How are crypto assets treated in estate planning?
Once viewed as a niche specialism, perhaps only reserved for those who knew the world of finance inside out, crypto assets are no longer the niche you think they are. Solicitors are increasingly finding such assets as part of ordinary estates, so it’s even more important than ever that modern wills need to reflect that reality.
English law now recognises crypto assets as a form of property capable of being owned, transferred and inherited in the same way any other assets can be, much like shares, investment portfolios or valuable personal possessions. Therefore, they are treated as property forming part of a person’s estate on death, meaning they must be identified, valued and administered by executors in the same way as other assets.
What to be aware of if including crypto assets in an estate?
While the legal classification may be familiar, the practical challenges are not. Unlike bank accounts or investment platforms, crypto assets are often held in digital wallets secured by private keys known only to the owner. There may be no central institution able to restore access if credentials are lost. If executors cannot locate or access those details, the asset may effectively be unrecoverable.
We are increasingly seeing estates where digital assets create unexpected complications, like executors being unaware that crypto assets exist at all, uncertainty about how to access online wallets or exchange accounts, difficulties obtaining accurate valuations for inheritance tax purposes or delays in estate administration while ownership and access are established.
In some cases, significant value can be lost simply because the necessary information was never recorded or shared appropriately.
Can crypto assets attract IHT?
Cryptoassets can also create challenges when calculating Inheritance Tax (IHT). Values must generally be assessed at the date of death, yet prices can fluctuate significantly within short periods.
Executors may therefore face a situation where tax liabilities arise based on a valuation that later changes substantially, adding pressure to already complex estate administration.
Many existing wills were drafted before digital assets became commonplace. As a result, they may not expressly contemplate crypto holdings or provide executors with sufficiently clear powers to deal with them.
Clear planning during lifetime can help reduce uncertainty and ensure executors understand both the existence and nature of the assets involved.
Importantly, effective planning does not require sharing sensitive security information within a will itself. Instead, it involves ensuring that assets are properly documented and that executors have the authority and guidance needed to administer them.
If you hold crypto assets, or suspect that your estate planning may not fully account for digital assets, taking advice now can help ensure your wishes can be carried out smoothly in the future.
Contact Downs Solicitors to see how we can help.
Contact Katie Carter
