Succession planning for digital asset portfolios: A guide for family offices

The rise of family office crypto: Digital assets in private wealth

Family offices and ultra-high-net-worth (UHNW) investors are increasingly integrating digital assets into their portfolios. In fact, according to a 2025 BNY Wealth survey, 74% of investment professionals have either invested in cryptocurrencies or are exploring the possibility, a 21% rise in 12 months. 
Many family offices are actively engaging in digital asset investments, including allocating funds to digital asset funds, ETFs, and venture investments in blockchain infrastructure, to diversify and capitalize on the sector's growth.

The creation of digital assets and the evolution of the digital asset space over a decade have transformed private wealth management. The crypto space and digital finance have increased liquidity and accessibility for investors. The appeal of cryptocurrencies and other digital assets for private wealth management stems from their high growth potential and diversification benefits.

Notably, crypto is no longer seen as a fringe speculation but as a credible asset class for long-term wealth strategies with elite investor networks even embracing Bitcoin as a store of value – a clear sign that crypto is now mainstream among the ultra-wealthy. The sector has seen rapid development, and many family offices now embrace digital assets as part of their core strategies. Many UHNW individuals are involving their heirs early in these plans, recognizing that the next generation is more tech-savvy and expects digital assets to play a central role in future portfolios.

Why succession planning for digital asset portfolios is critical

Trillions of dollars in family wealth are set to change hands globally in the coming decade, making succession planning a pressing issue. For example, in the Middle East about USD 1 trillion in assets will be changing hands in the next decade, yet only 24% of high-net-worth individuals there have a full estate plan in place (Source: Lara on the Block). The rapid adoption of private wealth digital assets adds new complexity to this challenge because unlike traditional bank accounts or stocks, cryptocurrencies do not automatically transfer to heirs without careful planning.

Digital assets are secured by cryptographic private keys, and if those keys are lost or inaccessible when an owner passes away, the wealth can vanish permanently. Blockchain networks have no built-in inheritance mechanism - if no one knows your wallet’s key or seed phrase, the crypto holdings are effectively irretrievable. Recent research estimates that about 3.8 million Bitcoins (worth over $390 billion at current prices) may already be lost forever, with a significant portion of that loss attributed to inadequate succession planning (Source: Weex).

The implications of inadequate succession planning for digital assets are severe, potentially resulting in permanent loss of wealth and disruption of intended legacy transfers.

In a recent post on X (formerly Twitter), CZ proposed that every platform in crypto should implement a “will function” - a digital inheritance mechanism that would allow users to pre-designate who gets their crypto assets and in what proportions.

In short, failing to plan for these assets can literally erase a fortune. Given these high stakes, having a clear strategy for digital asset succession is not just prudent, it is essential to preserve family wealth and legacy. Robust succession planning is a cornerstone of long-term wealth preservation, ensuring that assets are protected and transferred according to the owner's wishes across generations.

Challenges in crypto succession planning

Planning the handover of cryptocurrency and other digital assets comes with unique challenges:

1. Private keys and access: Control of crypto depends on private keys or seed phrases. If these secrets are not securely passed on, heirs cannot access the assets,  there is no “forgot password” option. Wallets protected by strong encryption offer great security during one’s life, but they can become impenetrable vaults in death if no one else has the keys. It is crucial to ensure that digital assets can be properly accessed by heirs or executors through clear legal and procedural measures.
2. No central authority: With decentralized assets, there is no institution to petition for asset recovery. Unlike a bank or broker that can assist an executor, a blockchain network will not unlock a wallet for your beneficiaries without the keys.

3. Legal and regulatory gaps: Estate laws in many jurisdictions are only beginning to catch up with digital assets. Some countries lack clear regulations on treating cryptocurrencies in wills or trusts, which can lead to uncertainty or disputes.

4. Technical complexity: Heirs or even wealth managers may not be well-versed in handling digital wallets, managing encryption, or navigating exchanges. This knowledge gap can impede a smooth transfer. If family members are not crypto-savvy, the risk of mistakes or security breaches during the process is higher.

5. Security vs. accessibility: Crypto owners face a dilemma between keeping keys ultra-secure (never sharing or writing them down) and making them accessible to heirs. Overly secretive approaches can backfire, yet sharing too much information too early can also introduce security risks. Balancing secrecy and succession is tricky.

These challenges highlight why a generic estate plan may fall short for digital holdings. Family offices need tailored strategies to address the technical and legal intricacies of crypto assets.

The importance of custody and asset management

Robust custody and asset management solutions are central to any digital asset succession plan. Secure and reliable infrastructure and platforms are essential for the custody and management of digital assets, ensuring assets are protected and accessible for inheritance. Reputable companies are building trust in the market by providing secure custody solutions specifically designed for family offices. Institutional-grade custody providers can offer multi-layered security, insurance options, and regulatory compliance - all of which are essential for family offices managing significant digital holdings.

Additionally, professional asset management strategies tailored to crypto portfolios can help preserve and grow wealth across generations, providing heirs with a stable and well-structured foundation as they take over stewardship of digital assets. It is crucial to evaluate trading processes and platforms to ensure security and compliance in all digital asset transactions. Accurate data and comprehensive reporting are vital for effective digital asset.

Best practices and strategies for digital asset succession planning

To overcome these challenges, families should integrate digital assets into their succession plans with the same rigor as traditional assets. Seeking professional guidance and leveraging the expertise of specialists in digital asset succession planning is essential to address the unique complexities involved. Key best practices include:

• Catalog your digital asset portfolio: Maintain an up-to-date inventory of all digital assets you own, including cryptocurrencies, tokens, NFTs, exchange accounts, hardware wallets, and all types of investments and interest-bearing digital assets. Document what they are and where they are held. This “crypto asset inventory” ensures your executors and heirs know what exists. Otherwise, valuable holdings might be overlooked or forgotten.
• Securely store private keys and seed phrases: Develop a safe method for preserving the keys needed to unlock your wallets. For example, create a crypto inheritance package that includes your seed phrases, private keys, PINs/passwords, and clear instructions for accessing each wallet or account. Store this documentation in a secure location (like a bank safe or encrypted drive), and ensure your estate documents explain how your executor or heir can retrieve it. Never include actual private keys in a will that will become public; instead, refer to a sealed document or storage location known to your fiduciary.
• Choose the right custody approach: Decide whether assets should be held in self-custodied wallets or with trusted custodial services, and plan accordingly. Holding crypto on reputable exchanges or with custodians can simplify inheritance (as they often have procedures for next of kin), but it introduces counterparty risk. Self-custody gives you full control but requires more succession planning. Ideally, adopting bankruptcy-protected custodians is the right approach.
• Utilize multi-signature and inheritance services: Leverage technology designed for crypto succession. Multi-signature wallets can require multiple keys (held by different trusted parties) to access funds, which can be configured such that a spouse, child, or trustee co-signs transactions when the primary holder is gone. Specialized services now offer “dead man’s switch” mechanisms (using multi-signature or time-locked smart contracts) that will transfer access to your crypto to designated heirs if you become inactive.
• Include digital assets in estate documents: Ensure your will, trust, or foundation documents explicitly cover digital assets. Specify who should inherit your cryptocurrencies and give executors or trustees the authority to handle them. However, do not write down passwords or keys in the will itself. Instead, have the will refer to your secure letter or storage (as set up in step 2) that contains the access details. Work with an estate attorney knowledgeable about digital assets to get the wording and legal structure right for your jurisdiction. Careful consideration of regulatory and legal factors is crucial to ensure compliance and effective transfer of digital assets.
• Appoint knowledgeable executors or trustees: Given the technical nature of crypto, consider naming an executor (or co-executor) who is tech-savvy or even appoint a specialized third-party trustee for digital assets. Select individuals or firms with a strong reputation and experience serving sophisticated investors and clients. This person or entity should understand how to handle private keys, navigate exchanges, and properly transfer digital holdings. They can guide other heirs who may not be familiar with these tools, ensuring the assets are not mismanaged or lost during the transition.
• Educate your heirs and update the plan: Gradually involve and educate your future heirs about your crypto holdings and how to manage them. Building their competence early ensures they won’t be dealing with crypto for the first time at the point of inheritance. This also builds confidence and helps ensure the success of your succession plan. Additionally, plan to review and refresh your succession strategy periodically. Crypto portfolios and security measures evolve, so keep your inventory, instructions, and legal documents up to date (at least annually). Consider testing the plan (for example, a dry run where a trusted person accesses a small test asset) to identify any gaps while you’re still around to fix them.

By implementing these measures, family offices can greatly reduce the risk of digital wealth being lost in transition. The goal is to make sure crypto assets are as securely and smoothly transferable to the next generation as any bank account or piece of real estate.

Legal and structural Innovations: The UAE example

Image by David Rodrigo

As the need for crypto succession planning grows, legal frameworks are starting to evolve. A notable example is the United Arab Emirates, which has taken proactive steps to incorporate digital assets into estate planning. In 2024, the Dubai International Financial Centre (DIFC) introduced a dedicated Digital Assets Will to help investors bequeath cryptocurrencies, NFTs, and other blockchain holdings. The DIFC Digital Assets Will is designed to ensure that one’s digital wealth is securely transferred to intended beneficiaries, avoiding complications or loss due to technical or legal barriers, and the DIFC Courts even provide a secure digital wallet platform where testators can assign their crypto assets to listed beneficiaries in advance. This innovative approach reduces the technical hurdles for heirs.

Another advancement in the UAE is the use of DIFC Foundations as wealth structuring tools. Recent amendments to the DIFC Foundation law explicitly include “Digital Assets” in the definition of property that a foundation can hold. In practice, this means families can place cryptocurrency holdings into a DIFC foundation (a legal entity similar to a trust) as part of their succession plan. These vehicles offer benefits like confidentiality, asset protection, and flexibility in governance, making them useful for managing digital assets across generations while mitigating issues like foreign probate.

The UAE’s forward-thinking policies are becoming a blueprint for others. The DIFC Innovation Hub has partnered with global institutions to explore tokenization solutions for multi-generational wealth transfer. The project aims to harness smart contracts and digital tokens to streamline inheritance and potentially establish a model that other jurisdictions can follow. Such initiatives underscore a growing recognition worldwide that traditional estate techniques must adapt to the realities of digital wealth.

Globally, we also see more traditional institutions adapting. Major crypto exchanges now have procedures to facilitate transfers to next of kin (though paperwork and legal proof like probate are still required). Some jurisdictions have begun updating laws to grant fiduciaries access to digital assets, provided they are properly authorized. However, these developments remain uneven, and it is incumbent on individual families to put their own plans in place. By leveraging the available tools and legal structures – whether a digital will, a trust or foundation, or a specialized custody service – family offices can gain peace of mind that their digital wealth will not fall into limbo.

Future-Proofing family wealth in the digital era

Digital assets have become a permanent part of the wealth landscape for UHNW families and institutions, bringing a new responsibility to manage these holdings prudently across generations. Succession planning for digital asset portfolios has thus emerged as a pillar of a comprehensive family office crypto management strategy. By acknowledging the unique risks (such as lost private keys) and taking proactive steps, including secure key management, updated estate documents, and next-generation education, families can future-proof their crypto wealth.

Fortunately, the industry is maturing, with advancements in advanced custody solutions and jurisdictions like the UAE offering crypto-friendly inheritance laws, resulting in growing resources. Even tax considerations are coming into focus: in many countries, inherited crypto assets may trigger estate or capital gains taxes for beneficiaries, whereas the UAE’s regime imposes no inheritance tax. Ultimately, successful succession planning for digital assets hinges on the same principles as any estate planning: clarity, security, and effective communication. Family offices that incorporate these steps into their cryptocurrency management and governance will ensure that today’s digital wealth becomes a lasting legacy for future generations.