Deceased Estates and Cryptocurrency Holdings

What Is Cryptocurrency, in Estate Terms?

Cryptocurrency is a class of digital asset that records ownership on a distributed ledger (a blockchain). The best-known examples are Bitcoin (BTC), Ethereum (ETH), and a long tail of 'altcoins' and stablecoins (USDC, USDT). There is no central register, no custodian, and no paper certificate. Each unit of cryptocurrency exists as an entry on the ledger; the right to spend that entry is held by whoever controls the corresponding private key. A private key is a long random number, almost always backed up in human-readable form as a twelve- or twenty-four-word seed phrase. The seed phrase is the wallet. Possession of the seed phrase confers the ability to recreate the wallet on any compatible device anywhere in the world; loss of the seed phrase, where there is no other backup, ends access to the asset permanently.

For executors, the practical taxonomy is simpler than the technology suggests:

• Exchange-held crypto. Held in an account with a centralised exchange (CoinSpot, Independent Reserve, Swyftx, Binance, Kraken, Coinbase). The exchange holds the keys; the customer holds a contractual claim. Recoverable on production of a death certificate and probate.
• Self-custody hot wallets. Software wallets installed on a phone, computer, or web browser (MetaMask, Exodus, Trust Wallet, Electrum). The keys are on the device, usually protected by a password or PIN, and backed up by a seed phrase. Recoverable only if the device or seed phrase is accessible.
• Self-custody cold wallets. Hardware wallets (Ledger, Trezor, Coldcard) or paper / metal seed-phrase backups. The keys never touch the internet. Recoverable only if the device PIN and / or seed phrase is accessible.
• DeFi positions. Crypto deployed into decentralised finance protocols (Aave, Uniswap, staking pools, liquidity pools, NFT collections). Recoverable only by interacting with the protocol through the original wallet — and often subject to lock-up periods, unbonding queues, or impermanent loss on exit.

The same estate may contain several of these simultaneously. An executor's first job is to map them.

Crypto Is Estate Property

Australian courts and the Australian Taxation Office both treat cryptocurrency as property. It is a CGT asset under section 108-5 of the Income Tax Assessment Act 1997 (Cth); it is property for the purposes of the Bankruptcy Act 1966 (Cth); it has been treated as property in family-law disputes (see our companion article on cryptocurrency and divorce); and it is property for succession purposes. That means it forms part of the deceased estate and the executor takes legal control of it on the date of death, in the same way as shares, real property or a bank account. The executor's duties — to call in the assets, to preserve them, to account for them and to distribute them — apply with full force.

The legal classification, however, does not solve the access problem. The executor's legal right to deal with the asset is meaningless if the executor cannot, in fact, move it. This is the single most important difference between crypto and every other class of estate asset, and it drives almost everything else in this article.

The Executor's Duties

The executor's duties in relation to crypto are the ordinary duties of an executor, applied to a technologically unusual asset. They include:

• Identification and locating. Take active steps to identify every crypto asset in the estate (see the next section).
• Preservation. Secure the keys, seed phrases, hardware wallets and devices from theft, loss, destruction and unauthorised access.
• Valuation. Obtain a contemporaneous date-of-death valuation in Australian dollars from a recognised source, and re-value at disposal.
• Decision-making. Decide, with proper advice and (where possible) beneficiary consent, whether to hold, liquidate or transmit each holding.
• Tax compliance. Report CGT events, ordinary income (staking, lending, mining, airdrops), and any pre-death disposals that the deceased had not reported.
• Record-keeping. Maintain a complete and auditable record of every wallet, transaction, valuation and decision.
• Distribution. Distribute the asset (or its proceeds) in accordance with the will or the intestacy rules, after tax and debts have been accounted for.

See our article on the duties of an executor in Victoria for the broader framework. An executor who fails in any of these duties — most commonly through poor security, failure to obtain advice, or failure to keep records — may be personally liable to the beneficiaries; see also our article on estate administration delays and executor liability.

Locating Crypto Assets

The first practical task in any estate is to find out what is there. With crypto, the deceased is often the only person who knew. The executor should systematically search:

• Bank and credit-card statements for the previous five to seven years, looking for transfers to and from known Australian exchanges (CoinSpot, Independent Reserve, Swyftx, BTC Markets) or international exchanges (Binance, Kraken, Coinbase). Even a single transfer is a thread worth pulling.
• Email accounts for exchange registration emails, account verification, two-factor authentication codes, periodic statements, transaction notifications, password-reset emails, and emails from wallet providers, custody services or hardware wallet manufacturers.
• The deceased's phone and computer for installed wallet applications, browser extensions (MetaMask, Phantom), saved passwords in the browser or password manager (1Password, Bitwarden, LastPass), cloud-storage notes, and any files with names like "seed", "wallet", "backup", "phrase" or similar.
• Paper records and safe-deposit contents for handwritten seed phrases, metal seed-phrase plates (Cryptosteel, Billfodl), hardware wallets in their original boxes, and recovery cards.
• Tax records. Any disposal of crypto should have been reported as a CGT event. The deceased's tax returns for prior years will often reveal the existence of crypto holdings; an accountant's working papers will sometimes reveal more.
• Family and business contacts. Adult children, business partners and the deceased's accountant will sometimes know about holdings the executor would otherwise miss.

The search should be documented contemporaneously. If crypto exists but cannot be accessed, the documentation of the search becomes important evidence — both for beneficiary relations and for the tax return.

Example: Exchange Account, Cooperative Provider

A Melbourne accountant dies leaving a CoinSpot account with a balance of approximately AUD 180,000 in mixed Bitcoin and Ethereum. The executor finds the account via bank statements (regular transfers to and from CoinSpot over five years), confirms the holding by writing to CoinSpot with the deceased's full name, date of birth and email address, obtains probate within four months, and lodges the deceased-estate account request with a certified copy of the grant. CoinSpot freezes the account on notification, processes the request over approximately six weeks, and liquidates the balance to AUD at the executor's election, remitting the proceeds to the estate bank account. The executor records the disposal in the estate trust return; the CGT cost base is the date-of-death value (rollover under Division 128); a gain or loss to the date of disposal is reported by the estate.

Example: Hardware Wallet, Located

A retired engineer dies leaving (according to his handwritten will) "the Bitcoin in my Ledger". The executor finds a Ledger Nano S in a desk drawer, with the PIN and seed phrase recorded on a card in the same safe-deposit box as the original will. The executor obtains specialist advice before touching the device, confirms the integrity of the seed phrase by restoring it onto a fresh hardware wallet on the lawyer's premises, obtains a date-of-death valuation of approximately AUD 1.2 million across BTC and ETH, and — with the unanimous written consent of the residuary beneficiaries — liquidates a portion through a regulated Australian exchange and transmits the balance in specie to two beneficiary-controlled wallets. The estate trust return reports the partial disposal; the in-specie transfers are not CGT events on the executor (Division 128 rollover) and the beneficiaries inherit the date-of-death cost base.

Example: Lost Credentials, Asset Effectively Lost

A Sydney engineer is known by his family to have held "a lot" of Bitcoin from the early years; his bank statements confirm purchases in 2012 and 2013 totalling approximately AUD 15,000. No exchange account is active at the date of death and no wallet file, hardware wallet, seed phrase or password is found despite a forensic review of his computer, phone and paper records. A specialist wallet-recovery firm engaged after three months reports that, with no password fragment or partial seed phrase to work from, the holding cannot be recovered. The executor documents the search, obtains tax advice confirming that no CGT event arises (because no disposal has occurred), communicates the position to the beneficiaries, and accounts for the asset as functionally lost. The economic loss is borne by the estate; the executor is not personally liable, because the search and the engagement of specialist help were reasonable.

Example: Multiple Beneficiaries in Dispute

A self-employed software developer dies intestate leaving three adult children and a self-custody wallet holding approximately AUD 600,000 in Ethereum and a staked ETH position with a 27-day unbonding period. Two of the children want immediate liquidation; the third wants the asset distributed in specie so he can continue to hold it. The administrator obtains specialist advice, convenes a meeting, sets out the options in writing (including the tax consequences of each), and proposes to unstake the position, liquidate one third for distribution in cash to the two children seeking liquidity, and transmit the remaining two thirds in specie. The third child wants more, the first two want less. Unable to reach unanimous agreement, the administrator applies for directions from the Supreme Court under section 63 of the Trustee Act 1958 (Vic). The court approves a balanced strategy substantially along the lines proposed. The application is funded out of the estate and the strategy is implemented without personal exposure to the administrator.

Working With Exchanges

Australian-domiciled exchanges (CoinSpot, Independent Reserve, Swyftx, BTC Markets) all have published deceased-estate procedures and, in our experience, respond reasonably to executors who provide proper documentation. The standard requirements are: a certified death certificate; a certified grant of probate or letters of administration; identification documents for the executor; and a completed estate account form. The exchange will typically suspend the account on notification, then process the estate claim over four to twelve weeks. Funds can usually be liquidated to AUD and remitted to an Australian bank account in the name of the estate, or transmitted in crypto to an estate-controlled wallet address.

Offshore exchanges are more variable. Major regulated providers (Coinbase, Kraken) have functional processes; smaller offshore exchanges range from slow to entirely unresponsive. Where an exchange has collapsed or entered administration (FTX, Celsius, BlockFi, Mt Gox), the estate becomes a creditor in the foreign insolvency, with all the delay and recovery risk that involves. The executor should preserve evidence of the balance (screenshots of the most recent statement, transaction history, login confirmations) and engage specialist advice before lodging any claim.

Self-Custody Wallets and the Keys Problem

Self-custody is where the real difficulty lies. The executor's right to deal with the asset is clear; the ability to deal with it depends entirely on access to the credentials. Where the keys are available:

• Secure them immediately. Move the hardware wallet, seed phrase card or written backup into the executor's sole custody (typically a solicitor's safe or a bank safe-deposit box).
• Do not photograph or transmit them. Photos, emails and messaging apps create copies that cannot be controlled.
• Verify before moving. Restore the seed phrase onto a clean hardware wallet to confirm it works, before any transaction is attempted.
• Plan the transaction. Decide whether to liquidate, transmit in specie, or hold; obtain tax advice; communicate the plan in writing to the beneficiaries; verify withdrawal addresses on a hardware-wallet screen rather than from a clipboard.

Where the keys are not available, the asset is, in substance, lost. There is no central authority to reset, no recovery process, and no legal mechanism to compel the protocol to surrender the balance. Wallet recovery services have a meaningful success rate only where the user has retained a partial password or seed-phrase fragment; for a clean loss, the success rate is effectively zero. The executor should document the search, take advice, communicate with the beneficiaries, and account for the asset as lost. This is the single strongest argument for proper succession planning during life.

Valuation and Volatility

Crypto is volatile. Single-day movements of 5–10% are ordinary; 20–30% movements are not unusual; 50–80% drawdowns from cycle peaks occur every few years. For estate purposes, the executor must value at the date of death and at the date of disposal, in Australian dollars, from a recognised source. CoinGecko, CoinMarketCap, the major Australian exchanges and specialist crypto-tax tools all provide acceptable rate sources. The methodology should be documented: which source, which exchange's price feed, what time-stamp, and (for thinly traded tokens) any adjustments for illiquidity.

Volatility is a real source of executor exposure. Holding a volatile asset through administration invites complaints from beneficiaries who would have preferred an earlier sale; selling early invites complaints from beneficiaries who would have preferred to hold. The defensible course is to obtain advice, document the strategy, consult the beneficiaries in writing, and (where the holding is material and the views are divided) consider an application for directions. The executor's protection comes from process, not from getting the call right.

Capital Gains Tax

Crypto is a CGT asset. The key principles for executors are:

• Death is generally not a CGT event. Under Division 128 of the Income Tax Assessment Act 1997 (Cth), the executor inherits the deceased's cost base and the asset rolls over to the estate (and ultimately to the beneficiary) without a CGT event at the date of death.
• Disposal is a CGT event. When the executor sells the crypto, or transmits it in specie to a non-resident beneficiary, or to a tax-advantaged entity, CGT consequences may arise and need to be reported in the estate trust return.
• Cost base. The cost base is what the deceased paid for the asset (acquisition cost plus incidentals) — not the date-of-death value — except for pre-CGT assets and a small category of personal-use assets which generally do not apply to crypto held as an investment.
• 50% discount. Where the asset has been held by the deceased (or the deceased and the estate combined) for more than twelve months at the date of disposal, the trustee 50% CGT discount is generally available on the trust's net capital gain.
• Crypto-to-crypto swaps are disposals. Swapping BTC for ETH is a CGT event on the BTC, even though no fiat changes hands. Executors should avoid accidental swaps during administration.

See our companion articles on capital gains tax in deceased estates and when a deceased estate ends for tax purposes for the broader framework.

Record-Keeping

Crypto record-keeping is unusually demanding. The ATO expects detailed records of every acquisition and every disposal, with AUD values at the time of the transaction, supporting evidence and wallet addresses. Where the deceased's records are incomplete (a very common situation), the executor should:

• Import every available transaction history (exchange CSVs, wallet-address histories from block explorers) into a specialist crypto-tax tool (Koinly, CoinTracking, CryptoTaxCalculator).
• Reconstruct cost base to the best evidence available, with appropriate disclosure to the ATO where data is missing.
• Document every administration transaction in the same tool, including the source of every AUD valuation.
• Preserve hardware wallets, seed-phrase backups and recovery cards for at least seven years after final distribution, even where the underlying balances have been distributed.

Security and Fraud

Crypto attracts theft. The asset is bearer in nature: whoever controls the keys controls the balance, and stolen crypto is extremely difficult to recover. Executors should:

• Treat keys and seed phrases as bearer instruments — kept offline, in a single secured location, never copied or photographed.
• Never enter a seed phrase into a website, an email or a 'wallet recovery' application. Legitimate recovery never requires the seed phrase to be entered online.
• Be alert to phishing emails impersonating exchanges, wallet providers and 'estate claim portals'. Verify every approach independently.
• Verify withdrawal addresses on the hardware-wallet screen for every transaction. Clipboard hijack malware is widespread.
• For large balances during administration, consider multi-signature wallets (Casa, Unchained Capital) or regulated institutional custody.

Report any suspected fraud to Scamwatch (scamwatch.gov.au) and ReportCyber (cyber.gov.au) and obtain specialist advice immediately. The Family Court has seen a growing number of disputes about crypto ownership and concealment (see our article on cryptocurrency and divorce in Australia); the probate jurisdiction will increasingly do the same.

Beneficiary Disputes

Crypto regularly produces beneficiary disputes for reasons that have no analogue in traditional estates. Sophisticated beneficiaries may want their share distributed in specie so they can manage it themselves; others want immediate liquidation. Some beneficiaries will dispute the executor's choice of exchange, timing of sale, or selection of which holdings to liquidate first. The executor's protection lies in:

• Providing full information to the beneficiaries early.
• Setting out the proposed strategy in writing, with the reasons.
• Obtaining unanimous consent where possible.
• Applying for directions from the court where consent cannot be obtained and the holdings are material.

See our companion article on beneficiary rights in estate administration.

Digital-Asset Succession Planning

Almost every crypto-estate disaster is, on inspection, a planning failure. The standard succession-planning checklist for a crypto holder is:

• Inventory. Maintain an up-to-date schedule of holdings — asset, platform, approximate balance — without the keys themselves. Review annually.
• Key storage. Store seed phrases offline in at least two geographically separate locations, on durable media (metal plates resist fire and flood; paper does not).
• Multi-signature. For larger holdings, consider a multi-signature arrangement so that no single point of failure exists and a single compromised key does not lose the balance.
• The will. The will should refer to the crypto holdings as a class, identify any specific gifts, and direct the executor to access the credentials through the storage location — without disclosing the credentials in the will itself.
• A 'digital executor' or technical adviser. Appoint a person with the technical literacy to assist the legal executor without taking over their role.
• Briefing. Tell at least one trusted person — usually the executor — that crypto exists and where the access plan is stored, without disclosing the credentials themselves.
• Review. Review the plan annually and whenever the underlying holdings, exchanges, wallets or beneficiaries change.

A will should never contain the seed phrase itself. A will is admitted to probate and becomes a public document on grant; including a seed phrase in a will is functionally identical to publishing it. The mechanics of separating reference to credentials (which goes in the will) from the credentials themselves (which do not) should be designed with a lawyer.

Interaction With Other Estate Issues

Crypto sits alongside other modern estate issues and often interacts with them:

• Private company shares. Where the deceased ran a crypto-related business through a private company, the executor must also address the corporate position; see private company shares in deceased estates. Executors dealing with listed-share holdings in the same estate should also review our guide on lost share certificates in deceased estates, which sets out how to locate, replace and transmit listed shareholdings where paperwork is missing.
• Business succession. Where the deceased was a sole trader in a crypto-related business, see business owner death in Victoria.
• Testamentary trusts. Where a testamentary trust receives crypto, the trustee inherits all the same access, valuation and tax issues. See taxation of testamentary trusts.
• Letters of administration. On intestacy, the administrator faces the same access and security issues as an executor but without the guidance of a will. See letters of administration in Victoria and probate in Victoria.

Conclusion

Cryptocurrency in deceased estates is, in legal terms, ordinary property. In practical terms it is anything but. Access depends on credentials that exist only in the holder's possession; valuation depends on volatile markets; security depends on operational discipline that few executors have practised before; and the tax framework, while ultimately the same as for any other CGT asset, requires careful record-keeping that is often missing. The executor's protection lies in engaging specialist advisers early, securing credentials immediately, documenting every search and every decision, communicating openly with beneficiaries, and never moving balances without a considered strategy. For holders, the corresponding protection is to plan during life — a clear inventory, secure offline credential storage, a will that refers to the holdings without exposing them, and a briefed executor. Done well, crypto can pass to the next generation as smoothly as any other asset. Done badly, it can disappear forever.