Cryptocurrency such as Bitcoin has been gaining popularity over several years as a common investment for many people. It is because of this growing interest in digital currency, there is now a need to provide for it in your Will. As this form of asset is not your run of the mill cash held in a bank account, it must be dealt with carefully when drafting your Will.
What is cryptocurrency?
Cryptocurrency is digital currency which does not exist in a physical state. However, while it can be used for payment, it is not recognised or regulated as a form of currency. Therefore it is to be treated as an asset, rather than cash.
Can I include cryptocurrency in my Will?
Under the Wills Act 1997 (Vic), a person can dispose of property that they were entitled to legally as at the date of their death.
To determine whether cryptocurrency would therefore fall under this premise of ‘property’, we must look to the Property Law Act 1958 (Vic). This Act provides that property includes any interest in intangible personal property such as shares, money held in a bank account and as the focus of this article, cryptocurrency.
How do I deal with cryptocurrency in my Will?
As it is an asset, you can include cryptocurrency in your Will however, unless it is dealt with specifically in your Will, it will form part of the ‘residue’ of your estate.
Regardless of whether you deal with your cryptocurrency specifically in your Will or whether it falls into the residue, you should ensure that your executor holds all information in regards to this asset.
Cryptocurrency is not like a traditional asset such as a bank account or shares as it does not usually have paper records. It is stored digitally on a secure ‘blockchain’ which can only be accessed using a unique private key. It is essential that your executor be able to locate this key in the event of your death. If they are not able to, they cannot access your cryptocurrency and distribute it to your beneficiaries.
When a lawyer is drafting your Will to include your cryptocurrency, never allow them to publish your private key as part of the Will contents. Upon your death, should there be a need to apply for a Grant of Probate, your Will becomes a public document. Having your private key detailed in your Will is like having your PIN written on the front of your bank card.
What do I need to be aware of?
Fluidity of value
Cryptocurrency is similar to shares in that its value is forever changing. As such, it is usually recommended that when dealing with it in your Will, you do not include exact values as it is likely to change over time. To specify a value amount may cause issues for your executor in the future.
It may be worthwhile considering having a conversation with your intended beneficiary who will inherit your cryptocurrency as they may wish to be made aware that at this current time, cryptocurrency is not legal tender. It cannot be used to pay off debts or used to pay for over the counter purchases like cash can.
Crypto wallets are used to store and protect your private key and can come in paper, hardware or software formats.
Paper – this is exactly as it sounds. Your private key and blockchain address are printed on a piece of paper. You may wish to store this securely with your other financial documents so that your executor can access this easily.
Hardware – your private key is stored on an external piece of hardware such as a USB and usually require a PIN or password for access. You will need to make your executor aware of this hardware together with the necessary security details to be able to access it.
Software – private keys can be stored on a cloud based system or installed directly onto your personal computer. In these situations, your executor will need to know where to access these and how.
What can Nevett Ford do to assist me?
If you hold cryptocurrency now, or are looking to in the future, it may be worthwhile considering an update of your Will. We have a team of experienced lawyers who will be able to assist you with this and they can be contacted on +613 9614 7111 or you can email us at email@example.com.