When a loved one passes away, managing what happens to their money might not be at the top of your priority list but it’s an important process that you will eventually need to go through. Although you will be dealing with emotional turmoil and upset, you may find yourself in the position where you will need access to the deceased’s investments. In this article, what happens to Bitcoin when you die, we take a look at the process and steps involved.
Free Initial Telephone Discussion
For a free initial discussion on how we can help you with the legal aspects of gaining access to your loved one’s investments when he or she dies, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help guide you through the whole process and also help you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
What steps to take when someone dies
In addition to dealing with the funeral arrangements, there are a number of steps that need to be taken before you can deal with the deceased’s financial affairs:
- You should register the death within 5 days. By doing this you will obtain a death certificate. This is an important document that you must keep safely as you will need the original in order to gain access to the deceased’s bank accounts.
- If the deceased left a Will, an executor will have been named. This is the person responsible for handling the estate of the deceased. Once the executor has the original copies of the Will and the death certificate, they can apply for probate. If someone dies without a Will, the application process is the same, but you’ll get ‘letters of administration’ rather than a ‘grant of probate’.
- You will need to estimate any inheritance tax liability and notify HMRC of the same. We can advise on this.
- Once you have the Will, death certificate, and grant of probate, you are then in a position to notify the banks, utility and insurance companies.
What is Bitcoin?
Bitcoin, often described as a cryptocurrency, a virtual currency or a digital currency – is a type of money that is completely virtual. It can be considered to be like an online version of cash that can be used to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether. The physical Bitcoins that appear in photos are a novelty. They would be worthless without the private codes printed inside them. They are not controlled by a single government and provide anonymity for their users.
Every transaction is recorded publicly in a ledger called the Blockchain making it very difficult to copy Bitcoins, create fake ones or spend ones you don’t own. It is possible to lose your Bitcoin wallet or delete your Bitcoins and lose them forever. There have also been thefts from websites that let you store your Bitcoins remotely.
The value of Bitcoins has gone up and down over the years since it was created in 2009 and the market for them can be very volatile.
What happens to my Bitcoin when I die?
The current legislation isn’t definitive with regards to cryptocurrency and inheritance. However, it is recognised that cryptocurrency is similar to property in that it can be owned, gifted and inherited.
Bitcoin is stored using what is known as a virtual wallet. However, the currency itself doesn’t sit in the wallet – the wallet holds the digital “keys” required to access the cryptocurrency. The currency itself stays in a ledger in the Blockchain.
If a person dies and the private keys are lost to a cryptocurrency wallet, then the cryptocurrency is essentially lost forever. This is because blockchains are highly secure and the entire process is decentralised, so there is no way to restore a private key.
HMRC has offered an insight into this: “If an individual misplaces their private key (for example, throwing away the piece of paper it is printed on), they will not be able to access the cryptoasset. The private key still exists as part of the cryptography, albeit it is not known to the owner any more.”
How should I store my cryptowallet information?
It is essential that you keep the details of your cryptocurrency wallet somewhere safe and to let your beneficiaries know all the information when the time comes. This is because there is no central body that records details of your wallet. There are a number of options open to you regarding where you can keep your wallet information. These can include:
- Some Banks will store wallets and private keys for clients.
- In a Hosted Wallet, private keys are kept secure by a third party provider.
- A Cold Wallet is where information is stored in a book, piece of paper, or standalone pc. In this way it is safe from online theft but can be easily lost.
- A Hot Wallet allows the keys to be kept online. This does make it a target for online theft.
The importance of keeping your wallet safe was unfortunately demonstrated by a man from Wales who accidently threw away an old hard drive containing his wallet in 2013. The value of his Bitcoin today would have been worth approximately £200m. Without the hard drive, he could not access his fortune.
Can I leave my Bitcoin in my Will?
If you want to leave your Bitcoin in your will, there are steps that need to be taken to ensure that your wishes are carried out. You will need to keep a note of specific instructions on how to access the private key in the wallet, all usernames for online accounts and any details on the public and private keys themselves.
Once a grant of probate has been obtained, your Will becomes a matter of public record, so it is vital that you don’t provide specific details in your Will when it comes to your crypto assets or any other online accounts.
How we can help
We have a proven track-record of helping clients deal with probate matters. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Wills and Probate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of guiding you through the often emotional process of probate in a sensitive and supportive manner and help ensure you achieve a positive outcome.
To speak to our Wills and Probate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form . We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
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