Inheritance of Digital Assets and Cryptocurrencies: A New Reality for Inheritance Law

In recent years, digital assets and cryptocurrencies have evolved from a niche tool for enthusiasts into a full‑fledged element of an investment portfolio, a means of payment and an object of business transactions. For many entrepreneurs, IT professionals, traders and even “ordinary” investors, cryptocurrencies and other digital assets already make up a significant share of their wealth. It is therefore natural to ask: what happens to these assets after the owner’s death, how do they pass to heirs, and are legal systems ready for this new reality?
What are digital assets in the context of inheritance?
Digital assets usually refer to a wide range of objects that exist in digital form and have economic value: cryptocurrencies (Bitcoin, Ethereum, etc.), tokens, virtual wallets, exchange accounts, NFTs, balances on payment platforms, as well as access to certain online services (marketplaces, financial applications, gaming platforms). From the perspective of inheritance law, the key question is whether a particular digital asset is recognised as property that can be inherited, or whether it is merely a “right of access” to a service that is personally linked to the user.
In the classical inheritance model, what passes to heirs is property – things, money, claims, corporate rights and so on. If legislation or court practice treats a digital asset as property, it forms part of the estate as an element of the deceased’s asset pool. If, however, we are dealing purely with personal rights (for example, a social media account tied to a specific individual and having no independent economic value), such “assets” may not pass to heirs at all, or their transfer may be strictly limited by the service rules or by law.
Specific features of cryptocurrency as an inheritance asset
Cryptocurrency differs significantly from traditional assets in that it is not “held” in a bank; access to it is provided by cryptographic keys or an account on an exchange. From a legal point of view it is increasingly recognised as an object of ownership, but without private keys or access to the account the practical ability to accept such an inheritance disappears.
Accordingly, the main problem in inheriting cryptocurrency is not only the legal recognition of the right, but also real access to the asset. If heirs are unaware of the existence of cryptoassets, do not possess the keys and cannot restore the account, these assets remain inaccessible to them: unlike bank accounts, a crypto‑wallet without identification of the owner and without keys is effectively lost.
Key legal challenges
The first challenge is the lack, in many jurisdictions, of specific rules governing the inheritance of digital assets. General inheritance provisions are often applied, even though they do not take into account the technical nature of the crypto industry, so notaries, courts and tax authorities are forced to adapt traditional approaches and this creates legal uncertainty for heirs.
The second set of issues relates to evidence: it is difficult to prove that the deceased owned cryptoassets that do not appear in bank statements or official registers. In many cases the only evidence is a wallet, correspondence, transaction history or accounting documents, which raises questions about the evidentiary basis, confidentiality and compliance of “anonymous” crypto transactions with anti‑money‑laundering and tax rules.
The third aspect is the conflict between terms of service and national law. Many platforms and exchanges state that an account is personal, non‑transferable and may be closed upon the user’s death. This can conflict with inheritance law principles under which property rights and assets should pass to heirs, and it requires a separate legal analysis of each service and the creation of an evidentiary base for potential disputes.
Practical models for organising cryptocurrency inheritance
To minimise the risk of losing cryptoassets, owners increasingly implement a “digital testament” – a plan for transferring access to wallets and accounts in the event of death. The most common option is a will that lists digital assets, sets out principles for their distribution and provides instructions on access (for example, via a safe containing seed phrases or wallet data).
Another model involves trust‑based tools or legal structures (a trust, company or fund) in which cryptoassets are held by a legal entity and heirs receive corporate rights or shares. This simplifies the legal side but requires careful tax planning.
Technical solutions are also used: multisignature arrangements, “inheritance” smart contracts, and dead man’s switch services that automatically transfer control or notify trusted persons after a long period of inactivity by the owner. Their use, however, demands a high level of technical literacy and a careful assessment of security and legal risks.
The role of the notary and lawyer
Including digital assets in inheritance cases reshapes the role of notaries and advisers. Whereas the main focus used to be on verifying traditional property, now lawyers must ask testators and heirs specific questions about the presence of cryptocurrencies, exchange accounts and digital wallets. It is important not only to record the existence of these assets legally, but also to check whether the ownership structure complies with the law and does not create risks from an AML or tax‑control perspective.
A notary or lawyer handling inheritance increasingly acts as a “bridge” between law and technology: on the one hand, they ensure proper formalisation of inheritance rights, and on the other, they help arrange the secure transfer of access to digital assets, involving technical experts where necessary. For lawyers, especially in business and investment practice, this is a new but already essential area of work.
Tax and compliance aspects
Transferring cryptocurrency by inheritance usually has tax consequences, which depend on the applicable model of digital‑asset taxation in a particular country. In some jurisdictions inheritance of property may be tax‑exempt or taxed at preferential rates, but subsequent sale or exchange of cryptoassets by heirs often gives rise to income or capital‑gains tax. It is also essential to determine the market value of cryptoassets on the date the estate is opened and to properly document that valuation.
For owners of substantial digital assets, it is advisable to integrate cryptocurrency into the overall asset‑management system: reflect it in internal accounting policies, formalise the ownership structure, where possible, through contracts or corporate vehicles, and take into account anti‑money‑laundering and compliance requirements. This simplifies inheritance and reduces the risk of disputes both with public authorities and between heirs.
Recommendations for digital‑asset owners
Practice shows that the main risk in inheriting cryptocurrency lies not so much in the absence of legal rules as in the lack of planning. Many crypto holders deliberately do not record what they own or “keep everything in their head”, fearing information leaks. As a result, even close relatives may be unaware of significant digital assets after the owner’s death and therefore effectively lose them.
A sensible compromise is to develop a structured plan: describe key digital assets (without disclosing all details publicly), identify the persons to be notified in case of death (heirs, a trusted person, a lawyer), design a secure mechanism for transferring seed phrases, private keys or logins – via a safe, deposit or specialised services with clear instructions – and include digital assets in a will or other planning instrument consistent with applicable law.
This approach makes it possible to combine confidentiality and security with legal certainty and protection of heirs’ interests.
If you have any questions or issues related to the inheritance of digital assets and cryptocurrencies, please contact our lawyers for individual advice and professional legal assistance.
Author: Ihor Yasko, Managing Partner of JSC “Law Firm WINNER”, PhD in Law.