diff --git a/test/functional/wallet_migration.py b/test/functional/wallet_migration.py
index 925376e8cd6..b4ef34de6eb 100755
--- a/test/functional/wallet_migration.py
+++ b/test/functional/wallet_migration.py
@@ -6,6 +6,7 @@
 
 import random
 import shutil
+from test_framework.address import script_to_p2sh
 from test_framework.descriptors import descsum_create
 from test_framework.test_framework import BitcoinTestFramework
 from test_framework.messages import COIN, CTransaction, CTxOut
@@ -674,6 +675,21 @@ def send_to_script(script, amount):
         wallet.rpc.importaddress(address=script_wsh_pkh.hex(), label="raw_spk2", rescan=True, p2sh=False)
         assert_equal(wallet.getbalances()['watchonly']['trusted'], 5)
 
+        # Import sh(pkh()) script, by using importaddress(), with the p2sh flag enabled.
+        # This will wrap the script under another sh level, which is invalid!, and store it inside the wallet.
+        # The migration process must skip the invalid scripts and the addressbook records linked to them.
+        # They are not being watched by the current wallet, nor should be watched by the migrated one.
+        label_sh_pkh = "raw_sh_pkh"
+        script_pkh = key_to_p2pkh_script(df_wallet.getaddressinfo(df_wallet.getnewaddress())["pubkey"])
+        script_sh_pkh = script_to_p2sh_script(script_pkh)
+        addy_script_sh_pkh = script_to_p2sh(script_pkh)  # valid script address
+        addy_script_double_sh_pkh = script_to_p2sh(script_sh_pkh)  # invalid script address
+
+        # Note: 'importaddress()' will add two scripts, a valid one sh(pkh()) and an invalid one 'sh(sh(pkh()))'.
+        #       Both of them will be stored with the same addressbook label. And only the latter one should
+        #       be discarded during migration. The first one must be migrated.
+        wallet.rpc.importaddress(address=script_sh_pkh.hex(), label=label_sh_pkh, rescan=False, p2sh=True)
+
         # Migrate wallet and re-check balance
         info_migration = wallet.migratewallet()
         wallet_wo = self.nodes[0].get_wallet_rpc(info_migration["watchonly_name"])
@@ -683,6 +699,20 @@ def send_to_script(script, amount):
         # The watch-only scripts are no longer part of the main wallet
         assert_equal(wallet.getbalances()['mine']['trusted'], 0)
 
+        # The invalid sh(sh(pk())) script label must not be part of the main wallet anymore
+        assert label_sh_pkh not in wallet.listlabels()
+        # But, the standard sh(pkh()) script should be part of the watch-only wallet.
+        addrs_by_label = wallet_wo.getaddressesbylabel(label_sh_pkh)
+        assert addy_script_sh_pkh in addrs_by_label
+        assert addy_script_double_sh_pkh not in addrs_by_label
+
+        # Also, the watch-only wallet should have the descriptor for the standard sh(pkh())
+        desc = descsum_create(f"addr({addy_script_sh_pkh})")
+        assert next(it['desc'] for it in wallet_wo.listdescriptors()['descriptors'] if it['desc'] == desc)
+        # And doesn't have a descriptor for the invalid one
+        desc_invalid = descsum_create(f"addr({addy_script_double_sh_pkh})")
+        assert_equal(next((it['desc'] for it in wallet_wo.listdescriptors()['descriptors'] if it['desc'] == desc_invalid), None), None)
+
         # Just in case, also verify wallet restart
         self.nodes[0].unloadwallet(info_migration["watchonly_name"])
         self.nodes[0].loadwallet(info_migration["watchonly_name"])