Bitcoin owners risk their funds being lost forever after they die, specialist warns
People who own digital currency such as Bitcoins risk their funds being lost forever after they die unless they leave a “digital trail” for relatives to follow, experts have warned.
Bitcoin and other “e-currencies” are increasing in popularity as they are seen as a convenient way of carrying out worldwide transactions while minimising the risk of fraud.
However, passing digital currencies on after death is far less straightforward than dealing with funds held in conventional bank accounts
Louise Lewis, a specialist in wills and probate at law firm Blake Morgan, warns that Bitcoin holders need to take extra measures to ensure that the currency is passed on as they would wish.
Louise said: “Bitcoin and similar digital currencies are still a relatively new technology which means that many people may not have given much thought to what will happen to them after their death.
“One of the strengths of these types of currency is the way they are securely encrypted, making it almost impossible for anyone else to access funds without permission of the owner.
“However this means that extra thought is needed when considering how to pass this currency on. Failing to do this could result in the funds effectively being lost forever.”
E-currency is viewed using a digital “wallet” which has a unique internet address. This wallet can be held anywhere – for example on a USB stick or in a cloud service – but funds can only be accessed with a secure password.
Louise adds: “Unlike conventional currency, it is not likely that your relatives will be aware that you hold digital funds unless you tell them. The currency would still exist after your death but nobody will be able to access it – in effect taking it out of circulation forever.
“Therefore it is important that details and passwords are passed on but they cannot be included in a Will, as this is a public document and to do so would compromise security.
“Our advice would be to leave a trail for your intended beneficiaries by including a reference in your Will to a separate document which can only be accessed by a previously selected password holder after your death.
“Another suggestion is to divide the ‘wallet’ into several pieces and give these out to various family members, by giving them each a piece of the internet address. When you die, these pieces can be put together to form the wallet and unlock it, allowing your executors to transfer your currency easily and quickly.
“As with all aspects of dealing with an estate, planning is the key. Death is not something we all want to think about, but making sure appropriate plans are made now can can avoid hassle and heartache further down the line.”
Louise adds that it is important that all forms of digital assets – including music files, online banking information and social media accounts – are considered when drawing up a will.
- Make it as easy as possible for your executors to locate an electronic devices including desktop computers, laptops, mobile phones, MP3 players and ebook readers
- Ensure bank statements are well-organised as these will show if there are any one-off or regular payments to digital services
- Tell trusted friends or relatives some details about the existence of digital assets
- On writing your Will, ensure you review digital assets and instruct a specialist if you are concerned.
For more information and advice about making a Will, click here.