As the use of cryptocurrency continues to grow, more and more Australians are investing in digital assets such as Bitcoin, Ethereum, and Litecoin. As with any valuable asset, it's important to include your cryptocurrency in your estate plan and your Will.
What is Cryptocurrency?
Cryptocurrency is a digital currency that uses ‘cryptography’ to secure transactions and control the creation of new units. Sound like a bit of a mouthful?
Basically; it’s the online transaction and creation of money via a secure platform.
Operating independently of central banks, Cryptocurrency uses a decentralised system called blockchain to record transactions. Unlike traditional currency, cryptocurrency has no physical form and exists solely in digital form- with some well-known examples of cryptocurrency include Bitcoin, Ethereum, and Litecoin.
Is cryptocurrency legal in Australia?
Whilst operating independently of central banks and traditional money systems, cryptocurrency is legal and regulated in Australia.
The government requires that all Cryptocurrency exchanges are registered and comply with anti-money laundering and counter-terrorism financing obligations, in the same way as traditional money.
What’s more, Cryptocurrency transactions are now treated as property for tax purposes and may be subject to capital gains tax.
Is Cryptocurrency Considered an Asset in Your Estate?
The law is evolving on cryptocurrency, but fundamentally it is considered an asset in your estate- just like stocks, bonds, and real estate.
With this in mind, any cryptocurrency should be included in your estate plan and your Will- ensuring it is distributed according to your wishes. Digital assets can be just as an important way to support those you leave behind, and so it's worth taking the time to include them in your estate plan.
How to Include Cryptocurrency in Your Will
If you have cryptocurrency, it's important to take steps to include it in your Will. Whilst the language and online world of this modern currency might feel complicated, when you break it down it’s really no different to money.
That being said, we’ve provided a few simple steps on how to include Cryptocurrency in your Will:
Identify Your Cryptocurrency Holdings: The first step is to identify all the cryptocurrency that you own. Make a list of the type and amount of cryptocurrency that you hold.
Choose an Executor: Choose an executor of your will who is knowledgeable about cryptocurrency or is willing to learn about it. Your executor will be responsible for managing and distributing your cryptocurrency according to your wishes.
Specify How Your Cryptocurrency Should Be Distributed: In your will, specify how you want your cryptocurrency to be distributed. You can leave it to a specific person, divide it among several people, or donate it to a charity.
Provide Access Information:Provide access information for your cryptocurrency, such as login credentials and private keys. Make sure this information is kept in a safe and secure place, and that your executor knows how to access it.
Review and Update Regularly:Review and update your will regularly to ensure that it reflects your current wishes and your cryptocurrency holdings.
What Happens to Cryptocurrency if You Die Without a Will?
If you die without a will, your Cryptocurrency will be distributed according to the intestacy laws of your state or country. This means that your cryptocurrency will be distributed to your closest living relatives, such as your spouse or children. If you have no living relatives, this could then transfer to the state.
Effective Financial Planning and Asset Management
Writing a Will which includes your Cryptocurrency is just one part of effective financial planning. In working to hold assets most efficiently and provide for your family at a later date, we recommend you engage in other efforts to keep your assets working best for you.
Here's our top tips on effective financial planning within your WIll:
Consult with an Estate Lawyer: An experienced estate lawyer can help you create an effective estate plan that includes your cryptocurrency and ensures that your wishes are carried out.
They’ll have the expertise to ensure your legal document is valid, and that your wishes are secured in Court. Similarly, if you have a larger or more complex estate, an estate lawyer can help to manage any complexities.
2. Keep Your Will Updated:
Review and update your will regularly to ensure that it reflects your current wishes and your cryptocurrency holdings. This includes any large asset purchases, such as a house, as well as any significant life changes covering marriage, business or the birth of a child.
3. Keep Good Records:
Keep detailed records of your cryptocurrency holdings, including login credentials and private keys. Similar to your Will itself, make sure that this information is kept in a safe and secure place and that your executor knows how to access it.
4. Communicate with Your Beneficiaries:
To avoid confusion and conflict after you die, it’s important to communicate with your beneficiaries about your estate plan and your wishes for your cryptocurrency.
5. Consider Using a Trust:
Finally, you may want to consider setting up a trust to manage your cryptocurrency after you die. Offering a number of benefits, a trust can actually provide more control over how your cryptocurrency is distributed and can help minimise stress, time and cost of probate.
To Wrap Up
As cryptocurrency continues to gain in popularity, it's important to include it in your Will. In addition to this, there are several steps you can take to engage in effective financial planning with digital assets in mind- helping to ensure that your estate is managed efficiently, and that your loved ones are taken care of.
Write your Will today
Safewill provides expert, affordable and flexible services for all your end of life needs. From writing your Will with digital assets in mind, to seeking guidance from a funeral director or appointing an executor- our team of compassionate experts are here to help at your time of need.
We help keep the cost low without cutting corners, and can provide expert estate or cremation support around the time of funerals.
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