Cryptoassets  

How to pass on crypto assets

  • Describe the challenges of dealing with crypto assets owned by a person who has died
  • Explain some of the tax consequences of crypto assets that turn up some time after probate
  • Explain how to use crypto assets in the event of divorce
CPD
Approx.30min

For those on the other side who suspect their spouse may be concealing assets in cryptocurrency, it can be difficult to get to the bottom of whether any such assets exist and, if so, how much is held at any one time.

The key is to find the threads to pull on that lead to the point of entry into or exit out of cryptocurrencies – bank statements and tax returns can both provide evidence of crypto being exchanged for fiat currency.

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Given the opacity of crypto wallets, parties may find themselves reliant on inferences drawn from wider evidence, which can form the basis of a distribution of more accessible assets.  Parties are obliged to make a full and frank disclosure of all their assets.

Non-disclosure is punished severely by the family court, including (in rare cases) imprisonment. The court also has the power to reopen divorce settlements if it can be proven that either party failed to disclose his or her assets.

Using cryptocurrency as a means of concealment is therefore risky and ill advised.

Hayden Bailey is head of private client and tax at Boodle Hatfield 

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Why is ownership of digital currencies difficult to trace?

  2. HMRC takes the view that the tax status of the asset is based on the tax residence of the key-holder, true or false?

  3. Which of the following is NOT a potential pitfall for executors dealing with tracing crypto assets?

  4. It is possible that the value of the crypto asset might be a fraction of the value at death, when the value is taken for IHT purposes, true or false?

  5. Which of the following is NOT a possible difficulty for executors when dealing with tax affairs relating to crypto assets of the deceased?

  6. The author recommends hiding assets in cryptocurrency in the event of divorce, true or false?

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You have successfully answered all the questions correctly, well done!

You should now know…

  • Describe the challenges of dealing with crypto assets owned by a person who has died
  • Explain some of the tax consequences of crypto assets that turn up some time after probate
  • Explain how to use crypto assets in the event of divorce

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