“I started buying Bitcoin as a form of investment. I am aware that is a virtual currency and that different rules apply to Bitcoins. But I’m know starting to wonder how I can ensure that I transfer my Bitcoins to my heirs when I die?”
Bitcoin is essentially a digital payment network where Bitcoin currency is stored and transferred. A Bitcoin is a form of digital token that you can send or receive electronically, but is does not come in set amounts like a physical currency does, and can be divided up to 8 decimal places, meaning that the smallest amount you can send is 0.00000001 Bitcoins. The value of a Bitcoin also changes in much the same way that the value of stocks change based on bidding.
Bitcoin is protected by powerful cryptography which makes it a secure way to store your wealth, but it also creates the risk that when you die, it will be out of reach for your heirs.
Bitcoin is stored in a virtual wallet which uses a string of random characters called a “public key”. The public key is visible to anyone as an address for sending and receiving the cryptocurrency. A separate “private key” however allows the owner access to the wallet’s contents. This means that when you die, your heirs may discover your Bitcoin wallet, but will be unable to gain access thereto without the private key.
The easiest way to ensure that your Bitcoin can be transferred to your heirs is to ensure that someone has a copy of the private key by writing it down, storing it on a memory drive or entrusting it with a company or a trusted financial advisor or attorney who can give it to your family after your death.
It is also a good idea to bequeath your Bitcoin formally in your will and identify who has a copy of the private key. Although it won’t form part of the physical assets of your estate to be administered, this will help ensure that there is no uncertainty as to whom you wanted to gain access to your wallet after your death.
Like with any other asset, we would suggest discussing your Bitcoin portfolio with your attorney with a view to formally provide therefore in your will.