What Happens to Cryptocurrency When You Die?

Because cryptocurrency is controlled by whoever holds the relevant private keys, rather than by an account with a company that can verify identity, being the rightful heir to a holding does not automatically mean being able to use it. If the deceased held their cryptocurrency in a personal wallet, meaning they controlled the private keys directly rather than through an exchange, those keys are the only way in, and there is no password reset option available anywhere.

This is fundamentally different from how a bank account works, where the bank can verify a death certificate and a grant of probate and then release the funds regardless of whether anyone knows the online banking password. With self-custodied cryptocurrency, if the keys are lost, the funds are, in nearly all cases, lost permanently and irretrievably, no matter how clearly the will identifies who should inherit them.

Where cryptocurrency is held on an exchange, such as a platform where someone bought and stored their coins rather than moving them to a personal wallet, the exchange itself may have a process for dealing with a deceased customer's account, somewhat similar to how a bank deals with a deceased customer's account. This typically requires a death certificate and evidence of the executor's authority, such as a grant of probate, before the exchange will release funds to the estate.

Where cryptocurrency is held in a personal wallet, controlled entirely by private keys or a seed phrase that only the deceased knew, there is no exchange or company to approach at all. The only way in is through the keys themselves, which is why locating and securing them, if they exist somewhere in the deceased's records, becomes one of the most urgent and important tasks for the executor.

Executors administering an estate should specifically ask family members whether the deceased was known to hold or trade cryptocurrency, since this is easy to overlook among more conventional assets like bank accounts and property. Bank statements can sometimes show a history of transfers to a cryptocurrency exchange, which is a useful clue even where the current holding is not immediately obvious.

Any note, document, or hardware device that might contain a private key or seed phrase should be treated with real care. These should not be photographed, shared over insecure channels, or typed into unfamiliar websites, since scams targeting exactly this kind of situation exist. Where the value involved is significant, it is worth getting professional advice on how to secure and transfer the holding safely, rather than experimenting without guidance.

Cryptocurrency needs to be valued as at the date of death for inheritance tax and probate purposes, in the same way as shares or other investments, using the market value in pounds sterling at that time. Because cryptocurrency prices can be extremely volatile, this valuation can matter significantly for the overall value of the estate and any tax due, and it should be documented carefully with clear evidence of the price used.

Once the estate has established the value and, where possible, obtained access to the holding, the cryptocurrency can be distributed to beneficiaries either by transferring the coins directly to their own wallets, where the beneficiaries are able to manage this, or by converting the holding into pounds sterling before distribution, which is sometimes the more practical route for beneficiaries unfamiliar with managing cryptocurrency themselves.

Given the combination of significant value, real technical complexity, and the permanent nature of any mistakes, cryptocurrency is one of the areas of estate administration where professional advice makes a genuine difference. This can include specialist probate practitioners familiar with digital assets, accountants for valuation and tax questions, and in some cases specialist digital asset recovery services where access is proving difficult.

If you are dealing with an estate that includes cryptocurrency, particularly where the value is significant or the access arrangements are unclear, we would recommend seeking individual advice tailored to the specific holding and circumstances, rather than relying on general information alone.