With the rise in popularity of cryptocurrencies, and more particularly, Bitcoin, the question which isn’t immediately thought of by investors is: how do cryptocurrencies fit into your estate plan and have you accounted for them? KEZIA TALBOT, Legal Adviser, BDO Wealth Advisers sheds some light.
Whilst the Reserve Bank, in its Position Paper on cryptocurrencies, has determined that cryptocurrencies are not legal tender, this does not mean that the cryptocurrency which you own is not deemed to be an asset in your estate for all other purposes. Cryptocurrencies are, however, subject to the normal principles of income and capital gains tax, depending on the taxpayer’s intentions. Therefore, they will be treated as an asset in your estate for both executor’s fees and estate duty purposes, if your executor is even aware of the cryptocurrency which you own.
It would be tragic if, for instance, your entire estate comprised the ownership of several bitcoins, but your financial planner or attorney was not aware of this when assisting you with your estate planning and the drafting of your Will, and later on, when administering your estate, as this would result in your heirs receiving little to no inheritance, whilst your estate could be worth several hundreds of thousands of Rand.
Bearing in mind the anonymous nature of cryptocurrencies and the manner in which you hold ownership of the cryptocurrency, it would be virtually impossible for your executor to trace your holdings and properly account for them if they have not been brought to his or her attention. Furthermore, by not including your cryptocurrency in your estate plan, it will be likely that the liquidity calculations performed during estate planning will be inaccurate, thereby impacting on the estate administration process.
As the value of cryptocurrency, by its very nature, is volatile and not generally affected by the same events which affect traditional currencies, it will be difficult to calculate precisely what the effect on your estate will be, from a tax point of view. But this value should be assessed each time you meet with your financial planner, to determine the impact at that point.
So, how do you deal with cryptocurrency in your estate?
In order to understand this, it is necessary to go back to basics and understand how cryptocurrency transactions, and in this case, bitcoin transactions, work:
Satoshi Nakamoto, the creator/s of bitcoin, defines bitcoin as “a chain of digital signatures. Each owner transfers to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.”
Unlike traditional currencies, bitcoins do not exist in a physical form. Most bitcoin owners have bitcoin wallets, which reflect the value of your bitcoins. In reality, however, the wallet contains the keys to your bitcoins.
As the keys are crucial for transferring ownership or spending your bitcoin, it is the keys which need to be protected and practically dealt with by your executor.
If a key is lost or no longer accessible, then, in essence, you will have lost your bitcoin.
The challenge, therefore, is to make your executor aware of your ownership of bitcoin and to ensure that he or she has access to the keys.
Without delving into the technical aspects of this discussion, a few options would be to: make a backup copy of your wallet and store same on an external hard drive, which your executor will know how to access, or ensure that you have transcribed the access details for the wallet in a separate document, addressed to your executor. Both the backup and/or the document setting out your access details for your wallet will need to be stored in a secure place, only identified to your spouse, executor or other trusted person, as these details are tantamount to your internet banking login details.
Lastly, it may be necessary to review your current Will or have a new Will drafted, in order to ensure that you have nominated an executor who would be comfortable dealing with these types of assets, and to ensure that your wishes regarding these and other assets, are correctly reflected.
Now download a bank account
Absa has introduced an end-to-end account opening for new customers, through the Absa Banking App, which can be downloaded from the Android and Apple app stores. This follows the launch of the world first ChatBanking on WhatsApp service.
This “download your account” feature enables new customers to Absa, to open a Cheque account, order their card and start transacting on the Absa Banking App, all within minutes, from anywhere and at any time, by downloading it from the App stores.
“Overall, this new capability is not only expected to enhance the customer’s digital experience, but we expect to leverage this in our branches, bringing digital experiences to the branch environment and making it easier for our customers to join and bank with us regardless of where they may be,” says Aupa Monyatsi, Managing Executive for Virtual Channels at Absa Retail & Business Banking.
“With this innovation comes the need to ensure that the security of our customers is at the heart of our digital experience, this is why the digital onboarding experience for this feature includes a high-quality facial matching check with the Department of Home Affairs to verify the customer’s identity, ensuring that we have the most up to date information of our clients. Security is supremely important for us.”
The new version of the Absa Banking App is now available in the Apple and Android App stores, and anyone with a South African ID can become an Absa customer, by following these simple steps:
- Download the Absa App
- Choose the account you would like to open
- Tell us who you are
- To keep you safe, we will verify your cell phone number
- Take a selfie, and we will do facial matching with the Department of Home Affairs to confirm you are who you say you are
- Tell us where you live
- Let us know what you do for a living and your income
- Click Apply.
How we use phones to avoid human contact
A recent study by Kaspersky Lab has found that 75% of people pick up their connected device to avoid conversing with another human being.
Connected devices are becoming essential to keeping people in contact with each other, but for many they are also a much-needed comfort blanket in a variety of social situations when they do not want to interact with others. A recent survey from Kaspersky Lab has confirmed this trend in behaviour after three-quarters of people (75%) admitted they use a device to pretend to be busy when they don’t want to talk to someone else, showing the importance of keeping connected devices protected under all circumstances.
Imagine you’ve arrived at a bar and you’re waiting for your date. The bar is busy, and people are chatting all around you. What do you do now? Strike up a conversation with someone you don’t know? Grab your phone from your pocket or handbag until your date arrives to keep yourself busy? Why talk to humans or even make eye-contact with someone else when you can stare at your connected device instead?
The truth is, our use of devices is making it much easier to avoid small talk or even be polite to those around us, and new Kaspersky Lab research has found that 72% of people use one when they do not know what to do in a social situation. They are also the ‘go-to’ distraction for people even when they aren’t trying to look busy or avoid someone’s eye. 46% of people admit to using a device just to kill time every day and 44% use it as a daily distraction.
In addition to just being a distraction, devices are also a lifeline to those who would rather not talk directly to another person in day-to-day situations, to complete essential tasks. In fact, nearly a third (31%) of people would prefer to carry out tasks such as ordering a taxi or finding directions to where they need to go via a website and an app, because they find it an easier experience than speaking with another person.
Whether they are helping us avoid direct contact or filling a void in our daily lives, our constant reliance on devices has become a cause for panic when they become unusable. A third (34%) of people worry that they will not be able to entertain themselves if they cannot access a connected device. 12% are even concerned that they won’t be able to pretend to be busy if their device is out of action.
Dmitry Aleshin, VP for Product Marketing, Kaspersky Lab said, “The reliance on connected devices is impacting us in more ways than we could have ever expected. There is no doubt that being connected gives us the freedom to make modern life easier, but devices are also vital to help people get through different and difficult social situations. No matter what your ‘connection crutch’ is, it is essential to make sure your device is online and available when you need it most.”
To ensure your device lifeline is always there and in top health – no matter what the reason or situation – Kaspersky Security Cloud keeps your connection safe and secure:
· I want to use my device while waiting for a friend – is it secure to access the bar’s Wi-Fi?
With Kaspersky Security Cloud, devices are protected against network threats, even if the user needs to use insecure public Wi-Fi hotspots. This is done through transferring data via an encrypted channel to ensure personal data safety, so users’ devices are protected on any connection.
· Oh no! I’m bored but my phone’s battery is getting low – what am I going to do?
Users can track their battery level thanks to a countdown of how many minutes are left until their device shuts down in the Kaspersky Security Cloud interface. There is also a wide-range of portable power supplies available to keep device batteries charged while on-the-go.
· I’ve lost my phone! How will I keep myself entertained now?
Should the unthinkable happen and you lose or have your phone stolen, Kaspersky Security Cloud can track and protect your device from data breaches, for complete peace of mind. Remote lock and locate features ensure your device remains secure until you are reunited.