The forgotten assets: Protecting your client’s digital assets at death
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Digital technology is ubiquitous; from the advent of the elusive “Cloud” to online banking accounts, social media accounts, and mobile apps we engage multiple forms of digital technology daily. With that technology, “[w]e’re accumulating far more digital records in our lives than we are physical ones.”[2] Indeed, on average, we have over $35,000 worth of assets stored in online financial institutions and in our electronic devices.[3] These are the often forgotten assets that fiduciaries confront, sometimes with substantial road blocks to their access.
Take, for instance, the hypothetical 60-year-old who unexpectedly dies. His personal representative attempts to marshal his assets but discovers that all of his account statements were produced and transmitted electronically by email. Even the decedent’s tax returns, which would provide valuable information as to the location of the decedent’s accounts, were produced electronically and filed online. The personal representative has no access to the decedent’s email username and password or any other account for that matter. Family members would like access to the decedent’s social media accounts to preserve photographs which may not be available elsewhere. Perhaps the decedent has an eBay account, website, or other online business that requires action. How then, does the fiduciary fulfill his role to account for the assets of the decedent and attend to the needs of the family?
Many website providers such as Apple, Facebook, Yahoo, Google, and Twitter have Terms of Service Agreements applicable to users which typically state that those providers will not issue login and password information to third parties including family members of a person who has died nor is the accounts’ ownership transferable. Apple appears, by far, the most restrictive of the providers, noting in its iCloud Terms of Service that “any rights to your Apple ID or Content within your Account terminate upon your death.” Other service providers have a gentler approach:
- Facebook will not provide login information but will honor requests by family members to have the decedent’s page removed or turned into a memorial page;
- Yahoo does not allow access to the account, citing to its agreement with the user in the TOS, but does have a process by which the account may be closed and deleted for privacy;
- Microsoft now has a “Next of Kin” process which permits the content of emails, their attachments, address book, to be disclosed after an authentication process; and
- Google has added an “Inactive Account Manager” tool that allows the user to set a time frame for destruction or transfer of content after the user ceases to use Google due to death or incapacity.
Thus, a fiduciary is at the mercy of these providers and their policies with respect to the release of the content of data in the Cloud, photographs, emails, attachments and contact lists.
In 2015, as an attempt to quell the concerns of fiduciaries and provide some clarity and uniformity among the states, the Uniform Law Commission (ULC) created the Revised Uniform Fiduciary Access to Digital Assets Act (Revised UFADAA). “The act allows fiduciaries to manage digital property like computer files, web domains, and virtual currency, but restricts a fiduciary’s access to electronic communications such as email, text messages, and social media accounts unless the original user consented in a will, trust, power of attorney, or other record.”[4] In addition, the act permits users to consent to disclosure of digital content by an “online tool” offered by the service provider, termed a “custodian” in the act. In the absence of any direction from the user, the TOS agreement for the user’s account will determine whether a fiduciary may access the user’s digital assets. In the last six months, the Revised UFADAA has been on the legislative dockets of 31 states with 19 of those states enacting the legislation. Currently, Ohio has not enacted or introduced this uniform legislation, although the legislation is anticipated to be introduced during this legislative session.
So what is the estate planner to do? The first step is to identify what constitutes a “digital asset” and inform clients that they must be included in the estate planning process. Typically, “digital assets” fall under four categories: personal, social media, financial, and business. Calling attention to a client’s digital assets and requesting a client to catalog all of his or her online accounts is the starting point.
Next, clients must decide what privacy choices they wish to make. The jury is still out in states not enacting the Revised UFADAA as to whether deference will be given to an account holder’s privacy choices as expressed in a document over those in a TOS agreement. As noted, the Revised UFADAA prioritizes an account-holder’s privacy preference in legal documents over the TOS agreements containing boilerplate prohibitions of non-disclosure. That said, it is best to err on the side of express language in a document authorizing the fiduciary to access digital assets.[5] In combination with this express language, a “Letter of Instruction” to the fiduciary specifying the client’s desires as to which accounts to delete and what content of those accounts the user does or does not want disclosed adds clarity.
In addition to including access to digital assets in estate planning documents, an emerging trend among estate planners is to utilize trusts to attempt to preserve and protect digital assets. The creation of “digital asset protection trusts” (DAP Trusts) to place existing digital property into a trust for the use of the trust beneficiaries.[6] The theory behind such trusts is that digital content that are purchased as licenses may be transferred to a revocable trust wherein the trustee has the authority to manage the assets on behalf of the beneficiaries according to the client’s instructions. Whether such trusts are valid has yet to be fleshed out and there are no reported cases discussing DAP Trusts.
With the ever-changing digital environment, the need for estate planners to recognize the new developments in digital asset planning and prepare their clients for such planning is crucial and will continue to be a developing area of the law for some time. The attempt at a uniform law in the Revised UFADAA ensures that fiduciaries have access to digital assets so they may properly administer an estate or trust and ensures that validly drafted powers of attorney apply to digital assets. However, with some additional steps, planners can ensure in their drafting that fiduciaries have access to a client’s digital assets.
Endnotes
[1] Lori L. Kuchmay, J.D., LL.M. (Estate Planning) Candidate, December 2016, The John Marshall Law School, Chicago, Illinois, is a Career Law Clerk for the Honorable William C. Lee, District Judge, United States District Court for the Northern District of Indiana. She is licensed to practice in both Ohio and Indiana.
[2] Evan Carroll, http://www.bbc.com/news/technology-24380211.
[3] https://blogs.mcafee.com/consumer/digital-assets/.
[4] http://uniformlaws.org/Act.aspx?title=Fiduciary Access to Digital Assets Act, Revised (2015).
[5] Sample language to include in documents can be found at http://www.thedigitalbeyond.com/sample-language.
[6] Joseph M. Mentreck, Estate Planning in a Digital World, 19 Prob. L.J. Ohio 195 (2009); see also, Gerry W. Beyer, Estate Planning in the Digital Age (2013).
