how to access, manage and ‘cash out’ your cryptocurrency will help to lessen the load on your executor.
What should I do now?
Now that you understand the importance of including your cryptocurrency in your will and some of the things you need to keep in mind, you are probably wondering how to actually do it. At Lynn & Brown Lawyers, we have a team dedicated to creating wills and managing deceased estates, so whether you want to make a will or you’re the executor of a will that includes cryptocurrency, our expert team will be able to assist you. Please do not hesitate to contact us for an initial appointment if you have any queries about cryptocurrency, wills or deceased estates.
About the authors:
This article has been co-authored by Chelsea McNeill and Steven Brown at Lynn & Brown Lawyers. Chelsea is in her third year of studying Law at Murdoch University. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.