Willing my cryptocurrency away: how to leave cryptoassets in a Will

The increase in the value of cryptoassets has undoubtedly contributed to the continued interest and adoption of this still relatively new asset class across organisations and individuals. The ease of purchasing, selling or transferring a cryptoasset has improved significantly over the last few years (which has in part stemmed from the development of the regulatory environment).

However, there is still a technical barrier to entry. This presents a practical problem; if your assets pass to your loved ones on your death, how do you ensure that they are able to actually access and benefit from any cryptoassets that you hold?

Can a Will cover my cryptoassets?

Yes. Wills are usually expressed so as to cover your entire “estate”. If your estate includes crypto then these assets will be swept up in the same way as other assets in your Will.

Given the unique nature of these assets, it may be worth carving out a clause in your Will to make a specific legacy of these assets.  Although, it is important to consider how such a clause should be drafted, particularly if your cryptoassets change over time.  If the clause is too narrowly drafted, the gift could fail if the specific cryptoassets owned at death have changed since the Will was drafted.

Who will deal with my cryptoassets following my death?

The executors you name in your Will are responsible for dealing with the administration of your estate following your death. They will have the task of gathering details of all of your assets, reporting values to HMRC for Inheritance Tax purpose and ultimately, distributing your assets in accordance with your Will.

The key consideration when appointing executors is to name people you trust to do the job and carry out your wishes. When it comes to cryptoassets, it is realistic to say that whilst most people may have heard of the asset class they may not have physical experience of dealing with them. It would therefore benefit from being dealt with by someone who has knowledge, expertise or experience in dealing with this sort of asset. Those individuals may not be the same individuals as those you would generally want to deal with the administration of your estate.

If you are lucky enough to have people in your life who understand the world of cryptoassets, one option is to appoint who you want as executors of your estate as a whole, then, in a separate Letter of Wishes addressed to the executors, highlight the individuals you would want them to seek advice and support from when it comes to dealing with your cryptoassets.

This could include suggesting accountants, lawyers or even third-party custodians who may be able to help. This is because the actual dealing with any cryptoasset may also require engagement with individuals who are familiar with the particular cryptoassets held by you (including how and when they were acquired) and related issues.

How will my executors know how to deal with my cryptoassets following my death?

Even if your chosen executors are familiar with the crypto industry themselves, they will need a huge amount of information on your cryptoassets in order to deal with them effectively.

A Will becomes a public document following your death. It is therefore essential that important access information is kept out of the Will itself (for example, details of your private key or its whereabouts). Your Will can simply identify the people you want to benefit from your assets. A separate Letter of Wishes is a much better place to include more detailed instructions, as this is private document, which is addressed only to your executors. This document can be used as a space to give your executors all of the details they need in order to access and deal with your cryptoassets.

What should my Letter of Wishes cover?

It is important that the Letter of Wishes provides clear information about the cryptoassets that are held, how they are held and how they can be accessed (for example, some accounts may only be accessible with the assistance of two factor authentication by way of a code sent to an authenticator app, email or phone number). This may include explaining where private keys, seed phrases, account credentials and hardware devices are located. If possible, and in advance of any Letter of Wishes being finalised, it may also be worth showing and explaining to the proposed executor how to gain access to an account or wallet.

It is appreciated that passwords, seed phrases and private keys are very sensitive information (and the inadvertent sharing of them more widely than necessary may present a security risk). Therefore, it may not be appropriate for that information to be included within the Letter of Wishes. It may be the case that those credentials are included within a separate location, such as a safe, security deposit box or with a secure and regulated third party custodian.  The other important information that will be required will include the underlying source of funds that were used to acquire those cryptoassets. This ensures that the information can be provided to financial institutions, if necessary, and that any tax consequences arising from the disposal of a cryptoasset (or other activities) can be calculated.

Given that your Letter of Wishes will still contain a significant amount of highly sensitive information, it is essential that it is stored somewhere safe and secure and that your executors know where to find it. You might print it and place it in a sealed envelope, to be stored with your original Will (or a copy) in a safe at home or with your solicitor.

A Letter of Wishes has the benefit of being easy to update, with minimal formality. It should be viewed as an evolving document which can (and should) be reviewed and updated from time to time to reflect any changes in your cryptoasset base.

Whoever you appoint as executors in your Will, it is safest to assume that they will have no knowledge of cryptoassets. Your Letter of Wishes should therefore serve as a basic, step-by-step guide to accessing each form of cryptoasset. Specialist advice should be taken so that a plan is personalised for you and your circumstances.

about the authors

Stephanie is a Senior Associate in the Private Client team. She joined Kingsley Napley in 2016 and advises on a broad range of private client matters, with particular expertise in succession planning with a cross-border element. Stephanie’s clients are varied and include high net worth individuals, multi-generational families, entrepreneurs and trustees. 

Chris is a Legal Director in the Dispute Resolution team. He focuses his practice on complex (and often international) commercial litigation, arbitration and investigations involving allegations of fraud or dishonesty. He acts for both Claimants and Defendants in those matters.

Cally is an Associate in the dispute resolution team, specialising in wills, trusts and inheritance disputes. Cally acts for both Claimants and Defendants on a variety of matters including will challenges, succession disputes, trust and estate administration disputes, and claims brought against estates pursuant to the Inheritance (Provision for Family and Dependants) Act 1975, where reasonable financial provision has not been made for the claimant under the terms of the deceased’s will (or on intestacy).