How Digital Assets Are Reshaping Family Wealth Preservation
The article was originally published in Forbes Finance Council.
After years of advising families on preserving capital, I grew used to a predictable set of questions. Property, a stake in a business, bank accounts, securities. Each has a clear physical or legal anchor and time-tested ways of passing to the next generation.
In the past few years, though, a different question surfaces in almost every conversation, and the familiar tool kit has no good answer for it: What happens to the part of a family’s capital that exists only in digital form? This, to me, is the new frontier of inheritance.
I will not dwell on why capital needs structure, because that logic is by now well understood. A widely cited 20-year study of 3,200 families by the Williams Group found that around 70% of wealthy families lose their wealth by the second generation and 90% by the third, and that the main cause is not poor markets or heavy taxes but a breakdown of planning and communication within the family. What interests me more is what has changed, which is the very substance of capital.
Assets With No Physical Address
Alongside property and securities, families increasingly hold digital assets, from digital currencies to businesses that exist only as entries on a network. These behave unlike anything earlier generations inherited, and the difference comes down to one word: access.
A traditional asset eventually announces itself. A bank account can be located and, however slowly, unfrozen. A property sits on a register. A digital asset depends entirely on keys, passwords and devices that, as a rule, only the owner knows. When the owner is gone and that information was never recorded anywhere, the asset does not become disputed. It becomes unreachable.
Here is the difference that matters most: A frozen account will one day be released by a court, but an unreachable digital asset is recovered by no one. Heirs may know it exists and still never touch it. This is a category of loss that simply did not exist a generation ago.
The problem is made worse by silence. The reluctance to discuss one’s own death, which already sits at the root of many inheritance failures, runs even deeper with digital holdings. They are newer, more private and create the comfortable illusion that one can deal with them later. Too often, later never arrives.
The second shift is that capital today is almost always spread across countries whose inheritance rules are not just different but incompatible. In some, a personal account is frozen the moment its holder dies and is not released without the consent of every heir and a matching court process. Others impose forced-heirship rules that send a fixed share to children regardless of the owner’s wishes. Others still follow principles under which daughters and widows receive far smaller shares than sons. A family with assets across several such regimes can face years of parallel proceedings, during which the capital is beyond everyone’s reach.
Digital assets sharpen this further because they have no national home at all. They sit above borders, fitting none of these frameworks cleanly. This is a blind spot for traditional succession law that only grows more tangled if approached country by country.
What To Do About It
The answer, in principle, is the same as for any asset meant to outlive its owner. It has to sit inside a framework whose rules are set in advance, rather than depend on one person’s memory or one country’s probate court.
For digital assets, that means documenting their existence and the rules for reaching them as part of the overall ownership structure. It also means entrusting custody to licensed institutions with proper custodial solutions rather than a device in a drawer whose loss is the loss of the asset itself. And finally, it means writing the rules of succession as plainly as they are for cash or shares.
It is worth being clear that none of this is about concealment or putting something out of sight. It is about continuity. The asset keeps existing and is governed by agreed rules so that a change of generation alters who manages it, not whether anyone can reach it at all. For a family, the distance between those two outcomes is sometimes decades of litigation, and sometimes total, permanent loss.
The Instrument Changes With The Capital
This brings me to what I consider most important. The structures families use to preserve capital are changing not out of fashion or because the law keeps shifting, but because the contents of capital have changed. Shares and cash are now being asked to hold things with no physical form and no national home. That is a genuine challenge and a natural stage of evolution because inheritance has always reflected whatever people happened to own in their time.
The families who recognize this early, and treat digital assets as a full part of the estate rather than an afterthought, will be among the few whose digital wealth can survive the handover. Those who keep postponing the conversation risk leaving their heirs not a fortune but a locked archive whose contents can only be guessed at.
Building capital is hard, but the true measure of success for a family is its ability to preserve and pass it on. A new dimension has been added to that task, and the moment to begin the conversation is not when it is already too late, but while it still feels premature. Capital built for generations calls for thinking across generations, whatever form that capital happens to take.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
