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.
Bitcoins are 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.
Bitcoins are 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 Bitcoins 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 Bitcoins 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.
I would suggest discussing your Bitcoin portfolio with your estate planner with a view to formally providing therefore in your will.
