Digital Assets and How to Pass Them On
Blog by Aliceblue News Desk
31 October 2026
9 minutes
Many of our investments, documents, businesses, and personal records now exist online. But if family members do not know these assets exist, or cannot access them after the owner’s death, they can be difficult to recover.
Digital assets can include demat investments, mutual funds, crypto, domain names, cloud files, online businesses, email accounts, and other valuable digital records.
Passing them on requires more than sharing passwords. A practical plan should make three things clear: what you own, who should receive it, and how the authorised person can access it safely.
Table of Contents
Quick Answer
To pass digital assets on, start by creating an inventory of what you own. Update nominations where they are available, include important assets in your Will or estate plan where appropriate, and create separate instructions for accessing accounts or wallets.
Financial assets such as demat holdings and mutual funds have formal transmission procedures. Crypto and online accounts may require additional access planning because a legal right to inherit an asset does not automatically provide the password, private key, or platform access needed to recover it.
A simple rule is:
The estate plan explains who should receive the asset. The access plan explains how they can reach it.
What Are Digital Assets?
In estate planning, a digital asset can be something of financial, business, personal, or sentimental value that exists electronically or is controlled through a digital account. Examples include demat shares, mutual fund investments, crypto assets, NFTs, domain names, websites, cloud documents, photographs, email accounts, and online businesses.
These assets do not all pass to heirs in the same way. A demat account has a formal transmission process, while a self-custody crypto wallet depends heavily on access to its private key or recovery phrase. Online accounts may also be governed by the service provider’s own rules. So the first step is to understand what type of digital asset you own.
Digital Assets vs Virtual Digital Assets
The terms digital asset and Virtual Digital Asset (VDA) should not be treated as the same thing. Digital asset is a broad everyday term that can include cloud files, domains, online businesses, investments, and crypto.
VDA is a specific term under Indian income-tax law. The Income Tax Department’s guidance on Virtual Digital Assets covers crypto-assets, NFTs, and other assets falling within the statutory definition. Cloud documents, email accounts, or photographs do not become VDAs simply because they exist digitally.
Create a Digital Asset Inventory
Before deciding how assets should pass to someone else, create a simple list of what exists. You do not need to record every password in this document. The aim is to help a trusted person know what to look for and where it is held.
Asset | Where It Is Held | Useful Information |
Demat shares | Broker / Depository | DP and account details |
Mutual funds | AMC / RTA / platform | Folio details |
Exchange-held crypto | Crypto exchange | Platform and registered email |
Self-custody crypto | Hardware/software wallet | Wallet type and recovery plan |
Domains | Registrar | Domain and registrar |
Cloud files | Cloud provider | Account and important folders |
Online business | Website/platform | Ownership and operating records |
Keep the inventory updated whenever an important account is opened, closed, or moved.
How Can Different Digital Assets Be Passed On?
Demat Shares and Mutual Funds:
Demat holdings and mutual funds have formal nomination and transmission procedures. SEBI defines transmission as the process through which investments of a deceased holder move to eligible surviving holders, nominees, or legal heirs. SEBI also simplified and standardised securities transmission through its July 2026 transmission framework.
Having updated nominations can make the process smoother. Alice Blue’s guide on adding a nominee to a demat account explains how demat nomination works, while its guide on mutual fund nomination covers adding or changing nominees for mutual fund holdings.
Keep nomination details, account records, your Will, and your intended beneficiaries aligned so that your instructions do not create unnecessary confusion.
Crypto Assets:
Crypto needs extra planning because the method of custody affects how it can be recovered. If crypto is held with an exchange or custodial platform, heirs may have to follow that provider’s claim process and submit documents such as a death certificate, identification, or succession documents.
Self-custody works differently. Control usually depends on a private key or recovery phrase. If that information is permanently lost, there may be no institution capable of restoring access.
For self-custody crypto, separate the plan into two parts:
- Legal instruction: who should inherit the asset.
- Recovery instruction: how the authorised person can obtain the information needed to access it.
Do not casually store seed phrases in email, an ordinary spreadsheet, or another insecure location.
Online Accounts, Cloud Files, Domains, and Businesses:
Online accounts are often governed by platform-specific rules. Some providers offer legacy or inactive-account tools that allow users to specify what should happen after long inactivity or death. These features can help with photographs, documents, emails, and other important records.
Domains, websites, online stores, and digital businesses need additional planning because they may have both financial value and operating requirements. Your records should identify ownership, the service provider, and where important business information is kept. Knowing a password does not automatically establish legal ownership of an account or business asset.
Nomination vs Inheritance
Nomination and inheritance are connected, but they are not always the same thing. For SEBI-regulated investments such as demat holdings and mutual funds, nomination provides a formal route for transmission. However, ultimate succession can still depend on the Will and applicable succession law.
For crypto, domains, and online accounts, the rules may be completely different. A crypto exchange may have its own death-claim process, while an online service may not allow the account itself to be transferred. This is why nomination should be treated as one part of estate planning rather than the entire plan.
Should Passwords Be Put in a Will?
Sensitive credentials are generally better kept separate from the Will. A Will explains what should happen to your assets. It is not designed to act as a password vault.
During estate administration, the Will may need to be seen by executors, lawyers, courts, or other parties. Passwords also change, while private keys and recovery phrases require much stronger security.
A clearer structure is:
- Will or estate document: identifies the asset and beneficiary.
- Secure access instructions: explain how an authorised person can obtain access.
The access instructions can be stored through an appropriately secured password manager, sealed record, or another method suited to your circumstances.
A Simple Digital Estate Planning Process
1. List Your Digital Assets
Start with investments, crypto, valuable online accounts, domains, businesses, and important files.
2. Decide Who Should Receive Them
Record the intended beneficiary in your Will or estate plan where appropriate.
3. Update Nominations
Keep nominations current for demat accounts, mutual funds, and other financial assets where nomination is available.
4. Create Secure Access Instructions
Explain how the authorised person can locate and recover important assets without putting sensitive credentials in the main asset list.
5. Use Platform Legacy Features
Where available, configure legacy-contact or inactive-account settings instead of relying only on someone knowing your password.
6. Tell a Trusted Person the Plan Exists
You do not need to give them every password today. They should, however, know that the inventory and access instructions exist and where they can be found when required.
7. Review the Plan Periodically
Update the plan when you change brokers, open or close wallets, buy or sell valuable domains, move cloud providers, start an online business, or change your Will.
Tax Basics When Digital Assets Are Inherited
Receiving property through a Will or inheritance is generally treated differently from receiving an ordinary taxable gift. The Income Tax Department’s guidance on the tax treatment of inherited property and gifts states that property received under a Will or by inheritance is excluded from the ordinary gift-tax provisions. The prescribed movable-property category also includes shares, securities, and Virtual Digital Assets.
However, receiving an asset and later selling it are separate events. If an heir later sells inherited shares, crypto, or another taxable asset, different tax rules may apply. Keeping purchase records and transaction histories can therefore be useful.
Common Mistakes
- Assuming family members know what you own: Digital assets may leave very little visible evidence.
- Treating nomination as a complete estate plan: Nomination rules differ depending on the asset.
- Holding self-custody crypto without a recovery plan: Lost keys may make the asset permanently inaccessible.
- Writing seed phrases or passwords directly in the Will: Sensitive credentials should be protected separately.
- Keeping every credential in one unsecured file: One security breach could expose several accounts.
- Ignoring domains or online businesses: These assets may have significant financial value.
- Assuming password access equals ownership: Platform rules and succession law can still apply.
- Never updating the asset list: Old account details can make recovery much harder.
Tips for Beginners
- Start by listing assets, not passwords.
- Separate financial assets from personal online accounts.
- Keep nominations updated where available.
- Identify who should receive valuable digital assets.
- Create a separate recovery plan for self-custody crypto.
- Use platform legacy features where available.
- Keep private keys and passwords separate from the main Will.
- Make sure at least one trusted person knows the plan exists.
- Review the list after major financial or digital changes.
- Consider professional legal advice for valuable crypto, overseas assets, digital businesses, or complex family situations.
Conclusion
Passing on digital assets requires both inheritance planning and access planning. Demat holdings and mutual funds have formal transmission procedures. Crypto may require a platform claim process or access to a self-custody wallet. Online accounts, cloud files, domains, and digital businesses may depend on separate platform or ownership rules.
A practical plan can be kept simple:
List the assets → decide who should receive them → update nominations → create secure access instructions → review the plan regularly.
The purpose is not to share passwords while you are alive. It is to make sure important digital assets can be identified and recovered when your family eventually needs them.
Frequently Asked Questions
Blog by Aliceblue News Desk
