24 March 2025 Estate planning for the digital age: How to protect and pass down your digital assets

Oak‘s Isle of Man Managing Director, Tanya O’Carroll, delves into the critical aspects of integrating digital assets in estate planning, focusing on valuation complexities, security considerations, and legal recognition. 

This article was first published in IOM Portfolio.

Why digital assets matter in estate planning 

The rise of digital assets, including cryptocurrencies, NFTs, and tokenised assets, has required a major shift when considering estate planning. Traditional trustees, advisors and clients now require new strategies to ensure digital wealth is properly secured, managed, and transferred. Digital assets may hold both financial and sentimental value, making their inclusion in estate plans essential to avoid loss or legal complications. Digital assets are not restricted to cryptocurrencies like Bitcoin or Ethereum, but include digital files, digital records, domain names, in-game digital assets, digital carbon credits crypto tokens and non-fungible tokens (NFTs). 

Challenges in managing digital assets 

Valuation complexity 

Determining the value of virtual currencies can be difficult, especially with cryptocurrencies, which experience high volatility. A coin that is worth thousands today might depreciate significantly tomorrow. This complicates estate planning, as fluctuating values affect taxation and wealth distribution. Regularly documenting and appraising digital assets is necessary for accurate estate valuation. 

Security risks and accessibility issues 

Unlike traditional bank accounts, digital assets rely on private keys for access. If these keys are lost, the assets may become permanently inaccessible. Security concerns also include hacking risks, fraud, and lack of clear access instructions for heirs. To mitigate risks, it is essential to maintain a structured inventory of all digital assets, ensure secure password storage through encryption or password managers, and designate a trusted digital executor. Many investors also use cold wallets to store cryptocurrency offline for additional security. 

Legal and regulatory challenges 

The legal status of digital assets varies across jurisdictions. Some regions recognise fiduciary access, while others still lack clear legislation, causing inconsistencies in estate planning. The UK introduced the Property (Digital Assets etc) Bill in September 2024. The Bill sought to remove legal uncertainty around property rights attached to digital assets. As digital assets cannot be physically possessed, they do not fall into the category of an object in possession. The aim of the Bill is to provide a mechanism of unlocking developments in common law.   

The Isle of Man Financial Services Authority in partnership with Digital Isle of Man have developed guidance aimed at those who are engaged in activities relating to crypto assets and token, the regulations vary again dependant on the jurisdiction. Consultation with legal professions with specific expertise in the arena is key to ensure compliance with ever-changing laws and regulations. 

Best practices for digital asset estate planning 

Creating a digital asset inventory is essential for estate planning. This record should include details of all digital holdings, login credentials, and access keys. Estate documents should explicitly mention these assets to prevent legal disputes. Because digital asset regulations are constantly evolving, it is important to stay informed with regular legal and financial consultations. The role of the trusted advisor includes ensuring that the related parties’ settlors/ beneficiaries and beneficial owners are educated on how to access and manage digital assets while understanding their potential tax liabilities. 

How Oak helps protect your digital wealth 

Comprehensive estate planning solutions 

Integrating digital assets into tailored estate plans ensures seamless management and succession. Oaks services include digital asset inventory documentation, implementing security measures for access protection, and structuring legal frameworks such as trusts to facilitate the smooth transfer of digital wealth.  

Expert guidance on taxation and regulatory compliance 

Navigating the regulatory landscape of digital assets can be complex. Oak works with tax and legal experts to ensure clients understand and comply with tax implications, including capital gains tax and inheritance planning. Our compliance monitoring helps ensure that digital holdings and transactions adhere to evolving laws and regulatory requirements. 

Ongoing education and support 

Oak believes in empowering clients through continuous education. We offer training for clients to ensure they can securely manage their digital assets. Periodic estate plan reviews also help clients adapt to changes in laws and technology, ensuring their estate plan remains relevant and compliant. 

Secure your digital legacy with Oak 

The digital world is constantly changing, and estate planning must adapt accordingly. By incorporating digital assets into your wealth management strategy, you can ensure a secure, compliant, and efficient transfer of assets to future generations. 

At Oak, we recognise the unique challenges that digital assets, particularly cryptocurrencies, present in estate planning. Our team of professionals, with expertise spanning accountancy, compliance, trust and estate planning, and investments, is well-equipped to assist clients in safeguarding their online wealth for future generations. 

We offer tailored estate planning solutions that integrate digital assets seamlessly into your overall wealth management strategy.