We explain, in plain English, what it means for families who wish to place digital holdings within a legal structure.
A settlor can transfer holdings to trustees who manage them for beneficiaries. This keeps matters private and usually avoids probate, which can be lengthy and costly.
We set expectations clearly. A legal structure can improve control, speed and privacy. It does not remove every practical issue, particularly where exchanges and online providers have their own terms.
Key choices include whether the structure should own holdings outright or simply control access via instructions and safeguarding. Proper planning helps avoid the “locked wallet” problem — valuable holdings with no organised keys or passcodes.
We recommend professional advice for tax, choice of structure and trustee selection. Mistakes with digital holdings can be irreversible, so sensible guidance matters.
Read on for a step‑by‑step journey from unique risks through practical set‑up and ongoing management. For detailed tax notes see our guide on crypto inheritance tax.
Key Takeaways
- Structures can speed access and keep matters private for loved ones.
- Decide if the structure owns holdings or only controls access.
- Organise keys and passcodes to avoid locked wallets.
- Professional advice helps with tax, structure type and trustees.
- We cover risks, setup steps and ongoing management in the article.
Why cryptocurrency needs special estate planning in the UK
Unlike cash in a bank, electronic wallets often leave no paper trail when an owner dies. That simple fact changes how we plan. Good estate planning must cover both legal paperwork and clear, secure information arrangements.
Little paper trail — holdings can go undiscovered
Many exchanges send no postal statements. Family can be unaware which accounts exist.
Risk: holdings may remain effectively lost if no one knows where to look.
Access depends on private keys, passcodes and technical skill
Ownership means little without credentials. Seed phrases, PINs and 2FA are critical.
Practical reality: without the right details and know‑how, executors may face an impossible process.
Volatility means delays can change value quickly
If beneficiaries must wait weeks or months, market swings can alter value sharply.
That can frustrate wishes where someone intends to leave a specific sum.
| Risk | Why it matters | Practical step |
|---|---|---|
| No paper trail | Executors lack leads during probate | Create an indexed inventory of accounts |
| Lost credentials | No access means no transfer | Store seed phrases separately and securely |
| Market volatility | Value can fall or rise while matters progress | Plan for flexibility in timing and distributions |
| Technical errors | Wrong address or mishandled device causes loss | Assign knowledgeable executors or advisers |
What counts as a digital asset and where crypto fits
Digital items range from photo libraries to exchange accounts and intellectual property.
We define digital property broadly so planning covers everything of value, not only token holdings. This helps families spot what matters and how each item may pass on.
Cryptocurrencies, wallets, exchange accounts and security tokens
Cryptocurrencies are the tokens themselves. They may live on blockchains and need private keys for movement.
Wallets can be self‑custody or hosted. A self‑custody wallet gives control through keys. An exchange account is a login that often rests with the provider.
Security tokens act like digital shares. They may carry legal rights and need specific documentation for transfer.
Other digital items that sit alongside crypto in your estate
Many estates include cloud photo libraries, emails that hold important documents, blog rights and in‑game items.
Intellectual property, such as a blog or creative work, is often treated as property. Platform accounts may not transfer easily, yet the rights can.
Sensitive data — recovery emails, 2FA devices and backup phrases — deserves careful handling and separate storage from legal papers.
Practical step: make a clear inventory that lists accounts, their nature, access method and location of recovery details. That single method covers financial and sentimental value alike.
| Item | How it exists | Why it matters |
|---|---|---|
| Self‑custody wallet | Private keys or seed phrase | Full control; loss of keys = loss of value |
| Exchange account | Platform login and verification | Provider rules affect transfer and access |
| Cloud media | iCloud, Google Photos, storage libraries | Sentimental value; may contain legal records |
| Intellectual property | Blogs, creative works, in‑game rights | Can generate income; often treated as property |
How a trust works for cryptocurrency holdings
When digital holdings are wrapped into a formal structure, three parties carry out separate duties.
Who does what:
- Settlor — the person who places items into the arrangement and sets its purposes.
- Trustee(s) — those who manage records, make decisions and follow the deed.
- Beneficiaries — the people who receive benefits under the plan.
Common forms and when they suit
In the UK, families often choose from bare, interest in possession or discretionary models. A bare option gives clear ownership paths. An interest model lets someone receive income first. A discretionary arrangement lets trustees decide who benefits and when.
Ownership versus control
The legal owner may be the trustee. Yet in practice control lies with whoever has the keys. That means paperwork and security instructions must match.
Practical purposes: continuity, protection, staged distributions and reducing pressure on heirs. Good planning lets trustees sell, hold or drip benefits over time, based on beneficiary age and needs.
using a trust to hold cryptocurrency assets uk
When markets swing fast, acting without delay can preserve real value. Trustees who can move straightaway remove months of waiting that often follow death.
Avoiding probate delays and keeping management moving
Assets held in a trust are usually outside probate. That means trustees can manage, sell or protect holdings at once. Prompt action helps guard against sudden falls in value.
Privacy advantages compared with a will becoming public
Wills become public during probate. By contrast, most trusts remain private. That privacy reduces the chance of unwanted attention and social‑engineering scams aimed at loved ones.
Protecting loved ones from the burden of handling crypto
We can set out clear roles so beneficiaries are not asked to learn wallets or seed phrases in grief. Trustees can handle technical steps, leaving family to grieve.
Maintaining control over how and when beneficiaries benefit
Trust deeds can set rules. You can allow staged payments, let trustees sell a portion for inheritance tax, or hold funds for long‑term growth. That preserves capital and gives heirs breathing space.
| Benefit | How it helps | Practical example |
|---|---|---|
| Speed | Immediate management | Trustees sell part to cover liabilities |
| Privacy | Details stay confidential | Avoids public probate listings |
| Protection | Less burden on family | Trustees handle wallets and exchanges |
For practical guidance on setting this up, see our note on trusts for digital assets.
The UK legal and practical landscape for digital assets
Digital service rules often decide who may see or move your online valuables after you die.
Many major platforms write terms under foreign law. That can affect access and create an awkward process for executors and relatives.
Examples:
- Some providers offer a legacy contact tool that grants access.
- Others may delete accounts or refuse requests from executors.
- US‑based platforms often apply US law even when individuals live in Britain.
Why this matters in practice
Coins or tokens held on an exchange face provider rules. Self‑custody items follow blockchain rules instead, so providers are not involved.
Legal clarity is limited in case law. The Property (Digital Assets etc.) Bill aims to reduce that uncertainty, but changes are still unfolding.
What we recommend: maintain a clear document trail — inventory, trustee resolutions and proof of authority. Good records cut delay and reduce disputes.
For tax notes and practical steps, see our inheritance tax guidance.
Preparing your cryptocurrency for a trust
Start by mapping out every account and device so nothing fades from view later. Make an inventory that lists platform names, wallet type, public addresses and where devices are stored.
- Platform or wallet name and public address.
- Type of account, brief note on holdings and verification method.
- Physical location of devices and recovery methods in place.
Separate sensitive data from legal papers. Do not place seed phrases or passwords in the trust deed or will. Keep that information in an encrypted password manager or offline encrypted vault.
Choose secure storage for instructions and recovery information. Options include a solicitor‑held sealed letter, an encrypted offline drive or a reputable password service. Tell trustees where the inventory and instructions live, and give clear steps for the handover process.
Back up without increasing risk. Keep copies in multiple secure places and limit who knows what. The simple goal is this: trustees must find what exists, prove authority and gain safe access when the time comes.
Setting up the trust document and appointing trustees
Begin by making the deed precise about which digital items form part of the arrangement.
Drafting the deed: define categories rather than vague phrases. List wallets, exchange logins, tokens and any business payments. State clear purposes and powers for management and sale.
Why it matters: transfers are often irreversible, so trustees must have lawful authority and step‑by‑step instructions.
Choosing trustees
Pick people with integrity and basic technical literacy. They should know 2FA, safe device handling and how to send transactions without errors.
Consider appointing both a professional trustee and a family member. This balances continuity, practical help and independent oversight.
Practical instructions
- Set rules for when to sell or hold, and who may approve distributions.
- Require record‑keeping, audit rights and reporting intervals.
- Include emergency contacts and a decision process for business receipts.
| Area | What to include | Benefit |
|---|---|---|
| Definitions | Wallet types, exchange names, business receipts | Removes ambiguity |
| Powers | Management, sale, distribution rules | Enables prompt action |
| Governance | Trustee roles, professional oversight | Balances skill and family context |
Transferring and managing crypto inside the trust
Clear practical steps help trustees move tokens with care. We explain how transfer mechanics differ for exchange accounts and self‑custody wallets.
How ownership and control differ by wallet type
On exchanges, an account shows legal records and platform rules. Control comes from logins and verification. For self‑custody, ownership is the private key itself.
- Exchange account: platform paperwork may be needed before access.
- Self‑custody: moving tokens means signing transactions with keys.
Cold wallets, custody arrangements and safeguarding devices
Cold wallets use offline devices and seed phrases. Store hardware in secure safe deposit boxes or solicitor vaults.
- Keep seed recovery separate from legal papers.
- Consider regulated custodians where professional custody makes sense for business or large investments.
Trustee duties: securing, trading, record‑keeping and distributions
Trustees must secure systems, decide whether to trade or hold, keep clear records and follow distribution rules. Good management protects family wealth and long‑term investments.
| Duty | Practical step | Benefit |
|---|---|---|
| Security | Dual control, hardware safes | Reduces theft risk |
| Records | Signed logs, transaction receipts | Audit trail for tax and heirs |
| Distributions | Follow deed rules; document approvals | Fair, accountable outcomes |
Reducing unauthorised transfers and irreversible losses
- Use multi‑sign processes for large transfers.
- Limit who may approve movement from an account.
- Test recovery steps before they are needed.
“Disciplined administration keeps family wealth accessible while lowering chance of permanent loss.”
Valuation, tax and reporting considerations for trust-held crypto
HMRC expects clear date‑stamped valuations when reporting transfers and disposals. That means record the market rate at the exact time of any transfer, gift or sale. Use a named exchange or reputable price index and note the source.
Prices move fast and different venues can show slightly different figures. This makes valuations challenging.
Practical steps: capture date, time, exchange name, token amount and pound value. Keep screenshots and exportable reports for proof.
Inheritance tax and the seven‑year context
Some lifetime gifts into discretionary arrangements may trigger inheritance tax depending on timing. The familiar seven‑year rule can reduce exposure, but the type of arrangement matters.
We recommend checking how a particular vehicle is treated for inheritance tax before moving holdings. Simple planning can avoid unexpected bills for heirs.
Capital Gains Tax on disposals
When trustees sell, swap or otherwise dispose of tokens they may create a capital gain or loss. Trustees must calculate gain using values at receipt and at disposal and report this to HMRC.
| Event | What to record | Why it matters |
|---|---|---|
| Transfer into arrangement | Date, market value, source | Inheritance tax position |
| Sale or swap | Proceeds, cost basis, fees | CGT calculation |
| Distribution on death | Value at date of death | Valuation for beneficiaries |
“Good records make tax reporting straightforward and protect what you leave behind.”
Tax rules for digital holdings continue to evolve. That uncertainty can change reporting duties and net value passed down. We suggest getting tailored professional advice before acting. Clear records and sensible timing often save families time, stress and money.
Conclusion
Modern digital holdings form part of many family estates and need clear steps before they become someone else’s problem.
Summary: without a proper plan, keys, logins and provider rules can mean value is effectively lost. Good estate planning must match legal documents with practical access arrangements for trustees and executors.
Trusts offer clear benefits: they often keep property outside probate, preserve privacy and let trustees act quickly for beneficiaries. Choice of executors and trustees matters greatly because mistakes can be permanent.
Next steps: create an indexed inventory, store recovery information securely, and review your arrangements regularly as holdings and laws change. Speak with a solicitor experienced in trusts and digital holdings so your family is not left solving a technical puzzle during bereavement.