Digital Assets and Estate Planning: What Happens to Your Crypto When You Die?

For most of financial history, an executor could locate a deceased person's assets by contacting their bank, reviewing their paperwork, and checking title deeds. Digital assets have fundamentally changed this. A person who holds £500,000 in bitcoin may leave behind nothing more than a hardware wallet in a drawer — and if the private keys are not properly documented and secured, that wealth disappears permanently. Digital asset estate planning is no longer a niche concern: it is essential for anyone who holds significant digital assets of any kind.

What Are Digital Assets?

For estate planning purposes, digital assets encompass:

• Cryptocurrency (Bitcoin, Ethereum, and thousands of others) held in self-custodied wallets (hardware or software) or on exchanges
• NFTs (non-fungible tokens) and other blockchain-based collectibles
• Digital investment accounts: brokerage accounts, savings accounts, and platforms accessed only online
• Online businesses: domains, websites generating revenue, e-commerce stores, intellectual property held online
• Social media accounts and digital content: YouTube channels, Substack newsletters, and similar income-generating digital presences
• Digital files: photographs, documents, creative works with commercial value
• Loyalty points and airline miles with significant value
• Gaming assets: in-game items with real-world value

Each category raises different legal, practical, and tax questions.

The Access Problem: Private Keys and Custody

The most acute challenge in digital asset estate planning is access. Unlike a bank account where an executor can present a death certificate and obtain access through established processes, self-custodied cryptocurrency requires the private key — a string of characters (or a "seed phrase" of 12–24 words) that unlocks the wallet. No private key: no access. No access: no recovery. Ever.

This is not hypothetical. Significant proportions of Bitcoin in circulation are estimated to be permanently lost due to inaccessible wallets. Executors and families regularly face situations where they know assets exist but cannot access them.

Practical steps to ensure access:

1. Document your holdings. Maintain a secure, up-to-date record of every digital asset you hold, on which platform or wallet, and the approximate value. This does not need to contain the private keys themselves — but it needs to allow your executor to know where to look.

2. Secure key storage. Private keys and seed phrases should be written on physical media (paper or metal), stored in a fireproof safe or safety deposit box, and never stored only on a computer or in the cloud.

3. Executor access. Arrange for your executor or a trusted person to have access to the location of your key storage, without necessarily knowing the keys during your lifetime. Some people split seed phrases (giving different parts to different trusted parties) using the "Shamir Secret Sharing" approach.

4. Custodied assets. Cryptocurrency held on exchanges (Coinbase, Binance, Kraken, etc.) is accessible through those platforms' estate processes, provided you have documented the accounts and the executor can provide appropriate documentation. Review the processes for each exchange you use.

5. Hardware wallets. Devices such as Ledger or Trezor have their own access mechanisms. Document the PIN, recovery phrase location, and any passphrases.

Inheritance of Digital Assets: Legal Framework

In the UK, digital assets pass under a will like any other personal property. If you die without a will (intestate), digital assets pass under the intestacy rules. However, several complications arise:

Transferability. Some digital assets are freely transferable. Others — certain online accounts, software licences, and platform memberships — may not be transferable under the platform's terms of service, meaning they cannot be inherited in the usual sense even if technically accessible.

Encryption and data protection. The Computer Misuse Act creates uncertainty about whether sharing passwords with executors is strictly legal. Best practice is to use tools specifically designed for digital estate access rather than simply sharing passwords.

Jurisdiction. Smart contracts and blockchain assets are not neatly located in any one jurisdiction. Where a dispute arises, it may be unclear which country's law governs. This is an evolving area of law.

Valuation for IHT Purposes

Cryptocurrency and other digital assets form part of the deceased's estate for inheritance tax purposes in the UK. Their value at the date of death must be reported to HMRC and included in the estate for IHT calculation.

Valuation of cryptocurrency is typically the spot price on the date of death in GBP, sourced from a reputable exchange. Market volatility means that the value can change materially between the date of death and the date the estate is actually dealt with — potentially creating an IHT liability that is larger or smaller than the actual realised value.

The executor or personal representative is responsible for accurate valuation. If the estate holds significant cryptocurrency, take professional advice on the valuation methodology that HMRC will accept.

Capital Gains Tax on Inherited Digital Assets

Under UK rules, the beneficiary who inherits a digital asset takes it at the market value at the date of death — this is their base cost for CGT purposes. Any further gain from that date onwards will be subject to CGT when they sell.

The estate itself may also have CGT obligations if the executor disposes of digital assets during the administration of the estate to pay liabilities. CGT for the estate is charged at 18%/24% on non-business assets.

Making a Valid Will That Covers Digital Assets

A general, well-drafted will can cover digital assets without needing to specifically list each asset — but specific drafting is advisable where the estate contains significant digital wealth. Points to consider:

Include a specific gift or residue clause. Digital assets can be swept into the residue of the estate (passing to the residuary beneficiary) or specifically gifted to a named person.

Appoint a technically capable executor. An executor who does not understand cryptocurrency may struggle to deal with digital assets appropriately. Consider appointing a co-executor with relevant technical knowledge, or specifically authorising the executor to take professional assistance.

Create a separate letter of wishes or digital asset inventory. This should detail what you hold and how to access it — kept separately from the will itself (which is a public document on probate) and updated regularly.

Do not put private keys in the will. The will becomes public on probate. Putting private keys or seed phrases in the will would expose them publicly.

International Considerations

For internationally mobile individuals, digital assets add another layer to an already complex estate picture:

• In some civil law countries, forced heirship rules mean a portion of the estate must pass to children or other specified heirs, regardless of the terms of the will. Whether these rules apply to digital assets sited on a global blockchain is legally uncertain.
• Some jurisdictions have specific legislation on digital assets and succession; many do not.
• If you hold cryptocurrency on an exchange based in a foreign jurisdiction, the process for executors to access the account will be governed by that jurisdiction's processes and laws.

The European Succession Regulation (Brussels IV) allows EU citizens to elect for the law of their nationality to govern their succession (rather than their country of residence). For UK nationals now outside the EU, this election is not available — a further reason to ensure a properly drafted, jurisdiction-appropriate will.

Practical Checklist

1. Audit all digital assets you hold — platforms, wallets, amounts
2. Document seed phrases and private keys securely offline
3. Ensure at least one trusted person knows where to find the access documentation
4. Review exchange accounts and understand their estate processes
5. Ensure your will is broadly worded enough to cover digital assets
6. Create a separate, updated letter of wishes specific to digital assets
7. Review your IHT position if digital assets form a material part of your estate
8. Seek specialist advice if you hold complex digital assets (DeFi positions, staking arrangements, NFTs)

How Global Investments Can Help

At Global Investments, we work with internationally mobile clients whose estates increasingly include digital assets alongside conventional investments and property. We can help you integrate your digital asset holdings into a comprehensive estate and succession plan, advise on the IHT implications, and refer you to specialist legal advisers in the relevant jurisdictions. If you have never formally reviewed your estate plan with digital assets in mind, now is the time to do so.

This article is for general information only. The legal and tax treatment of digital assets is evolving rapidly and varies by jurisdiction. Always seek qualified legal, tax, and financial advice. The value of digital assets can be highly volatile and can fall to zero.