NFTs in an estate: what to preserve

NFTs are unique tokens (art, collectibles, domain names, memberships) held in a wallet. For an estate they behave like self-custody crypto with one extra difference: their value is usually a judgement, not a price. The first question heirs often have is simply: what is this, and does it belong to the estate?

What an NFT is

NFT stands for non-fungible token: a unique token on a blockchain. It can refer to digital art, collectibles, domain names, access rights or other digital assets. The blockchain records which blockchain address holds the token; that by itself says nothing about who is legally entitled. The files it points to (such as an image) are usually stored elsewhere. An important distinction: the token (proof of control over the token) is not the same as the rights behind it, an NFT may point to an artwork without transferring copyright or reproduction rights. That is a legal question for a lawyer or notary.

What may exist

• Art and collectibles, the most common; value is subjective and illiquid.
• Domain names and ENS-type names, can have real utility and resale value.
• Memberships and access tokens; their value depends on the associated rights, transferability and demand.
• In-game items, platform-specific; access may die with the platform.

How NFTs are held

With self-custody, the wallet or account configuration determines who can technically act on behalf of the wallet. Whether an NFT can then also be transferred also depends on the rules set for that NFT. Some NFTs are not transferable or have extra conditions.

• Self-custody: you manage access to the wallet yourself. That does not automatically mean every NFT can be moved. So also check whether the NFT in question is transferable and what conditions apply. Technical access is not legal authority.
• Marketplaces and platforms, a marketplace account is not automatically a custodial account. On many NFT marketplaces (including OpenSea) the token stays in the linked self-custody wallet and the platform acts only as an interface. Only when a platform actually holds the assets in custody does access run through that provider’s account and estate procedure.
• Custodial services, the provider holds the keys; the provider’s account procedure applies, similar to an exchange.

Preservation

• NFTs are tied to the wallet that holds them: the same preservation rules apply (preservation checklist, what did I find?).
• The media file is often stored off-chain (IPFS, cloud); the token is on-chain. The token, the metadata and the linked media file can be separate components; keep information about all three where relevant, because which rights are attached to the NFT depends on the applicable terms and law.
• Do not move, list, “test-sell” or “mint” anything before authority is established.
• Preserve proof of provenance: purchase records, transaction data, correspondence.

The honest valuation problem

• There is no official price. Floor prices from marketplaces are indications of asking prices, not value.
• Liquidity is often near zero: “worth” and “saleable for” can be completely different numbers.
• How tax authorities treat NFTs for reporting differs by country; in many, they are treated like other crypto-assets. Verify locally (valuation, tax and reporting).
• Whether and how NFTs are divided between heirs follows the same logic as other crypto (dividing crypto).

What to do

1. Record each NFT in the estate inventory with its chain, collection and token ID, no secrets involved.
2. Record relevant market data around the applicable valuation date, such as recent comparable sales and available market prices. For a formal filing, use the valuation rule that applies in the jurisdiction concerned.
3. Get a professional opinion before claiming a large figure to authorities or heirs.

An NFT does not automatically require immediate action. Do check whether deadlines or renewals are attached to it. Some blockchain domain names can, for example, expire if they are not renewed in time. Do not move or sell anything before it is clear who may act, but record time-sensitive deadlines right away.