Estate Planning · UK Reference

Inheritance & Crypto: A UK Legacy Guide

Published 4 May 2026

Planning what happens to your cryptocurrency when you die is just as important as securing it while you're alive. Cryptoassets are property for UK inheritance tax purposes — they form part of your estate and may push it over the taxable threshold. Without clear instructions for your executor, assets held in self-custody wallets may be permanently inaccessible. This guide covers the key steps for UK holders.

Cryptoassets count toward your estate value for Inheritance Tax purposes
Never put seed phrases or private keys in your will — wills become public documents
A separate Letter of Wishes is the right vehicle for access instructions
Without a digital asset inventory, executors may not know your holdings exist

Matt Oakley

4 May 2026 7 min read Tax

HMRC crypto guidance

Tax context

Inheritance tax thresholds

HMRC treats cryptoassets as property. This means they form part of your estate and are subject to Inheritance Tax (IHT) in the same way as property, savings and investments. The current thresholds — fixed through the 2030–31 tax year — are:

Nil-rate band: £325,000 — the first £325,000 of your estate is free from IHT
Residence nil-rate band: £175,000 — an additional allowance where a main residence passes to direct descendants
Combined threshold: Up to £500,000 for individuals; unused allowances can be transferred to a surviving spouse or civil partner, potentially doubling the threshold to £1,000,000
Rate above threshold: 40% on the value of the estate above the applicable threshold

Large crypto holdings can push an estate over the threshold. For those with significant self-custody holdings, combining this with sound tax planning — ideally with professional advice — is worth considering well in advance. The Crypto Tax 101 guide covers the CGT treatment of crypto during your lifetime, which is a related but separate consideration.

What this means

Crypto held in self-custody with no documented access plan is effectively irrecoverable for beneficiaries. Unlike a bank account, there is no legal mechanism to retrieve assets from a blockchain without the private key. This is context, not advice.

Critical rule

Keep crypto out of the will itself

A will becomes a public document after death through the probate process. This means anyone can access it. You should never include private keys, seed phrases, PIN numbers, wallet passwords or any other access credentials in your will. The will should simply state who inherits your cryptoassets — the actual access information belongs elsewhere.

This is especially important for self-custody hardware wallet users. The seed phrase to a hardware wallet is the master key to every asset on that wallet — including assets not yet listed in the will. Exposing it publicly would allow anyone to drain the wallet before or during the estate administration process. Hardware wallet security during lifetime is covered in Part 4 of the wallet series.

HMRC treats inherited crypto as part of the deceased's estate for Inheritance Tax purposes — but without accessible private keys, the taxable asset cannot be realised, creating a liability against an inaccessible asset.

The right vehicle

Drafting a Letter of Wishes

Law firm guidance — including from Fladgate — recommends preparing a private Letter of Wishes to accompany your will. Unlike the will, this document does not become public. It is addressed to your executors and should:

Describe what you own and how to access it: List the types of cryptoassets you hold and how they are stored — hardware wallets, exchange accounts, multi-signature wallets, or software wallets. Identify where private keys, seed phrases, account credentials and hardware devices are located. Direct the executor to a secure location (a safe, a sealed envelope, or a regulated custodian) where the credentials are stored — do not necessarily include the credentials in the letter itself.
Point to expert help: Nominate a person the executor can contact for technical assistance. Most executors are not familiar with crypto recovery processes; guidance prevents costly mistakes.
Reference the digital asset inventory: The letter should tell executors where to find the inventory (see below) without including it directly in any document that could become public.
Be kept confidential and regularly updated: Print and seal it with your will, or store it securely alongside. Review it whenever your holdings or storage methods change.

A 2026 article on digital assets in probate noted that executors frequently face significant difficulties and delays when passwords, recovery information and clear instructions have not been left behind — and that proactive planning can save families "considerable stress, delay and potential financial loss".

Practical step

Creating a digital asset inventory

A digital asset inventory is a private document listing everything needed to locate and access your crypto holdings. It should include:

Each wallet address and the assets held within it
Exchange accounts (Coinbase, Kraken, and others) — account email addresses, how to access them, and where 2FA codes are backed up
Hardware wallet devices — make, model, and where they are physically located
The location of seed phrase backups (not the seed phrases themselves in this document if it will be widely accessible)
Instructions for accessing multi-factor authentication, including backup codes

The inventory should not be attached to the will. It should be referenced in the Letter of Wishes, which tells your executor where to find it. Keep a single authoritative copy, stored securely, and update it whenever holdings or storage arrangements change.

Execution

Working with your executor

Appoint an executor who either understands digital assets or is willing to learn. If possible, walk them through the process of accessing your wallets before finalising your plans — not by showing them your seed phrase, but by ensuring they understand what a hardware wallet is, how recovery works in principle, and who they can call for help.

If the executor is not technically confident, the Letter of Wishes should direct them to a professional service experienced in crypto estate administration. Several UK solicitor firms now offer this. The cost of professional support during estate administration is typically a charge on the estate.

Because the crypto landscape evolves quickly, review your Letter of Wishes and digital asset inventory at least once a year. A letter of wishes is much easier to update than a will — it does not require witnessing or formal amendment.

Connected topics

Crypto Tax 101 — CGT and income tax on crypto during your lifetime, which affects the value of what passes to your estate.
Crypto Wallets Part 1 — self-custody fundamentals, including how hardware wallets work and what seed phrases represent.
Crypto Wallets Part 4 — seed phrase security and the risks of exposing recovery information.