An executor in Adelaide can see, on a blockchain explorer, that the deceased held around $180,000 of Bitcoin. The wallet address is in an old email. The balance is visible to anyone in the world who cares to look.
Nobody can move it. There is no bank to call, no branch to visit, no identity check that unlocks it. Without the private key, the asset simply sits there, permanently visible and permanently unreachable, while the estate is administered around a hole where $180,000 should be.
This is the defining feature of digital assets in estate planning. With traditional assets, the hard question is who inherits. With digital assets, ownership is often the easy part and access is the problem, and access is the one thing a will cannot grant.
This guide covers what actually happens to crypto, online accounts and loyalty points when someone dies, the tax treatment of inherited crypto, and the practical steps that prevent the situation above.
Three kinds of digital asset, and they behave differently
| Type | Examples | What happens on death |
|---|---|---|
| Property you own | Crypto, domain names, online businesses, monetised channels, digital art | Forms part of your estate and passes under your will, if it can be accessed |
| Licensed access | Loyalty and frequent flyer points, streaming and media libraries, most social accounts | Governed by the provider’s terms, not by your will |
| Records and keys | Email, cloud storage, photos, password managers, authentication apps | Not valuable in themselves, but often the only route to everything else |
The third category is the one people overlook and the one executors need most. Email in particular functions as the master key to almost everything, because password resets flow through it.
Crypto is the hard one
Legal title is straightforward. Access is not.
Crypto held by an Australian resident is property, it forms part of the estate, and it passes under the will like anything else. That part is settled.
The difficulty is that control depends on a private key or seed phrase. There is no issuer, no registry and no customer service. If the key is lost, the asset is lost, and no legal document, court order or probate grant changes that. A will can say who inherits the Bitcoin. It cannot produce the key.
Self custody and exchange accounts are different problems
Where crypto is held on an exchange, the estate has someone to deal with. Australian exchanges generally have a deceased estate process requiring a death certificate, proof of the executor’s authority, and usually a grant of probate. It is slower than a bank but it works.
Where crypto is self custodied in a hardware or software wallet, there is nobody to ask. The estate’s ability to recover the asset depends entirely on whether the deceased left a workable path to the key.
There is a middle case worth naming. If an exchange or platform enters external administration, the CGT position generally does not crystallise until the administration is finalised, which can leave an estate holding an unresolved claim for a long time.
Never put a seed phrase in your will
This is the single most important line in this article. Once a grant of probate is made, the will becomes a public document that can be obtained by anyone. Anything written in it, including a seed phrase, a private key or a password, is exposed.
The same applies to putting keys in an email, a shared cloud folder, or a document your executor is told about but which is not properly secured. The objective is to give a trusted person a path to access at the right time, without creating a copy that anyone can find in the meantime.
What to do instead
- Say that it exists. The will, or a separate memorandum referred to in it, should record that crypto assets exist and roughly where, without recording the credentials. An executor who does not know to look will not look.
- Keep the credentials separate and secure. Physical backups of a seed phrase held in a safe or bank safe deposit box, or sealed instructions held by your solicitor, are common approaches. The instructions should be updated whenever the holdings change.
- Write instructions someone else can follow. A seed phrase is useless to an executor who has never used a hardware wallet. Step by step instructions matter as much as the credentials.
- Consider whether your executor is the right person for this. Administering a crypto holding needs a level of technical confidence that not every capable executor has. This may warrant a specific appointment, or professional help engaged by the estate.
- Consider consolidating. Multiple wallets, exchanges and chains accumulated over a decade are considerably harder to administer than a smaller number of well documented holdings.
The people best placed to advise on the legal structure here are estate solicitors, and this is worth doing properly rather than improvising. Our guide on what the executor role actually involves is a useful reality check for anyone naming one.
The tax position on inherited crypto
Australia has no inheritance tax, but that does not mean inherited crypto has no tax consequences. Several rules matter.
- Passing to a beneficiary is generally not a taxable event. The legal personal representative disregards any capital gain or loss on transferring an estate asset to a beneficiary.
- The beneficiary inherits the cost base. For assets the deceased acquired on or after 20 September 1985, the beneficiary takes on the deceased’s cost base, and is taken to have acquired the asset on the day the person died. The cost base does not reset to market value at death.
- If the executor sells during administration, the estate pays. Where the LPR disposes of crypto rather than transferring it, normal CGT rules apply and the gain sits with the estate.
- The deceased’s capital losses die with them. Any unapplied net capital losses the deceased was carrying forward do not transfer to the estate or to beneficiaries. This surprises families with substantial accumulated losses and is worth knowing before a large gain is realised.
- Records are the whole game. Because the beneficiary inherits the deceased’s cost base, they need the deceased’s acquisition records. Crypto held across several platforms over many years, with no consolidated record, produces exactly the substantiation problem described in our guide on cost base records, only worse, because there is no share registry to fall back on.
The changes to the CGT discount from 1 July 2027 apply to crypto as they do to other CGT assets held by individuals and trusts, including the deemed sale and reacquisition of assets held at 30 June 2027. That makes documented holdings and valuations more valuable, not less.
Where the key is genuinely lost
The ATO accepts that a capital loss can be claimed for lost or stolen crypto where you can provide evidence of ownership. Its position is that something recoverable is not lost, but a lost private key cannot be recovered, so it qualifies. Any compensation or insurance received reduces the loss.
That is a consolation rather than a solution. A capital loss can only offset capital gains, not other income, so an estate with a lost wallet and no gains gets very little from it.
Loyalty points and frequent flyer balances
Households frequently hold five figure point balances and assume they will pass to family. Often they do, but not because of the will.
Points are generally not property you own. They are a contractual entitlement governed by the program’s terms and conditions, and what happens on death is whatever those terms say. Several major Australian programs do have a process allowing a balance to be transferred to a nominated person or to the estate on application, sometimes within a limited period after death. Others do not, and some terms provide for cancellation.
Two practical steps. Record the programs and membership numbers in your inventory, because a balance nobody knows about is a balance nobody claims. And check the current terms for the programs where you hold a meaningful balance, since these terms change and any figure or rule published elsewhere may be out of date.
Accounts your family will need, whether or not they are worth anything
- Email. The route to resetting almost everything else. Also, in practice, where the executor finds out what accounts and assets existed at all.
- Photos and cloud storage. Rarely valuable, frequently the thing families most want, and frequently lost.
- Subscriptions and recurring payments. Someone has to find and cancel them, and they continue billing until they do.
- Social media. Major platforms have memorialisation or legacy contact features that let you nominate someone during your lifetime. Setting these up takes minutes and is far easier than dealing with a platform after the fact.
- Devices and authentication. Two factor authentication that depends on a phone can lock an estate out of accounts it is legally entitled to access. Note where the authenticator lives and how it is backed up.
Several large technology providers now offer legacy contact or inactive account settings that allow you to nominate who can access certain data after your death. These are worth turning on, because they are the only mechanism that works with the provider’s terms rather than against them.
What Australian law does and does not do here
There is no comprehensive Australian legislation governing access to digital assets and accounts on death or incapacity. Law reform bodies have recommended reform, but the position remains largely governed by each provider’s terms of service, which are typically drafted for a global user base and generally prohibit account sharing.
That produces an awkward gap. Your executor may be legally entitled to an asset while being contractually prohibited from accessing the account holding it. It is also why the intuitive solution, writing your passwords on a list for your executor, is not the right answer on its own. It can breach the provider’s terms, it creates a security exposure while you are alive, and it does nothing about the assets that need more than a password.
The workable approach is layered. Legal entitlement through the will, discoverability through an inventory, access through properly secured credentials and the platforms’ own legacy tools, and a person capable of using all three.
Building a digital asset inventory
This is the practical core, and it is a document, not a legal instrument.
- List what exists, not how to get in. Asset or account, provider, approximate value, and where the credentials are held. The inventory itself should contain no passwords or seed phrases.
- Cover all four groups. Crypto and wallets, financial and trading platforms, loyalty programs, and personal accounts including email and cloud storage.
- Say where the keys are. A safe, a safe deposit box, sealed instructions with your solicitor. Someone needs to know the location without knowing the contents.
- Include instructions, not just credentials. Assume the reader has never used the software involved.
- Reference it in your will without incorporating it, so that it can be updated without redoing the will. Your solicitor will know how to word this.
- Turn on the platform legacy tools for the major accounts while you can.
- Review it annually. Digital holdings change far faster than property or super, and a five year old inventory is close to useless.
The same inventory is the document that makes the rest of your estate plan work as intended. Our guides on estate planning and how property title can override your will deal with the other assets that behave differently from how people assume, and superannuation and your will covers the largest of them.
Incapacity, not just death
Death is the scenario people plan for. Incapacity is more common and, for digital assets, often harder.
An attorney under an enduring power of attorney may need to deal with an investment account, cancel subscriptions, manage a small online business or access records, while the account holder is alive but unable to give instructions. Whether the document authorises that, and whether the provider will accept it, needs thinking about in advance. Our guide on powers of attorney and advance care directives in South Australia covers the documents involved.
Where Professional Advice Adds Value
We are financial planners rather than solicitors, so the drafting sits with your lawyer. What we do is the part that makes the drafting useful.
At Money Path that means building the complete picture of what you own, including the holdings that never appear on a statement, and then asking what would actually happen to each one tomorrow. For crypto specifically, it means working through the cost base and record position while you are here to explain it, since the beneficiary inherits your cost base and will need your records to use it. It also means an honest conversation about whether the person you have named as executor could realistically administer what you hold, which is a different question from whether you trust them.
The broader point is one we make often. A well drafted will controls a smaller share of most people’s wealth than they think, and the assets that sit outside it are usually the ones causing the trouble. Digital assets are simply the newest members of that group.
Frequently asked questions
Can I leave cryptocurrency in my will?
Yes. Crypto is property, forms part of your estate and passes under your will. The difficulty is not legal entitlement but access, because whoever inherits it needs the private key or seed phrase. A will can direct who receives it but cannot produce the means to control it.
Should I write my seed phrase in my will?
No. Once probate is granted, a will becomes a public document that can be obtained by others, so anything written in it is exposed. Record that the asset exists, and keep the credentials separately in secure storage or as sealed instructions held by your solicitor.
What happens to crypto if nobody has the private key?
It is generally unrecoverable, regardless of what the will says or what a court orders. The ATO does accept that a capital loss can be claimed for crypto lost through a lost private key where ownership can be evidenced, but a capital loss only offsets capital gains and is a poor substitute for the asset.
Is inherited crypto taxed in Australia?
There is no inheritance tax, and the transfer from the estate to a beneficiary is generally not a taxable event. The beneficiary takes on the deceased’s cost base and is taken to have acquired the asset on the date of death, so tax arises when the beneficiary later disposes of it. If the executor sells during administration, normal CGT rules apply to the estate.
Do frequent flyer points pass to my family?
It depends on the program’s terms rather than on your will, because points are generally a contractual entitlement rather than property you own. Several major Australian programs allow a transfer to a nominated person or the estate on application, sometimes within a limited period. Check the current terms and record your membership numbers so the balance is not overlooked.
Can my executor just use my passwords?
It is not that simple. Most providers’ terms prohibit account sharing, and there is no comprehensive Australian law giving executors a right of access. Handing over a password list also creates a security risk while you are alive. A better approach combines a will, an inventory that says what exists, securely stored credentials, and the platforms’ own legacy contact features.
What should a digital asset inventory contain?
A list of what exists and where, covering crypto and wallets, financial platforms, loyalty programs and personal accounts including email and cloud storage, with approximate values and the location of the credentials. It should not contain the credentials themselves. Review it annually, because digital holdings change quickly.
Taking the next step
Start with a list. Not passwords, not a legal document, just an honest inventory of what exists and where the keys are kept. It takes an evening, it costs nothing, and it is the single thing that determines whether the digital part of your estate reaches the people it is meant for or disappears entirely.
General advice warning: This article contains general information only. It does not take into account your objectives, financial situation or needs, and it is not legal or tax advice. Succession law is state based, the terms of service governing online accounts vary between providers and change frequently, and taxation rules change regularly, including the capital gains tax changes applying from 1 July 2027. The drafting of a will, a memorandum of wishes or instructions relating to digital assets is legal work and should be undertaken with a solicitor. You should confirm any tax position with a registered tax agent, and seek personal advice from a licensed financial adviser before acting.
