Robert Webster, partner at Maguire Family Law, explores the growing challenge digital assets present in estate planning, and shares advice for private client practitioners.
Digital assets are becoming an increasingly significant component of personal wealth, yet they present estate planners with risks that differ fundamentally from traditional property.
Cryptocurrency in particular poses unique challenges. Without careful planning, substantial digital holdings can become permanently inaccessible on death, leaving personal representatives unable to locate, control or distribute assets intended for beneficiaries.
As investment trends shift and digital currencies become more widely held, private client practitioners must ensure that estate planning keeps pace with technological change. Failing to do so risks avoidable loss, disputes and professional negligence exposure.
Cryptocurrency as property in estate administration
English law recognises cryptocurrency as property capable of being owned and transferred. In AA v Persons Unknown, the High Court confirmed that digital assets fall within established definitions of property, enabling the courts to grant proprietary remedies in respect of them. This recognition provides an essential legal foundation for estate administration, confirming that digital assets form part of a deceased’s estate in the same manner as other investments.
However, practical control of cryptocurrency differs markedly from traditional financial assets. Banks and investment platforms maintain centralised records and can be contacted by personal representatives. Cryptocurrency, by contrast, can be controlled through private cryptographic keys known only to the holder. Without access to these keys, digital wallets may be locked forever and assets irretrievable.
The risk of irretrievable loss
The defining feature of cryptocurrency is decentralisation. There is usually no central authority capable of restoring access if login credentials, private keys or recovery phrases are lost. If this information dies with the owner, the asset may effectively cease to exist in practical terms, regardless of its theoretical legal status.
Estimates suggest that a significant proportion of cryptocurrency in circulation is already inaccessible due to lost credentials. In an estate context, this creates serious risks for personal representatives, who may be under a duty to gather in assets but lack the technical means to do so. The result can be financial loss for beneficiaries and potential disputes regarding the adequacy of estate planning.
Identifying digital assets within the estate
Locating cryptocurrency holdings can be difficult where records are incomplete. Unlike conventional investments, there may be no paper trail or institutional correspondence. Digital wallets may be stored on hardware devices, encrypted software applications or online exchanges operating internationally.
Private client practitioners should therefore encourage clients to maintain secure but accessible records of digital asset holdings. This includes documenting the existence of wallets, exchanges used, and instructions regarding access mechanisms. Without such records, personal representatives may struggle to identify the full extent of estate assets.
Secure storage and access planning
Estate planning for cryptocurrency involves a careful balance between security and accessibility. Private keys and recovery phrases must be protected from theft or misuse, yet they must also be capable of being accessed by trusted individuals in the event of death or incapacity.
Practitioners increasingly encounter solutions involving encrypted storage systems, multi-signature wallets requiring multiple approvals for transactions, and formal digital asset memoranda stored alongside testamentary documents. The appropriate approach depends on the scale of holdings, the client’s technical literacy and their broader risk profile.
Cross-border and regulatory complications
Cryptocurrency exchanges frequently operate across multiple jurisdictions, each with differing regulatory and compliance frameworks. Personal representatives may face difficulties obtaining account information or securing control of assets where providers are based overseas. Delays can be significant, particularly where regulatory standards or succession laws differ.
These jurisdictional complexities reinforce the importance of clear record keeping and early professional advice. Where substantial digital holdings exist, coordination between private client solicitors, forensic specialists and, in some cases, foreign lawyers may be required.
Interaction with family law and wealth structuring
Cryptocurrency’s role in estate planning increasingly overlaps with family law and wealth structuring considerations. Digital assets may form part of nuptial agreements, intergenerational wealth transfers and tax planning strategies. As a result, private client practitioners must remain alert to the treatment of digital property across multiple legal contexts.
A holistic approach to wealth planning ensures that digital assets are not considered in isolation but as part of the client’s broader financial landscape.
Conclusion
Cryptocurrency presents estate planners with a modern form of property that carries unfamiliar practical risks. While the legal status of digital assets is increasingly clear, their decentralised and security-driven nature demands careful succession planning. Without it, valuable assets may be permanently lost.
Private client practitioners who develop robust procedures for identifying, recording and transferring digital wealth will be best placed to protect clients and beneficiaries as digital assets become an established feature of modern estates.
About the author
Robert Webster is a partner at Maguire Family Law. He is dual qualified, initially being admitted in 2015 as a barrister and solicitor in New Zealand then later as a solicitor here in 2018. Rob brings to the UK a wide range of family law experience, having represented clients in contested hearings before both the Family Court and High Court in New Zealand, as well as conducting his own advocacy across the North West. Having commenced his UK career in a Legal 500 firm in Liverpool City Centre, Rob later joined a high street practice in Lancashire for around 18 months before joining Maguire Family Law in 2020.
