Cryptocurrency! Do you understand it? Do you have any? Not to worry if you answered No to both questions because so did I but you may know someone who does and for whom this information is important.
Because crypto currency (crypto) is not issued by a central authority and, thus, not regulated it is controlled by each currency’s developer. It has grown fast in popularity and value with up to 200 million users worldwide (over 4.2 million in SA) and over 18 000 (and growing) businesses accepting crypto as currency in place of cash.
When we think of our Estate, money, house, furniture and similar assets come to mind. Today, many people have to think about their crypto as well. “These are intangible digital assets that are not issued by a central authority.” (Kyle Abrahams – How to deal with your crypto assets in your will, The Saturday Independent, 6 November 2021).
Yes, once again I have discovered another interesting article in the local newspaper to create a blog and pass on some useful information.
How this affects your will:
As an intangible asset crypto is seen as property in terms of the Estate Duty Act and estate duty is applicable to crypto on your death. If you have accumulated crypto it is important that you include this digital currency in your will. Kyle Abrahams proposes a 2-pronged approach.
1. Include a clause detailing exactly how you wish the crypto currency to be distributed.
2. Write a letter of directions to the beneficiary(ies) explaining exactly how and where to access the crypto
In your will, use a clause similar to those which detail the distribution of other assets – to whom and in what ratio if there is more than one beneficiary. Add to that the following:
“My cryptocurrency might be stored on digital wallets, paper wallets, online exchanges or a combination of wallets and exchanges or any other crypto digital platforms
The following items or devices might contain a cryptocurrency wallet: {name of item/device and type of cryptocurrency]. These items shall not be distributed to any person until such time as the cryptocurrency or any information related to the access of my cryptocurrency has been transferred to [nominated beneficiary]”. (Kyle Abrahams – How to deal with your crypto assets in your will, y Saturday Independent, 6 November 2021).
You must specifically state in your will that you have written a letter of directions to be opened only by the beneficiary at the time of distribution. Include a sentence stating with whom the letter is held, usually your Executor. The letter of directions will contain the following details:
a) where all your crypto is to be found
b) keys, usernames and passwords to unlock the crypto
c) instructions on how to convert the crypto to cash should the beneficiary wish to do so
Do not store the letter with your will nor include the directions in your as this is handed to the Master of the High Court and so becomes public knowledge. will
REMEMBER: Although a new form of asset, crypto is as much an asset as your house, bonds, shares etc. If you do not deal with it in your will it will be lost.