What Happens to Cryptocurrency When Someone Dies

As cryptocurrency becomes more common, many people now hold digital assets such as Bitcoin, Ethereum, or NFTs alongside traditional investments. But what happens to those assets when the owner dies? Unlike money in a bank, crypto is stored digitally and protected by private keys, which can make it difficult for executors or family members to access. This article explains what happens to cryptocurrency after someone dies, how it’s treated under UK law, and what steps can be taken to ensure it is inherited smoothly.

Cryptocurrency as Part of an Estate

In the UK, cryptocurrency is considered property for legal and tax purposes. This means it forms part of a person’s estate when they die, just like cash, shares, or real estate.

The digital assets are valued at the date of death and included in the estate for Inheritance Tax (IHT) calculations. Executors or administrators must declare them to HMRC when submitting the inheritance tax forms.

However, unlike physical assets, crypto cannot be accessed without the right information, such as private keys, passwords, or recovery phrases. If this information is lost, the assets may be permanently inaccessible.

Accessing the Deceased’s Crypto Assets

Accessing cryptocurrency after someone’s death is one of the biggest challenges for executors. Because blockchain systems are decentralised, there is no central authority like a bank to contact for account recovery.

To access the crypto, executors or family members need:

  • Details of all wallets and exchanges used.

  • Login information or recovery phrases for each account.

  • Instructions left by the deceased on how to access these securely.

If the deceased used an exchange based in the UK or abroad, the executor can contact the company with a copy of the death certificate, will, and proof of authority (Grant of Probate or Letters of Administration). Some exchanges have specific procedures for handling deceased users’ accounts.

If the person held crypto in a private wallet, only the private keys or recovery phrase will unlock it. Without these, the funds cannot be recovered.

Including Cryptocurrency in a Will

The best way to ensure crypto is passed on successfully is to include it in a will. A will should:

  • Specify who inherits the crypto assets.

  • Identify where the crypto is held (wallets or exchanges).

  • Provide clear but secure instructions on how to access it.

For security reasons, private keys or recovery phrases should not be written directly in the will, as wills become public records once probate is granted. Instead, they can be stored in a separate secure document or with a solicitor, executor, or digital asset custodian.

By including cryptocurrency in an estate plan, you make it much easier for executors to locate, value, and distribute the assets properly.

Inheritance Tax on Cryptocurrency

Cryptocurrency is subject to Inheritance Tax in the same way as other assets.

  • The total value of the crypto at the date of death is added to the estate.

  • If the estate exceeds the nil rate band (£325,000, or £650,000 for married couples or civil partners), IHT may apply at 40% on the excess.

  • The executor is responsible for reporting the crypto value to HMRC and paying any tax due.

If the crypto is inherited by a spouse or civil partner, the transfer is usually exempt from Inheritance Tax. However, the value must still be recorded for reporting purposes.

Valuing crypto can be tricky due to price volatility, so executors should use the market value at the time of death, supported by exchange rate records or professional valuations.

Capital Gains Tax for Beneficiaries

When a beneficiary later sells or exchanges the cryptocurrency they inherited, they may need to pay Capital Gains Tax (CGT) on any increase in value since the date of inheritance.

For example, if a beneficiary inherits Bitcoin worth £20,000 and later sells it for £30,000, they are taxed on the £10,000 gain. They can, however, use their annual CGT allowance (£3,000 for 2025–26) to reduce the amount payable.

Keeping accurate records of the crypto’s value at the date of death and at the time of disposal is essential for future tax calculations.

How Executors Should Handle Crypto in an Estate

Executors have a legal duty to identify and protect all assets in the estate, including cryptocurrency. To do this properly, they should:

  1. Locate all wallet and exchange accounts.

  2. Secure access to private keys and login details.

  3. Record the value of each asset at the date of death.

  4. Include the crypto in the inheritance tax return to HMRC.

  5. Transfer or sell the assets according to the will or intestacy rules.

Executors who are not familiar with crypto should seek help from a professional experienced in handling digital assets, as mistakes could lead to lost funds or breaches of legal obligations.

What Happens If There Is No Will

If someone dies without a will, their estate is distributed according to intestacy rules. Cryptocurrency will be treated like any other property and passed to relatives in a set legal order.

However, without prior documentation or knowledge of the deceased’s crypto holdings, these assets may be difficult or impossible to locate. This highlights the importance of leaving clear records and an estate plan, even for those with modest crypto holdings.

How a Crypto Accountant or Solicitor Can Help

Dealing with cryptocurrency after someone’s death requires specialist knowledge of both tax and digital asset management. A crypto accountant or solicitor can:

  • Value the crypto assets at the date of death for HMRC reporting.

  • Advise on inheritance and capital gains tax implications.

  • Help executors complete inheritance tax forms correctly.

  • Guide families on securely transferring or liquidating crypto assets.

  • Assist with probate applications that include digital assets.

Professional help ensures the estate remains compliant with UK tax law and that valuable crypto assets are not lost through inaccessibility or error.

Example Scenario

Imagine a person dies holding £50,000 worth of Bitcoin and Ethereum across several wallets. Their executor locates the wallet addresses but not the recovery phrases. Without access to those keys, the funds cannot be retrieved.

If, however, the deceased had left detailed instructions in a secure note stored with their solicitor, the executor could unlock the wallets, value the assets, include them in the inheritance tax return, and transfer them to the beneficiaries as intended.

This example shows how vital it is to plan ahead for digital assets as part of your estate.

Summary

When someone dies, cryptocurrency is treated as part of their estate and is subject to inheritance and capital gains tax in the same way as other assets. The main challenge is access without private keys or recovery information, crypto may be lost forever.

The best approach is to include digital assets in your will, keep access details securely stored, and make sure your executor or solicitor knows how to handle them. Professional advice from a crypto accountant or estate planner ensures the process runs smoothly and that your digital wealth is passed on safely and tax-efficiently.