This article originally appeared in the September 21, 2016, edition of the Cascade Business News
Today, no estate or disability planning is complete without providing for your “digital assets.” Even if you’ve never considered the notion of digital assets, you almost certainly possess them. Inadequate digital asset planning can frustrate the administration of your estate, lead to identity theft, and cause the loss of valued possessions. Have you ever wondered what happens to your Facebook profile or your vast iTunes library when you die? Can your personal representative compel access to your email or E-Trade accounts if knowledge of the passwords dies with you?
More and more of our daily tasks–not to mention assets with sentimental and/or financial value–are going digital. Broadly defined, a “digital asset” is any electronic record stored on, and retrievable from, an electronic device. This includes email accounts; online banking accounts; social media profiles; photographs, writings, or other intellectual property stored on a hard drive or in the cloud; entertainment media purchased from iTunes or similar online marketplaces; and websites and domain names. Digital assets can reside on your computer, cell phone, tablet, external hard drive, or on the Internet.
Upon death or disability, a will or power of attorney typically appoints a fiduciary (e.g., a “personal representative”) to attend to your assets and affairs. Such fiduciaries are tasked with accessing, managing, and transferring your assets–tasks that become considerably more difficult when the extent of, and passwords for, digital assets are unknown. Providing fiduciaries with a periodically updated inventory of digital assets and related passwords, as well as with instructions regarding their management, termination, or disposition, has become a crucial part of modern estate planning. Assets may otherwise be lost, and personally identifiable information may float in cyberspace indefinitely, waiting to be co-opted by identity thieves.
Such proactive approaches, however, are not always the end of the story. Various federal privacy and anti-hacking laws, and end-user agreements with online service providers, can create roadblocks for even a duly authorized fiduciary to legally access a decedent’s account. Google and Yahoo! for instance have been known to require separate legal proceedings before providing fiduciary access. Aside from the access question, end-user agreements also can raise questions about the ultimate ownership–and thus transferability–of digital assets. These agreements may contain language that hosted content becomes property of the online custodian, or that media “purchased” online is actually merely licensed by a user until death. Review of end-user agreements, which are often assented to without a second thought, has also thus become an important part of digital asset planning.
In March, Oregon became the first state to adopt the Revised Uniform Fiduciary Access to Digital Accounts Act (“RUFADAA”), effective January 1, 2017. RUFADAA now provides a mechanism by which fiduciaries under a will, trust, power of attorney, or conservatorship can compel access to, or the termination of, digital accounts pursuant to a statutorily defined process. RUFADAA also provides fiduciaries with legal cover from various computer-related laws that arguably prevented such access. RUFADAA gives discretion to online custodians to limit access to only such portions of accounts necessary to discharge a fiduciary’s obligations and allows custodians to impose a “reasonable administrative charge” for such access. RUFADAA imposes strict legal duties upon fiduciaries, and legal counsel should be consulted when seeking access under the new act.
RUFADAA will generally apply when fiduciary authority to access digital accounts has been explicitly granted under the relevant instrument (e.g., a will). Now is a good time to ensure that your testamentary documents, general power of attorney, and estate planning generally, adequately addresses your digital assets.
For more information on this topic, please contact firstname.lastname@example.org or call (888) 598-7070.