What is cryptocurrency?
What is cryptocurrency?
Cryptocurrency is a privately issued digital asset which has its own ‘currency’ and utilises cryptography to store digital tokens rather than relying on a central entity to operate it, such as a bank. It is important to note that cryptocurrency has no intrinsic value, so its value fluctuates depending on a range of factors such as its popularity.
In Australia, the effect of the Currency Act 1965 is that cryptocurrencies are not recognised as legal tender, however, the use of cryptocurrency is becoming more accessible via cryptocurrency ATMs and some businesses accepting it as a form of payment.
Cryptocurrency and other digital assets should be included in your Estate plan.
How can I include cryptocurrency in my Will?
Unless an asset is left as a specific gift to somebody, it will form part of your residuary estate. Your residuary estate includes all the assets not otherwise dealt with in your Will, in other words, the ‘leftovers’.
The difficulty with Cryptocurrency not being specifically mentioned in your Will is that your Executor may not even know you have cryptocurrency, or they may not know how to access and liquidate it if necessary. Cryptocurrency does not leave a paper trail like traditional assets such as shares or bank accounts, and for this reason you should ensure that your cryptocurrency is clearly identified.
If you plan on leaving cryptocurrency in your Will, it is wise to leave an ‘instruction sheet ’for your Executor to help deal with this asset. As cryptocurrencies are stored virtually on what is known as a ‘blockchain’, you need a unique key to access the asset. It is imperative that your Executor knows where to find this private key which is like a password. We do not recommend writing your ‘key’ details into your Will as it eventually becomes public record if or when Probate is granted which could put your data at risk. You can leave a memorandum with your important documents such as your Will and Powers of Attorney which instructs your Executor on how to access your cryptocurrency.
The Wills and Estates Team provides special Information Booklets to clients to record this information, with each set of Wills and Enduring Powers of Attorney prepared. If you would like to see our Team for any estate planning advice please telephone us in 9870 9870.
