What Happens to Digital Assets After Death?

Introduction

When a person dies without a valid will in NSW, obtaining Letters of Administration gives an administrator the legal authority to manage and distribute the estate. This role increasingly involves identifying and securing digital assets such as cryptocurrency, online accounts, and intellectual property — holdings that Australian courts now recognise as property.

This article outlines the key duties of an administrator, from discovering digital wallets and preserving private keys to handling platform requests and managing capital gains tax obligations. It provides practical guidance for securely administering a digital legacy under NSW intestacy laws.

Interactive Tool: Check If You’re Ready to Handle the Estate’s Digital Assets

Device & Digital Wallet Discovery Methods

An administrator’s first task is to identify the deceased’s smartphones, digital accounts and cryptocurrency wallets. Crypto assets may be stored in:

• a software wallet, including one held through a trading platform; or
• a hardware wallet.

A hardware wallet stores private keys on a secure device that is not connected to the internet. Physical discovery is therefore essential because the wallet may not be identifiable through online account searches. 

Each wallet has a private key that authorises transactions, and losing that key usually means losing access to the cryptocurrency.

Identification of Online Businesses & Intellectual Property

The digital asset search should also cover:

• online businesses;
• domain names;
• cloud files; and
• related digital records.

These assets may contain financial value, business information or material needed to maintain the estate’s interests.

Administrators should record any copyright, trade marks and other intellectual property connected with the deceased or an online business. 

The search should also identify relevant accounts, renewal details and service arrangements so that domains, business operations and intellectual property are not overlooked during estate administration.

Device Access & Private Key Preservation for Executors

Solutions for Passcode & Biometric Lockouts

Apple iPhones are designed to prevent access without the correct passcode or biometric unlock. After death, Face ID or Touch ID may no longer provide access, leaving an executor unable to review:

• digital records;
• email accounts;
• password manager vaults; or
• authentication tools.

Apple requires a Legacy Contact or a court order before an administrator can obtain access to a locked device. Possession of the iPhone alone may not be enough to recover information held on it, including records relevant to the estate administration.

Protection of Hardware Wallets & Authentication Apps

A hardware wallet stores cryptocurrency private keys on a secure device that is not connected to the internet. This can make it harder for hackers to access the wallet, but the device and its access details still require careful protection during estate administration.

Each wallet uses a private key to authorise transactions on the blockchain network. If the private key is lost, the cryptocurrency is usually lost permanently because crypto systems have no central data bank.

Authentication apps should also be preserved because they may hold codes needed to access online accounts and cryptocurrency holdings.

Legal Frameworks & Platform Requests for Administrators

The Impact of Unclear Statutory Guidance in NSW

NSW does not have clear statutory guidance specifically governing access to a deceased person’s digital assets and records. Relevant areas may include:

• intellectual property;
• privacy;
• contract;
• crime;
• estate administration; and
• wills and succession law.

This creates uncertainty about access, control and inheritance.

Social Media Policies & Legacy Contact Procedures

Social media accounts may form part of an estate, but an administrator’s access can depend on the platform’s terms of service and internal procedures. 

The NSW Law Reform Commission identified these policies, together with privacy protections and jurisdictional issues, as matters relevant to any access scheme.

An administrator may need to provide evidence of the following before a platform considers a request:

• the deceased’s death;
• their legal authority; and
• their relationship to the estate.

Estate planning can also address these issues by:

• identifying digital accounts;
• recording access details; and
• appointing a digital executor.

However, a platform’s own procedure may still control whether an account is transferred, memorialised or closed.

Valuation, Capital Gains Tax & Documentation for Beneficiaries

Market Valuation Requirements for Crypto Assets

Crypto assets should be recorded at their market value in Australian dollars at the date of the deceased person’s death. This valuation supports probate reporting, estate administration and later tax calculations.

Administrators should keep records for each cryptocurrency and transaction, including:

• the asset’s value or cost;
• the date of acquisition; and
• costs incurred by the legal personal representative or beneficiary.

Each crypto asset is treated as a separate CGT asset. Accurate records can help establish the asset’s value and cost base when it is later transferred or disposed of.

Capital Gains Tax for Inherited Estates

A legal personal representative can disregard a capital gain or capital loss when a CGT asset owned by the deceased immediately before death passes to a beneficiary, including under the laws of intestacy. 

However, the beneficiary may face CGT if they later sell, exchange, gift or otherwise dispose of the inherited cryptocurrency.

CGT may apply at the deceased’s death when an asset passes to a foreign resident or a tax-advantaged entity, such as a charity, subject to the conditions described by the Australian Taxation Office.

When the legal personal representative sells an estate asset while winding up the estate, the resulting capital gain or loss is subject to the normal CGT rules.

Asset Transfer & Digital Legacy Distribution Rules

The Difference Between Asset Ownership & Digital Licences

An estate may contain both owned digital assets and digital services accessed under a licence or service agreement. Ownership may allow an asset to pass to a beneficiary, while a licence may only provide permission to use an account, platform or digital content.

The deceased’s terms of service may control whether access can be:

• transferred;
• continued; or
• closed.

Administrators should check the relevant agreement before treating an online account, digital content or other digital asset as transferable property.

Distribution Guidelines Under NSW Intestacy Rules

Digital assets form part of the estate where they are property owned by the deceased. When a person dies without a valid will, NSW intestacy rules determine which beneficiaries are entitled to receive the estate, including qualifying cryptocurrency and other transferable digital assets.

Before distribution, the administrator should:

• identify each asset;
• confirm its ownership;
• preserve access details; and
• record its value.

A cryptocurrency holding may be transferred to an entitled beneficiary or sold so its value can be shared as part of distributing the estate.

Conclusion

Managing a digital estate after Letters of Administration requires careful control of devices, wallets, private keys, online accounts and intellectual property. Accurate Australian-dollar valuations, transaction records and attention to capital gains tax support the administration and later distribution of cryptocurrency and other digital assets under NSW intestacy rules.

The next step is to contact LawBridge for a consultation about the estate. For practical legal guidance on digital asset management, cryptocurrency holdings and intellectual property, contact our wills and estate planning lawyers at LawBridge to help deal with the estate’s digital records and distribution responsibilities.

Frequently Asked Questions