Crypto inheritance and estate planning

By CH Consulting

Cryptocurrencies present unique challenges when it comes to estate administration, from securing private keys to navigating offshore exchanges and hidden wallets. The South African Revenue Service (SARS) treats crypto as property, meaning it’s fully taxable in an estate. That includes both capital gains tax (CGT) on any growth at the time of death and estate duty of up to 25% on the total value. 

Let’s take a closer look at the considerations and best practices for managing cryptocurrency inheritance and estate planning.

Book a free exploratory crypto tax call with CH Consulting using the referral code: CRYPTOTAX2025.

How SARS treats crypto at death

Under South African law, digital assets are treated as property and form part of your estate in the same way as shares, real estate, or cars. When a person passes, it is regarded as if they had sold their cryptocurrency at market value on the date of death, a process known as deemed disposal. Any growth in value from the time they acquired it until their passing is subject to capital gains tax (CGT). Once included in an estate, it may also attract estate duty, 20% on estates up to R30 million and 25% on anything above that threshold.

Case study

If someone bought R500,000 worth of Bitcoin in 2019, and on the day of their passing it was worth R2 million, a CGT event is triggered on the R1.5 million gain, while estate duty is levied on the full R2 million included in the estate.

This means crypto can create double tax exposure of CGT plus estate duty, unless managed carefully.

The practical risks

Even if you specify what happens to your crypto assets in a will, crypto poses unique risks:

Private keys and seed phrases – Without these keys, heirs cannot access your wallets, and executors cannot “reset passwords” as with banks.

Exchange accounts – Local platforms like Luno may release funds to heirs upon receipt of death certificates and executor instructions, but it can become much more complex if crypto assets are held on an offshore exchange.

Hidden wallets – Unknown crypto assets could remain unclaimed.

Executors and cryptocurrency

Executors traditionally manage estates by collecting assets, settling debts, and distributing inheritance. With crypto, however, they face a new set of obstacles. Many may not fully understand how crypto assets are stored, and gaining access to wallets and accounts can be challenging without the right information. On top of that, they must ensure that SARS obligations, including capital gains tax and estate duty, are calculated correctly. Without careful planning, crypto can quickly turn estate administration into a nightmare.

How other countries treat crypto assets

Globally, the consensus is clear: crypto is taxable in estates, even if practically inaccessible.

USA – Crypto is property; included in gross estate and subject to estate tax. Executors must report holdings to the IRS.

UK – Treated as assets; CGT triggered at death; inheritance tax applies.

Australia – Similar to South Africa; deemed disposal, with CGT and estate tax implications.

Best practices for crypto estate planning

Include crypto assets in your will

Specify wallet holdings and who inherits them, avoiding vague references and be as precise as possible.

Secure storage of keys

If your crypto is held on a hardware wallet and not an exchange, store seed phrases in a secure physical location, and consider multi-signature wallets with trusted co-signers.

Inform executors

Ensure executors know of your crypto assets and provide clear instructions for access.

Professional guidance

Work with tax practitioners to minimise CGT and estate duty, and consider lifetime donations to reduce estate exposure.

Donations and trusts

South Africans can legally reduce estate duty exposure by donating cryptocurrency during their lifetime (subject to donations tax), setting up family trusts that hold cryptocurrency outside of the estate, and using annual exemptions for small donations. These strategies must be carefully structured to comply with SARS requirements. 

Keeping accurate records and maintaining a clean record goes a long way in reducing the burden when you pass. 

Common mistakes

Many people make the mistake of not having a will, which can delay the distribution of assets or even result in their loss in intestate estates. Others fail to tell anyone about their crypto holdings, leaving heirs unable to claim what they don’t know exists. Without a record of the cost base, SARS is left to estimate taxes, which often turns out to be unfavourable for the deceased’s estate. 

Record-keeping

Keeping accurate records for your heirs is essential. This should include acquisition details such as purchase dates and cost base, wallet addresses and private keys, exchange account information, and clear written instructions stored securely. With these records in place, heirs can access your crypto assets efficiently and report taxes correctly, helping to avoid unnecessary delays or complications.

Crypto succession law in South Africa

Investors can expect further Financial Sector Conduct Authority (FSCA) guidance on the custodial responsibilities of exchanges, test cases in South African courts clarifying executors’ rights over wallets, and increased SARS scrutiny of estates holding crypto assets. Estate planners, tax advisors, and executors will increasingly need to become fluent in crypto matters involving estate planning.

Book a free exploratory crypto tax call with CH Consulting using the referral code: CRYPTOTAX2025.

* Investing in Crypto assets may result in the loss of capital. Luno (Pty) Ltd is an authorised financial services provider (FSP No. 53314), and registered credit provider (NCRCP22123). This article is provided for educational purposes only and does not constitute tax, legal, or financial advice. Luno (Pty) Ltd is not a tax advisor and makes no representation or warranty regarding the accuracy, completeness, or applicability of the information contained herein. Luno does not receive any financial benefit from this content.

Readers should consult with a registered tax practitioner before taking any action based on this material. CH Consulting (Pty) Ltd is an independent tax practice, registered with SARS, and is solely responsible for the professional services offered via the links provided.