What happens to cryptocurrency when you die UK?

Cryptocurrency forms part of your estate and is subject to inheritance tax. However, without proper planning, beneficiaries may never be able to access it. Private keys or passwords are needed to recover crypto, and if these are lost, the assets are effectively lost forever.

Is cryptocurrency subject to inheritance tax UK?

Yes, cryptocurrency is treated as property and included in your estate for inheritance tax purposes. If your total estate exceeds £325,000 (nil-rate band), crypto assets contribute to potential 40% IHT liability on the excess.

How do I leave cryptocurrency in my will UK?

Include crypto in your will by describing the assets and naming beneficiaries. Crucially, do NOT put private keys or seed phrases in your will (it becomes public on probate). Store access details separately and securely, telling executors where to find them.

Can my family access my Bitcoin if I die?

Only if they have your private keys, seed phrases, or exchange login details. If you die without leaving this information securely accessible, your crypto is essentially lost forever. Proper planning is essential.

Crypto Inheritance UK — What Happens to Cryptocurrency When You Die | PocketWise

Billions of pounds in cryptocurrency is estimated to be lost forever because owners died without leaving access details. Here’s how to ensure your crypto passes to your beneficiaries.

The Problem with Crypto Inheritance

Why Crypto Is Different

Traditional Assets	Cryptocurrency
Banks know the owner	No central authority
Probate grants access	Private keys required
Can be traced	May be unknown to exist
Recoverable with death cert	Lost without keys = lost forever

The Scale of Lost Crypto

Estimate	Amount
Lost Bitcoin globally	3-4 million BTC
Often due to	Death or lost keys
UK holders affected	Unknown but significant

UK Tax Position

Crypto and Inheritance Tax

Rule	Details
Treated as property	Not currency
Part of estate	For IHT calculation
Valued at death	Market value that day
IHT rate	40% above threshold

IHT Thresholds (2025/26)

Threshold	Amount
Nil-rate band	£325,000
Residence nil-rate band	£175,000
Combined (to direct descendants with home)	£500,000
Married couple (with transfers)	Up to £1,000,000

Example: Crypto in Estate

Asset	Value
House	£350,000
Savings	£100,000
Crypto	£150,000
Total estate	£600,000
Above threshold (£500k)	£100,000
IHT at 40%	£40,000

Capital Gains Tax Reset

CGT Rule	At Death
Base cost	Resets to value at death
Previous gains	Wiped out
Beneficiary sells later	CGT only on gains since death

This can be advantageous — large gains aren’t taxed at death.

Storing Access Information

What Information Needs Passing On

Item	Why Needed
Private keys	Direct wallet access
Seed phrases (12/24 words)	Wallet recovery
Exchange login details	Account access
2FA backup codes	If authenticator lost
List of holdings	What exists and where
Wallet addresses	What to look for

How NOT to Store Details

Method	Why It’s Bad
In your will	Becomes public document
Just in your head	Lost on death
On device without backup	Device failure
In email	Hackable
Telling family verbally	Forgotten or misremembered

Secure Storage Options

Method	Pros	Cons
Bank safe deposit box	Secure, fire-proof	Cost, access delay
Home safe	Quick family access	Fire/theft risk
Encrypted USB	Compact, hidden	Tech savvy needed
Split information	Extra security	Complexity
Crypto inheritance service	Purpose-built	Trust third party

Methods for Passing Crypto On

Method 1: Detailed Instructions for Executors

Step	Action
1	Create document listing all holdings
2	Include access instructions
3	Store separately from will
4	Tell executor where it is
5	Update when holdings change

The document should include:

Information	Details
Exchange accounts	Name, email used, 2FA info
Hardware wallets	Location, PIN, seed phrase
Software wallets	Apps, passwords
Approximate values	For estate admin
Named beneficiaries	Who gets what

How It Works	Details
Concept	Divide seed phrase into parts
Requirement	Need X of Y parts to recover
Example	3 of 5 family members needed
Security	No single point of failure

Method 3: Dead Man’s Switch

Service Type	How It Works
Regular check-in	You confirm alive periodically
If you don’t respond	Information released to beneficiary
Providers	Various crypto-specific services
Risk	Service discontinuation

Method 4: Multi-Signature Wallet

How It Works	Details
Setup	Wallet needs 2 of 3 keys
You hold	1 key
Beneficiary holds	1 key
Safe/solicitor	1 key
Access	Any 2 can transact

Working with Your Solicitor

What to Tell Them

Information	Purpose
You own crypto	Estate planning
Approximate value	IHT planning
How to access	Not details, just that plan exists
Where details stored	Executor needs to know

What NOT to Put in Will

Don’t Include	Why
Private keys	Will is public after probate
Seed phrases	Security risk
Passwords	Identity theft
Exchange details	Same reason

Will Wording

Good	Bad
“I leave my cryptocurrency holdings to [name]”	“My Bitcoin private key is…”
“Details of access stored at [location]”	Full instructions in will

Telling Your Family

What Family Needs to Know

Information	Why
You own crypto	They know to look
It has value	Worth recovering
Where access info is	Can find it
Who to contact	Adviser, service
What to do first	Step-by-step

The Conversation

Topic	Points to Cover
What crypto is	Basic understanding
Why it’s different	Access requirements
What you own	General awareness
The plan	How they’ll access
Who can help	Tech-savvy person

Estate Administration Steps

For Executors

Step	Action
1	Locate access information
2	Identify all holdings
3	Value at date of death
4	Include in estate accounts
5	Pay any IHT due
6	Transfer to beneficiaries

Valuation for Probate

Requirement	Details
Value at death	Not purchase price
Evidence	Screenshot/exchange record
Multiple coins	Value each separately
Report to HMRC	On IHT return

HMRC and Crypto

Rule	Details
Must be declared	On IHT400 form
Valuation evidence	Keep records
CGT for beneficiary	On future sale
Records to keep	5+ years

Hardware vs Exchange

If Held on Exchange (Coinbase, Kraken, etc.)

Advantage	How It Helps
Account recovery	Possible with death certificate
Customer support	Can help executors
Verified identity	Account traceable

Disadvantage	Issue
Terms vary	Some exchanges difficult
2FA recovery	May complicate access
Not your keys	Exchange controls crypto

If Held in Hardware Wallet (Ledger, Trezor)

Advantage	Details
Your keys	Full control
No exchange	No third party
Secure	Physical device

Disadvantage	Issue
Lost seed = lost crypto	No recovery option
Less familiar to heirs	May not understand
Security depends on you	Must plan properly

Crypto Inheritance Checklist

Do Now

List all crypto holdings and locations
Document access methods for each
Create secure storage for information
Update your will to reference crypto
Tell executor where to find details
Brief family on basics

Review Regularly

Update when holdings change
Check seed phrases still readable
Verify 2FA backup codes work
Update beneficiary details if needed
Review exchange recovery options

Special Situations

Multiple Beneficiaries

Approach	How
Specific assets	“Bitcoin to A, Ethereum to B”
Shares	“Crypto split equally”
Executor discretion	“As executor decides”

Minor Beneficiaries

Issue	Solution
Can’t manage crypto	Leave to adult in trust
Timing of access	Trust specifies
Who holds keys	Trustee responsibility

International Holdings

Consideration	Details
Exchange location	May have different rules
All in UK estate	For UK resident
Overseas beneficiaries	Transfer logistics

Summary

Priority	Action
Essential	Document all holdings and access
Essential	Store securely (not in will)
Essential	Tell executor where to find info
Important	Mention in will (not details)
Important	Brief family on basics
Helpful	Consider inheritance service
Helpful	Multi-sig or split access

Without proper planning, your cryptocurrency could be lost forever. Take steps now to ensure your digital assets reach your intended beneficiaries.

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