Crypto-Assets 101: ‘Hodling’ the Inheritance and Helping Your Clients Avoid a ‘Boating Accident’

Ten years ago, the inclusion of digital assets in an estate plan was rare. Today, crypto-assets regularly feature in Australian portfolios, necessitating a disciplined approach to administration and succession planning. In all areas of succession law, practitioners must address the administrative reality of planning for, identifying, securing, and transferring these assets.

The following statistics show exactly how widespread this asset class has become:

• the number of users in Australia’s crypto market is expected to reach 16M by 2026;^[1]
• Australia now has around 2,000+ crypto ATMs nationwide (up from 23 in 2019); ^[2]
• revenue generated in Australia’s crypto market is projected to reach $1.2B by the end of 2026; ^[3]
• as of April 2025, there were 17,134 cryptocurrencies in existence, however the top 20 cryptocurrencies make up nearly 90% of the total market (with Bitcoin and Ethereum accounting for nearly 75%);^[4]
• in 2023 there were 95M NFTs in existence, and this is projected to reach 19.31M by 2027; ^[5]and
• in 2024, AMP made headlines by investing $27 million in Bitcoin, becoming the first major superannuation fund to take a stake in the asset class;^[6] and
• by the end of 2025 SMSFs held approximately $3.2B in crypto assets, a substantial increase from $198M in 2019, representing a 1,516% growth over 6 years.^[7]

In this evolving climate, traditional estate planning and administration conversations are insufficient, and estate practitioners must develop, at least, a basic knowledge of blockchain technology, crypto-assets, private/public keys, recovery phrases and wallets. Without proper understanding and planning … a ‘boating accident’ could occur.

‘Boating Accidents’ – Examples of Lost Crypto-Assets
In crypto jargon, a ‘boating accident’ is a loss of crypto-assets due to a loss of access credentials. Though usually unintentional, “… investors have faked a boating accident hoping that this will help them to avoid sharing their crypto wealth with the tax authorities or in a divorce.”[8]

Boating accidents are becoming more common, noting that around 20% of Bitcoin in existence (worth around $140bn) are ‘lost’ online.^[9] The following publicised cases serve as a reminder that, if it can happen to these people, it could easily happen to practitioners and their clients:

• after mining 7,500 Bitcoin (est value AUD$677M on 24/06/2026),^[10] James Howells accidentally threw away the drive storing the Bitcoin and it, along with the rest of his trash was taken to the local landfill in the UK, where it remains;[11]
• Stefan Thomas, lost the paper where he wrote down the password for his IronKey (containing the private keys to a wallet that holds 7,002 Bitcoin (est value AUD$632M on 24/06/2026);
• prolific crypto investor Matthew Mellon stored his private keys to XRP (valued at AUD$500M) in cold wallets in various banks, and died without divulging their locations. The estate lawyers were eventually able to call in and sell the XRP by approaching Ripple (the company that manages the currency), but not before the value of the XRP fluctuated down 30%. Note that this was a unique privilege in this instance, estate planning experts say, because most cryptocurrencies aren’t closely tied to centralised entities able to provide third party access;[12] and
• Gerald Cotten, the sole director, employee and CEO of QuadrigaCX.com (one of Canada’s largest online cryptocurrency exchanges) was the only one who knew crucial access details to cold wallets connected to the QuadrigaCX exchange. When Cotten died suddenly and unexpectedly, it is reported that AUD$243.3M in cryptocurrency belonging to users of the exchange was lost.[13]

These examples illustrate a fundamental principle: whoever controls the private key controls the asset. If the key is lost, the asset is effectively gone, regardless of legal ownership.

Not ‘Boating Accidents’…The Broader Risk Landscape
If the risks of boating accidents are not sufficiently terrifying, consider the following examples of other risks of investment in the crypto-market:

• FTX (previously one of the world’s largest cryptocurrency exchanges) collapsed in November 2022 with the expected loss to investors exceeding AUD$12.7B. Its founder, Sam Bankman-Fried was arrested on 12 December 2022 amidst the collapse, and charged with multiple counts of securities and wire fraud, conspiracy and money laundering, with his criminal activities alleged to have begun in 2019.[14] It is reported that the collapse of FTX had a substantial impact in Australia with around 30,000 Australians estimated to be impacted;^[15]
• in 2021, an NFT trader made an error when listing a Bored Ape for USD$3,000 instead of USD$300,000. It was bought immediately by a bot programmed to take advantage of undervalued listings, then promptly relisted for USD$248,000. The seller’s mistake was irreversible;[16] and
• in a recent and costly example of a ‘rug pull’, the developers of the Defi100 project (a DeFi protocol built on the Binance Smart Chain) abruptly abandoned the project, displaying on its website ‘we scammed you guys, and you can’t do shit about it’. Cryptoanalysts estimate the developers absconded with $USD32million in investors’ funds.[17]

These risks can be distilled into four core categories: access risk (lost keys or credentials), platform risk (exchange failure), human error risk (irreversible mistakes), and legal and regulatory risk (uncertainty and jurisdictional complexity).

The Real Problem: Legal Rights vs Practical Access
When a person loses capacity or dies, fundamental legal questions that arise are:

• how can any crypto-assets (for example bitcoin and NFTs) they own be accessed?
• does an attorney, executor or administrator (summarised as “fiduciary”) have the right and ability to access and/or control crypto-assets?
• what about email accounts, mobiles phones and other devices that may be needed to facilitate access to those crypto-assets?

These questions expose a critical issue: in digital estates, legal authority does not guarantee practical control.

In many cases, the real challenge is not whether a fiduciary has the legal right to access an asset, but whether they can actually do so in practice. This is particularly acute for crypto-assets, where control is determined not by legal title, but by possession of private keys or access credentials.

What Can Practitioners Do To Help?
The following are some key steps that estate practitioners can take to raise their level of awareness and increase the ability to meet their clients’ needs and expectations in relation to crypto-assets:

1. Learn vital terminology
Develop a basic (at least) knowledge of key terminology. Blockchain, Crypto-assets (cryptocurrency and NFTs), Private Keys & Public Keys, Recovery Phrase/Seed Phrase and Wallets and Wallet Addresses are all vital terminology that you need to become familiar with. You can do so by:

• YouTube education. A page called Coin Bureau, and in particular the video title ‘Explain Crypto to Complete Beginners: My Guide’ is recommended;[18] and/or
• contacting the author for a copy of the full paper on which this article is based.

A critical distinction for practitioners is between custodial and non-custodial wallets:

• in a custodial arrangement, a third party (such as an exchange) holds the private keys; and
• in a non-custodial arrangement, the individual holds the private keys themselves.

This distinction has significant estate planning implications. Custodial arrangements may allow for some form of recovery (subject to the provider’s terms of service and jurisdiction), whereas non-custodial arrangements are unforgiving: if the keys are lost, there is no recourse. In practical terms: not your keys, not your crypto.

2. Consider the entire digital estate, not just the crypto-assets
Estate planning and administration must also consider the other components of a person’s digital estate (including digital devices and digital accounts). These additional components are often an integral part of ensuring access to, and control of, crypto-assets.

Confirm where the access details for a person’s crypto-assets are. They are commonly:

• in safety deposit box or secure lock box;
• on a locked digital device (e.g. a laptop, phone or drive);
• in a digital account (e.g. a email account or cloud-based storage service); and/or
• buried in their backyard (yes, really).

It is vital to understand digital estate generally, and to ensure that a proper plan for the whole of the digital estate is implemented, not just the crypto-asset in isolation.

If the fiduciary cannot access a person’s digital account, they may need to apply for a court order in the relevant jurisdiction (commonly California), at great expense and delay to the estate.

If the fiduciary cannot access a person’s digital device, note that phones and laptops are in reality very difficult to ‘crack’, and the relevant custodian will likely refuse to grant access. Apple refused a USA court order to help the FBI gain access to the iPhone used by one of the shooters in the mass killing in San Bernardino, California on December 2, 2015 (where 14 people were killed and 22 seriously injured).[19]

3. Consider jurisdictional issues, and the lack of formal legal solutions
Due to the intangible and global nature of a digital estate (and its components) it is not possible to easily determine the ‘proper law’. In most instances, several laws from different jurisdictions will apply to each component of the digital estate, creating significant problems in both estate planning and administration.

Despite international discussion, with the exception of the USA and Canada, there has been no formal legislative or judicial recognition of digital estates in estate planning or estate administration.

There is no legislation in Australia specifically dealing with access to digital records in the event of death or loss of decision-making capacity. Despite:

• the New South Wales Law Reform Commission’s Report titled ‘Access to digital assets and records upon death or incapacity’ in 2019;[3] and
• the NSW Government Consultation Paper titled ‘A nationally consistent scheme for access to digital records upon death or loss of decision-making capacity’ in 2022,

there have been no substantial moves towards a clear and effective system/scheme (legislatively or judicially).

Consequently, no automatic right of survivorship exists for a person’s digital estate, nor is there an immediate right to access components of it after death. Most (if not all) digital accounts are regulated by individual service agreements, which may (or may not) contain policies for dealing with a user’s death or incapacity. Policies that do exist may be impractical, or inconsistent with a person’s wishes.

These issues lead to problems in managing a deceased’s digital estate, which may result in components of the digital estate being inaccessible. Obtaining a court order to access digital assets is a time-consuming and costly process, and there is no guarantee that the custodian or service provider will comply.

Although there may be a strong legal argument that a fiduciary’s powers extend, impliedly, to accessing a digital estate, with no formal legislative or judicial recognition of such powers in Australia, practitioners must convince the relevant custodian. It is the author’s strong view that nothing less than an express power in the will or power of attorney (general or standard documents are insufficient) will result in a positive response from custodians, who have demonstrated an unwillingness to accept an implicit power of access, particularly if third party access contradicts their service agreement.

Legislative reforms, intended to resolve some of the uncertainty, are currently underway in various jurisdictions. However, service agreements may always have a role to play (and potentially govern) how their fiduciary can work with their crypto-assets and digital estate.

4. Develop precedents, as well as a policy and procedure for your firm for crypto-assets/digital estates
Important considerations include useability, privacy, terms of retainer, policies about what documents are held by the practice, insurances, required disclosures, risks of obsolete and unusable technology, and additional fees to be charged.

5. Ensure the estate plan considers and provides for the crypto-assets
This necessarily requires a degree of specialist knowledge, as the risk of a mistake giving rise to a loss is not insubstantial. Advice that leads to a loss of assets (for example, theft due to disclosure of private keys), or a loss of access (for example, where the fiduciaries cannot locate the access keys) may expose practitioners to liability for professional negligence.

As in all areas of professional practice, practitioners should carefully consider the limits of their own expertise, and assess whether they are prepared to advise on crypto-assets as part of the estate plan, or limit the scope of their engagement.

As a guide, practitioners advising on crypto-assets should:

• Ask EVERY client about crypto-currencies and crypto-assets: add basic language to your intake form: ‘do you own crypto-currencies? (e.g. bitcoin, ether)’ and ‘do you own other types of crypto-assets? (e.g. NFTs, artist tokens, or stablecoins)’; and
• Ensure that every client who owns crypto-assets has a legal plan AND an access plan: Without an access plan, it is likely that some or all of the crypto-assets will be lost.

Considerations for the legal plan include:

• reviewing relevant service agreements and platform terms;
• determining whether ownership documentation (for example, deeds of ownership, confirmations or bare trust arrangements) is required;
• including appropriate definitions, powers, indemnities and authorisations in wills, powers of attorney and trust deeds; and
• ensuring gifting provisions are sufficiently clear and workable.

It should go without saying that private keys, seed phrases and passwords should never be included in wills or other estate planning documents, nor stored with practitioners.

Considerations for the access plan include ensuring it clearly addresses:

• WHAT is being used to access, store and manage the assets, including relevant devices, wallet types (custodial vs non-custodial; hot vs cold), and any exchanges or applications;
• WHO can assist fiduciaries in locating and using that information; and
• WHERE access credentials are stored (noting that the access plan should describe the location only, and must not contain the credentials themselves). Also where the access plan itself will be stored, and how fiduciaries will locate it.

In addition, clients should:

• determine an appropriate method by which fiduciaries can obtain access (for example, secure physical storage with directions, segregation of access information, or the use of password managers or similar systems);
• consider how 2FA/MFA authentication mechanisms will be accessed or replicated;
• implement appropriate security practices, including offline storage of private keys and seed phrases, avoiding digital storage of sensitive credentials, and maintaining secure backups in multiple locations; and
• maintain a clear and up-to-date digital estate inventory identifying their crypto-assets and how they are held.

For SMSF-held assets, the access plan should also clearly demonstrate that the trustee has control of, and can access, the assets in its capacity as trustee, supported by appropriate documentation.

An example access plan can be found at https://empoweredlaw.com/basic-cryptocurrency-inventory-sheet/.

6. Consider SMSF specific risks
Crypto-assets introduce additional complexity when held within a self-managed superannuation fund (SMSF), where strict regulatory and compliance obligations apply. While SMSFs are permitted to invest in crypto-assets, those investments must satisfy the sole purpose test, align with the fund’s investment strategy, and comply with Superannuation Industry (Supervision) Act 1993 (Cth) and Superannuation Industry (Supervision) Regulations 1994 (Cth).

A key risk arises in relation to ownership and control. Crypto-assets must be clearly held in the name of the trustee in its capacity as trustee of the SMSF, and must be kept separate from personal assets. Where accounts or wallets are established in an individual’s name, or where private keys are held personally without clear documentation, this may give rise to compliance breaches and audit issues.

There are also evidentiary challenges. Unlike traditional assets, auditors must verify not only the existence of the crypto-assets (often via blockchain records), but also that the SMSF has legal ownership and effective control.

Failure to properly structure, document and manage crypto-assets within an SMSF may result in audit qualifications, regulatory breaches, and, in extreme cases, loss of the asset itself.

7. Consider the following additional advice
A practitioner should also recommend that clients:

• prepare and regularly review a digital estate inventory. An example can be found at step.org/digital-assets-inventory;
• review their privacy settings for all accounts on a regular basis;
• ensure family are aware of wishes about digital accounts; and
• regularly download/save/backup.

8. Tips for estate administration
Irrespective of the estate plan, a deceased’s family (and/or their fiduciary) must be asked whether the deceased person had a digital estate, and whether they will require assistance to deal with it. If the answer is yes:

• Step 1 – Discovery: If no access plan, digital estate inventory or other document can be found, search the deceased’s possessions for USB flash drives, and search their computing devices for crypto-asset wallets, emails about exchange accounts and other online custodial accounts. Engage a trusted (and suitably insured) expert if the value of the crypto-assets is likely to be high.
• Step 2 – Possession: Fiduciaries may not need to obtain a grant of representation for control and possession (see Step 3), but doing so will provide proof of their title. In terms of risk reduction and practice management:
  • do not store data within a firm’s own IT system, where it may be broadly accessible, as well as at risk of exposure by a cyber-attack on the firm;
  • physical storage (either paper or a hardware device such as a flash memory stick) stored securely, for example in a safe, is recommended;
  • policies and procedures should be implemented to ensure that only authorised individuals within a firm can gain access; and
  • consider further security measures, such as ensuring that it will only be handled by two individuals together, and/or while being video recorded from when the physical storage is removed from the safe to when it is returned.
• Step 3 – Applying for a grant of representation and/or directions of the court (where necessary)
• Step 4 – Valuation: It is recommended that all crypto-assets be valued. Whilst valuing crypto-currency will be similar in practice to that of valuing securities or foreign currency, the valuation of NFTs is far more difficult, and a specialist valuer should be engaged.

Given the volatility of many crypto-assets, there may well be a significant spread in prices over the course of a day. Practitioners should take note of any regulations and guidance on valuation within their jurisdiction. Whilst these may not apply directly to crypto-assets, they may be helpful to apply by analogy.

• Step 5 – Taxation considerations: Engage a crypto literate accountant and/or tax lawyer where questions of taxation relating to crypto-assets arise.
• Step 6 – Distribution: subject to the terms of the relevant power of attorney or will, after having taken possession of the crypto-assets (and once all administration matters are completed) the fiduciary can administer them by:
• converting them to cash and distributing the proceeds; or
• distributing them in specie by transferring the tokens to a wallet controlled by the beneficiary, or to a custodian with which the beneficiary has their own account.

Although possibly, fiduciaries should exercise caution in investing in crypto-assets as part of their general power of investment. At a minimum, fiduciaries should take advice about the scope of their powers and duties under the terms of the governing documents (as well as under legislation), and they should bear in mind any duty of care when exercising those powers.

9. Discussions with Australian Registrars
As a result of discussions with registrars from courts around Australia, the author makes the following observations:

• disclosures of crypto-assets remain incredibly rare, though registries universally flag this as an “emerging issue”;
• the general expectation of the registries is that, if digital assets form part of the estate of a deceased, proper consideration should be given by applicants and their representatives about whether they should be disclosed;
• procedures will likely differ depending on whether an estate holds traditional assets alongside digital ones, or if a digital token is the sole asset within the jurisdiction;
• omitting these assets from formal applications can create significant liability issues in the future;
• fiduciaries should secure written consent or agreements from beneficiaries when:
• substantial estate funds are being risked to secure and gain access to digital assets or online accounts; and/or
• finalising the estate administration becomes necessary despite certain digital assets remaining lost or unrecoverable; and
• it is possible to apply to the courts for directions about:
• whether any digital assets or digital accounts form part of the estate;
• what efforts should be made, and what funds expended, by fiduciaries in attempting to secure and gain access to any digital assets or digital accounts, for example by engaging cyber security experts and hackers/crackers; and
• finalising the estate where there is evidence that digital assets form part of the estate, but they cannot be located/called in.

10. Conclusion
The author’s conclusions are:

• crypto-assets are no longer something that practitioners can ignore;
• clients will expect practitioners to know about crypto-assets and digital estates, including achievable estate planning and administration strategies;
• laws in this area are unsettled, and vary wildly between geographical areas, countries, and even states within a country;
• the need for legislative change is evident (and inevitable), and practitioners must keep up-to-date on new developments;
• clients need to understand the difficulties that may arise when completing an estate plan that includes provision for their crypto-assets and digital estate;
• post-death litigation will inevitably increase, particularly, estate plans that fail to deal with crypto-assets and digital estates will increasingly be the subject matter of litigation; and
• estate administration will become more complex and expensive as a result of the need to deal with crypto-assets and digital estates. Choosing the right fiduciary and giving them all the information they need is key.

The author, having served 10 years on the STEP Digital Asset SIG, recommends visiting the Digital Assets section of the STEP website at www.step.org/digital-assets, which has more information and links to other knowledgeable professionals (worldwide) who can help.

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Note: For those concerned that the article title contains a typo, it does not. The term ‘HODL’ originated in a 2013 Bitcoin forum post as a simple misspelling of ‘hold’. The crypto community later adopted it as a backronym for ‘Hold On for Dear Life’. The phrase perfectly captures the white-knuckle rollercoaster ride of extreme volatility that defines owning and investing in crypto-assets. A feeling many executors, successor trustees, and advisers share as they attempt to manage crypto-assets in succession planning … Hence the term ‘hodling’ the inheritance.

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[1] Statista, Cryptocurrencies – Australia, July 2024. Accessed from: https://www.statista.com/outlook/fmo/digital-assets/cryptocurrencies/australia (last accessed 24 June 2026).

[2] News.com, ‘High-risk product’: Australia to crack down on crypto ATMs. Accessed from: https://www.news.com.au/finance/economy/australian-economy/highrisk-product-australia-to-crack-down-on-crypto-atms/news-story/7ee20e0a7c61efe1f5a20cafb60af256 (last accessed 24 June 2026).

[3] Statista, Cryptocurrencies – Australia, July 2024. Accessed from: https://www.statista.com/outlook/fmo/digital-assets/cryptocurrencies/australia (last accessed 24 June 2026).

[4] CoinLedger, How Many Cryptocurrencies Are There in 2025? History, Growth, and Future Forecast. Accessed from: https://coinledger.io/research/how-many-cryptocurrencies-are-there (last accessed 24 June 2026).

[5] Metaschool, 30 Best NFT Marketing Strategies for 2024, 19 August 2024. Accessed from: https://metaschool.so/articles/nft-marketing (last accessed 24 June 2026).

[6] Keeli Cambourne, “Advisers urged to expand APLs as SMSF crypto boom accelerates” (5 May 2026), IFA. Accessed from: https://www.ifa.com.au/advisers-urged-to-expand-apls-as-smsf-crypto-boom-accelerates/.  Also see “Australia’s SMSF sector hits record growth as new research points to digital assets” (May 2026), AdviserVoice. Accessed from: https://newshub.medianet.com.au/2026/05/australias-smsf-sector-hits-record-growth-as-new-research-points-to-digital-assets-as-an-influential-factor-in-smsf-formation/151422/.

[7] Keeli Cambourne, SMSF crypto investment on the rise (7 October 2024), SMSF Advisor. Accessed from: https://www.smsfadvisor.com/news/23867-smsf-crypto-investment-on-the-rise-report (last accessed 24 June 2026). Also see Koinly, Crypto SMSF Guide 2025, 9 June 2025. Accessed from: https://koinly.io/blog/crypto-smsf/ (last accessed 24 June 2026).

[8] R Belhomme and N Schmidt, ‘Back to Basics: Digital Assets – Part 3: Decoding crypto jargon’, STEP Journal, Issue 3, 2023.

[9] Bankrate, Are your lost bitcoins gone forever? Here’s how you might be able to recover them, 10 October 2024. Accessed from: https://www.bankrate.com/investing/how-to-recover-lost-bitcoins-and-other-crypto/#:~:text=A%202023%20report%20from%20Unchained,when%20Bitcoin%20is%20fully%20mined (last accessed 24 June 2026).

[10] Interestingly, 7,500 Bitcoin had an estimated value of AUD$1.25B on 7 July 2025.

[11] See: https://www.dailymail.co.uk/news/article-5143163/IT-worker-threw-away-Bitcoin-drive-worth-75million.html, (last accessed 24 June 2026).

[12] See: https://www.dailydot.com/debug/death-internet-cryptocurrency-matthew-mellon/, (last accessed 24 June 2026).

[13] See: https://www.nortonrosefulbright.com/en/knowledge/publications/168bc350/quadriga-bankruptcy, (last accessed 24 June 2026).

[14] See: https://www.investopedia.com/what-went-wrong-with-ftx-6828447, (accessed 24 June 2026).

[15] SMSF Advisor, FTX collapse sparks tax and valuation issues for SMSFs, 1 December 2025. Accessed from: https://www.smsfadvisor.com/news/21876-smsfs-hit-with-tax-and-valuation-challenges-after-ftx-collapse, (last accessed 24 June 2026).

[16] See: https://www.cnet.com/culture/how-a-300k-bored-ape-yacht-club-nft-was-accidentally-sold-for-3k/ (last accessed 24 June 2026).

[17] See: https://www.cryptovantage.com/news/what-are-the-biggest-crypto-rug-pulls-in-history/ (last accessed 24 June 2026).

[18 See https://www.youtube.com/watch?v=VYWc9dFqROI (last accessed 24 June 2026).

[19] See: http://theconversation.com/hacking-the-terror-suspects-iphone-what-the-fbi-can-do-now-apple-says-no-55135, (last accessed 24 June 2026).

[20] NSW Law Reform Commission, ‘Report 147: Access to digital records upon death or incapacity’, December 2019.

June 2026

Kimberley Martin
Director, WMM Law