Racheal Muldoon writes for the Financial Times on whether individuals can pass down digital assets in their will
A reader writes into the Financial Times, asking for advice on what they should do when preparing their will following retirement, where they have recently decided to invest a portion of their wealth into digital assets and wish to pass them on.
The individual explains that they are thinking about potential pitfalls they might need to navigate versus more traditional assets such as real estate or cash. They ask:
What are the tax considerations? What about the security of my wallets, for example handing down the different passwords in a secure manner?
Racheal Muldoon, Partner in our Financial Services Regulation & Funds team, answers the reader's question, and explains that in England and Wales, digital assets including cryptocurrencies, are recognised as legal property that can be left in a will.
They are subject to UK taxation and are capable of being held on trust.
Racheal goes on to advise that the individual considers the following:
- Maintaining a detailed digital asset inventory — recording the type of tokens held, quantities and storage methodology.
- Securing their private keys and seed phrases. Many digital asset holders are turning to multi signature (multi-sig) wallet solutions for this.
- Never recording private keys or seed phrases in a will, as these become public documents upon grant of probate.
- Documenting access instructions outside of a will, for example in a letter of wishes.
- Tax implications such as CGT and IHT.
- Diversification of coins within a portfolio is a widespread practice to mitigate risk (although this can lead to uninteded consequences and complexity).
Read the full article in the Financial Times here (subscription required).
