SQE student Olga Kyriakoudi delves into the legal challenges of inheriting digital assets
From Bitcoin wallets to Instagram accounts left in wills, digital inheritance is a rapidly evolving yet complex area of private client law. This article explores how digital and decentralised assets are defined, the legal challenges of passing them on, and why thoughtful estate planning is more important than ever.
What are digital assets?
With no universally agreed definition of digital assets, their classification varies across jurisdictions, leading to differing interpretations of what they represent. For instance, Canada treats them as commodities, while Mauritius classifies them as digital assets. In a rare alignment, both the USA and the UK recognise digital assets as property for tax purposes, though in the UK’s case, “recognition” might be a strong word.
In a 2023 report, the Law Commission described them as a broad category of electronic resources, including crypto-tokens, digital files, email accounts, domain names, in-game assets, and other electronically stored records.
However, academic literature provides a far more practical classification. Christo Meyer, in their article, identifies five distinct types of digital assets:
- Personal or sentimental assets such as photos and videos,
- Financial assets, including online stock or foreign exchange accounts,
- Business assets, such as rights to online training content, video channels, or blogs,
- Social media accounts, including platforms like Facebook, X, and LinkedIn,
- Decentralised assets, such as cryptocurrencies, DeFi products, and tokens.
Had the Law Commission focused on functional distinctions instead of pushing for a “third type of property,” a legal definition of digital assets might already exist. Grouping all digital assets under one category overlooks their varied uses and risks future legal complications.
Decentralised assets
Decentralised assets include cryptocurrencies, Non-Fungible Tokens (NFTs), and similar technologies. Cryptocurrencies are digital currencies that are not issued by central banks, operating instead on blockchain networks (decentralised digital ledgers verified by a global network of computers). Bitcoin and Litecoin are among the earliest examples, used primarily as mediums of exchange.
NFTs, by contrast, represent ownership of unique digital items such as art, music, or virtual goods. Unlike fungible cryptocurrencies, NFTs are one-of-a-kind and also exist on the blockchain. In private client law, both NFTs and cryptocurrencies are typically grouped under the term cryptoassets.
Social media accounts
Social media accounts, like Instagram or Facebook pages, often carry sentimental value, preserving memories and connections. However, it is important to note that with commercialisation of social media and the rise of social media influencers, such accounts can also carry a significant commercial value.
Legal challenges in digital inheritance
Digital inheritance concerns the transfer of digital assets after death. Yet, due to the lack of a clear statutory framework, especially for decentralised assets, many challenges remain.
Currently, digital assets are governed by a mix of user agreements and discretionary platform policies, which can change without notice. The Law Commission’s proposal to recognise cryptoassets as a “third type of property” has sparked academic debate.
Professor Robert Stevens argues cryptoassets do not constitute property under UK law, as they do not fall within the established categories of choses in possession or choses in action, representing valuable data without enforceable rights.
By comparison, Timothy Chan argues they should be recognised as property due to their transactional functionality, much like goodwill. Despite ongoing debate, case law has affirmed that cryptoassets qualify as property, and HMRC treats them accordingly for tax purposes.
Following a Law Commission consultation, the Property (Digital Assets Etc.) Bill was published. The Bill confirms that digital assets like crypto tokens can have property rights outside the two traditional categories, ensuring legal protection including against theft.
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Find out moreHowever, the Bill does not specify which digital assets fall into this ‘third category’ of personal property; instead, it leaves this determination to the courts on a case-by-case basis. Additionally, the Bill confirms that a “thing” can attract property rights even if it is neither a thing in possession nor a thing in action, serving as a means of ‘unlocking’ the development of the common law.
Academic commentary raises key concerns about the Bill’s scope. Linus J. Hoffmann and Quentin B. Schäfer argue that the Bill is overly broad and risks increasing legal uncertainty. They criticise the Bill’s vague language, particularly the use of the term “thing” as it is likely to prompt inconsistent rulings and increased litigation. More broadly, they caution against extending property rights to digital content such as social media accounts, which they believe are better governed by contracts or regulation. Such “over-propertisation” could stifle innovation and fragment rights, leading to what they describe as the “tragedy of the anticommons.” They therefore recommend restricting the Bill’s scope to cryptoassets only.
Sharing a similar viewpoint, Dr. Michaela MacDonald sees the Bill as an underdeveloped and problematic reform. She argues it lacks clarity in defining digital assets and their relationship with existing legal frameworks, particularly intellectual property and contract law.
While this article echoes academic concerns, it also recognises the Bill’s view that a fixed definition may be problematic in the long term. However, it challenges the idea that the rapid pace of technological change justifies the complete absence of a definitional framework.
The Bill seems to overlook the potential for a flexible, functional classification, such as one identifying five distinct types of digital assets. This approach could have provided much-needed clarity while remaining adaptable to future developments. It would also offer a clearer basis for determining which categories of digital assets may attract property rights, thereby avoiding reliance on the vague and problematic term ‘thing.’
Although the Bill’s aim of ‘unlocking the development of the common law’ is not flawed, doing so without meaningful legislative guidance risks fragmented case law, prolonged legal uncertainty, inconsistent decisions and increased litigation. Arguably, the absence of such guidance undermines the Civil Procedure Rules’ objective of avoiding unnecessary legal proceedings.
From a private client law perspective, the Bill lacks clarity on digital inheritance. This article agrees the Bill would be more effective if limited to cryptoassets, helping to pave the way for separate legislation, as current laws on wills and intestacy do not address digital assets.
Until a clear statutory categorisation of digital assets is established, one that reflects their diversity and evolving nature, private client practitioners must rely on unclear guidance and legislation not designed to address digital inheritance.
What Is Estate Planning?
An estate includes all assets and property a person owns at the time of death. Estate planning ensures these are passed on according to their wishes, typically through a valid Will. Without one, intestacy rules apply but rarely reflect the person’s full intentions.
Why do digital assets matter in estate planning?
The digital age is reshaping how wealth is created, stored, and transferred. Generation Beta, emerging in 2025, will be the first to grow up fully in a digital-first world where virtual experiences shape relationships, careers, and finances.
At the same time, we are witnessing history’s largest wealth transfer, with baby boomers expected to pass down £5.5 trillion to millennials and Gen X by 2050. These younger generations, already comfortable with digital banking and cryptocurrencies, are well-equipped to integrate digital assets into their financial lives.
Unlike prior generations who focused on property and stocks, younger heirs are likely to invest in tokenised assets, digital currencies, and virtual economies. This signals a future where digital assets will dominate financial planning, making digital estate planning not just relevant, but essential.
Estate planning for digital and decentralised assets
Unlike traditional assets, cryptoassets are not managed by banks or institutions. They reside in encrypted wallets, accessible only through private keys or seed phrases. If access is lost, there is no way to recover them.
To avoid this, individuals should prepare a secure memorandum listing all financial decentralised assets, such as crypto wallets, NFTs, and others, along with guidance on access. This document should not contain passwords or private keys directly but should refer to a separate secure source.
For substantial crypto holdings, legal professionals recommend placing these within a trust. As they are legally classified as property, trustees can manage cryptoassets as part of an investment portfolio. Trust deeds should clearly authorise this, and detailed instructions can be included in a non-binding letter of wishes.
Some providers, like Fidelity Digital Assets, offer custodial services to manage and store digital assets for clients who prefer to outsource technical and security tasks, though private trustees may offer greater flexibility and personalised oversight.
Managing social media accounts after death
Most major platforms now offer ways to manage accounts after death. Facebook and Instagram support memorialisation or deletion, with legacy contacts handling limited tasks. X (formerly Twitter) lacks a memorialisation option but allows account closure with proof of death.
To ensure digital wishes are followed, individuals should include preferences in a letter of wishes and reference a secure document with access details. Reviewing each platform’s post-death policies is essential, a summary of major ones can be found here.
Conclusion
In Digital Transformation, Lindsay Herbert writes, “the truth is that digital transformation is actually not about adapting to new technology at all — it is about directing an organisation to be more adaptive to change itself”. For lawmakers, this means shifting from a reactive to a proactive stance, creating legal frameworks that help professionals navigate change rather than chase it.
For private client practitioners, digital assets are no longer fringe considerations; they are central to identity and wealth. With legislation lagging behind emerging technologies, private client professionals are expected to bridge the gap between legal uncertainty and modern realities. One can only hope the law soon catches up to support them.
Olga Kyriakoudi is an SQE LLM student at BPP University and a first-year trainee solicitor.
The Legal Cheek Journal is sponsored by LPC Law.
