Cryptocurrency is essentially a virtual form of money that is protected by a strong Cryptography which makes it a secure way to store wealth and investments. The most common examples of this currency are Bitcoin, Litecoin and Ethereum to name a few.
This form of currency creates several challenges when the owner passes on as it is a form of an asset which is intangible in its nature. This further creates risk implications in that the digital fortune can be lost forever if not stored and transferred safely to your next of kin, children or heirs during your lifetime due to the extreme privacy settings associated with this currency in that only the owner has the “private key” to access the wallet.
Cryptocurrency should be formally bequeathed in your Last will and Testament to your specific heirs to ensure that there is no uncertainty as to whom you wish to leave this asset to. It is also crucial to make a copy of your private wallet key, account details and to identify who is in possession thereof to ensure that the person who inherits your Cryptocurrency can access your wallet. You must ensure that your chosen executor of your estate has a copy of your private wallet key. This should be written down in your will or saved on a memory drive and kept with your Will or entrusted to your executor.
It is also worthwhile to discuss this with your executor or the person you are bequeathing this asset to and explaining the process in detail as this will ensure a smooth transfer of the asset.
SARS has also clarified its position regarding this form of currency for tax purposes in that it is considered an income which is taxable.
For any queries regarding the information or a parental consent affidavit above please contact Myers Attorneys on 011 346 2422 or menzi@myersattorneys.co.za