Wealthy crypto investors and entrepreneurs are increasingly seeking offshore trusts for estate planning and tax efficiency, but trustees remain hesitant to accept digital assets due to significant concerns. According to reports from The Financial Times, only a small number of trustees are comfortable holding cryptocurrency, with many clients selling their tokens before placing the proceeds into trusts. Charlie Tee, a partner at law firm Withers, noted that even when digital assets have been converted into fiat currency, trustees can remain cautious about accepting the proceeds. The reluctance stems from price volatility, custody risks, and difficulties verifying the source of digital asset wealth.
UK taxpayers disposed of £13.8 billion in crypto assets during the year through April 2025, with most disposals made by men under the age of 45, as reported by The Financial Times. Nearly 250 taxpayers recorded capital gains exceeding £1 million from crypto disposals during this period. More recent HMRC figures showed 17,600 taxpayers reported £1.38 billion in taxable crypto gains for the 2024-25 tax year, with 240 investors accounting for £717 million after reporting gains of more than £1 million each. The tax authority has stepped up scrutiny, sending around 81,000 warning letters to crypto investors suspected of underpaying taxes during the previous year.
Crypto ownership presents unique estate planning challenges because assets depend on access to private keys, unlike conventional accounts. As reported by The Financial Times, assets held in self-custody wallets can become inaccessible if the owner dies without leaving workable methods for heirs to recover the wallet. A crypto estate plan requires arrangements covering wallet access, private keys, and instructions for beneficiaries alongside legal documents for transferring ownership. Ripple board member David Schwartz raised similar concerns in August, proposing an inheritance setup involving duplicate Bitcoin hardware wallets given to two trusted relatives while separately providing shared PINs to trusted friends.
Trustees face significant fiduciary responsibilities that extend beyond the person creating the trust to children, grandchildren, and future beneficiaries. Claire Randall, a partner at Farrer & Co, told The Financial Times that trustees accepting crypto-related wealth must establish how money was obtained and ensure it wasn't linked to criminal activity. Tracing this history can be complicated when funds have moved through wallets, exchanges, and other digital asset services. The FTX collapse in November 2022, which led to bankruptcy after liquidity crisis problems with Alameda Research, has made trust companies more cautious about accepting responsibility for digital assets.
Specialist screening tools are becoming available to help trustees establish cryptocurrency acquisition history and verify source of wealth. Andrew Horbury, chief executive of UAE-based Cavenwell Group, told The Financial Times that screening tools can trace transactions and help trustees examine trading histories, comparing them with asset values being considered for trusts. These checks can assist with source-of-wealth and anti-money laundering investigations, though traditional trust companies continue weighing whether they're prepared to accept crypto directly. Some providers remain more comfortable with cash generated from crypto sales than holding tokens inside trusts.
