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NFT (Non-Fungible Token)

Also known as: Non-Fungible Token, Digital Collectible

Definition

An NFT (Non-Fungible Token) is a unique digital certificate of ownership recorded on a blockchain that proves you own a specific digital asset, such as artwork, music, videos, or collectibles.

Think of an NFT as a digital certificate of authenticity—many people can screenshot the image, but only you have blockchain-verified proof that you own the original digital version.

What Does NFT (Non-Fungible Token) Mean?

NFT stands for "Non-Fungible Token," where "non-fungible" means unique and non-interchangeable. NFTs are stored on blockchain technology—a secure digital ledger that records ownership permanently—and represent ownership of digital assets like art, music, videos, virtual real estate, gaming items, or collectibles. Unlike cryptocurrency such as Bitcoin (where every coin is identical and interchangeable), each NFT is one-of-a-kind with its own distinct value and cannot be replaced with an identical copy.

Under UK law, the Property (Digital Assets etc) Bill 2024 confirms that NFTs are personal property—a distinct third category alongside physical possessions and legal rights. This means NFTs receive the same legal protections as traditional property and can be inherited through your will. The English High Court case Lavinia Deborah Osbourne v Persons Unknown & Ozone Networks Inc Trading as Opensea [2022] EWHC 1021 (Comm) recognised NFTs as property capable of legal protection, marking the first UK case to confirm their property status.

When you purchase an NFT, you own the digital certificate of ownership, but NOT automatically the copyright or intellectual property rights to the underlying artwork or content. The NFT links to a file stored elsewhere on the internet (not the file itself), and copyright typically remains with the original creator unless explicitly transferred in writing under the Copyright, Designs and Patents Act 1988. Most NFTs grant only a limited license for personal display—you can show the artwork in your digital wallet or on social media, but you cannot reproduce it commercially or create merchandise without the artist's permission. For example, Sarah purchases an NFT of digital artwork for £15,000. She owns the NFT and can display it digitally, but the original artist retains copyright—Sarah cannot sell prints or use the artwork commercially without permission.

NFTs form part of your taxable estate for inheritance tax purposes, just like other property. HMRC treats NFTs as assets subject to both inheritance tax (40% on estates over the nil-rate band) and capital gains tax when sold. However, NFTs present unique estate planning challenges because executors need access credentials—private keys or seed phrases that unlock cryptocurrency wallets—to retrieve them. Without these credentials, NFTs are permanently inaccessible, even if mentioned in your will. There is no bank, customer service department, or central authority that can recover access. James owns gaming NFTs worth £8,000 stored in his Coinbase wallet. When creating his will, he appoints his tech-savvy brother Michael as executor and provides secure access instructions. Without this planning, the £8,000 collection would be worthless to his estate, yet inheritance tax would still be due on its value at death.

Common Questions

"What happens to my NFTs when I die?" Your NFTs form part of your estate and can be passed to beneficiaries through your will, just like other property. However, your executor will need access to your cryptocurrency wallet's private keys or seed phrases to retrieve them. Without these credentials, your NFTs may be permanently inaccessible, even if they're mentioned in your will.

"Do I own the copyright when I buy an NFT?" No, buying an NFT does not automatically transfer copyright or intellectual property rights—you own a digital certificate of authenticity, not the underlying artwork or content. The copyright typically remains with the original creator unless explicitly transferred in writing. Most NFTs grant you only a limited license to display the item for personal use.

"How do I include NFTs in my will?" You should specifically mention your NFTs in your will as digital assets and ensure your executor knows how to access them. Never include private keys or passwords directly in your will (it becomes a public document after probate). Instead, store access credentials securely and provide clear instructions to your executor on how to retrieve them, such as through a password manager or secure note.

Common Misconceptions

Myth: "Buying an NFT means I own the artwork and can do whatever I want with it"

Reality: You own the NFT (digital certificate of authenticity), not the copyright or intellectual property rights to the underlying artwork. The original creator retains copyright unless they explicitly transfer it to you in writing. Most NFT purchases only grant you a limited license to display the artwork for personal, non-commercial use. Under UK copyright law, intellectual property rights must be assigned in writing—without express written terms in the smart contract or sale agreement transferring copyright, you receive only the NFT token itself.

Myth: "If I lose access to my NFT wallet, my executor can just contact the platform to recover my NFTs"

Reality: NFTs are stored on decentralised blockchains using cryptographic private keys—there is no central authority, bank, or customer service department that can recover access. If you lose your private keys or seed phrases, your NFTs are permanently inaccessible, regardless of their value or whether they're mentioned in your will. NFT platforms like OpenSea display your NFTs, but they don't control access—the blockchain does. This fundamental difference between centralised services (banks) and decentralised technology (blockchain) makes estate planning for NFTs critical.

  • Digital Assets: The broader category of digital property—NFTs are a specific type of digital asset requiring blockchain-specific knowledge alongside social media accounts, cryptocurrency, and cloud storage.
  • Cryptocurrency: Related blockchain technology—both use similar infrastructure and cryptocurrency wallets, but cryptocurrency is fungible (interchangeable) while NFTs are non-fungible (unique).
  • Blockchain: The foundational technology that makes NFTs possible—a secure digital ledger that verifies and records ownership permanently without central authority.
  • Cryptocurrency Wallet: The storage mechanism for NFTs—executors need access to wallet private keys and seed phrases to retrieve NFTs from an estate.
  • Digital Collectibles: NFTs often represent digital collectibles like art, trading cards, or virtual items—NFT describes the technology that verifies ownership of these collectibles.

Need Help with Your Will?

Understanding NFTs and how they fit into your estate is crucial if you own valuable digital assets. Proper planning ensures your NFTs can be accessed by your executor and passed to your chosen beneficiaries, rather than being lost forever.

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.