- 1 Pass Down Digital Assets, Including Cryptocurrency and Family Memories, Through Your Estate Plan
Pass Down Digital Assets, Including Cryptocurrency and Family Memories, Through Your Estate Plan
What happens to your digital assets at death? Who can access your online data when you are incapacitated? Digital estate planning allows you to protect your online accounts, digital currencies, photos and other properties stored digitally.
The law makes it possible for you to design and control your digital estate plan, and to give consent to an executor to access your digital assets.
Traditional Estate Administration Is Changing
When conducting estate administration, the first task must be to marshal the deceased’s assets.
To “marshal the assets” means to:
- Identify all of the decedent’s assets
- Protect them
- Retitle them in the name of the estate
For years, I counseled family members about the estate of a loved one. I advised them to collect all of the mail for one or two months.
We used account statements and correspondence to confirm we knew all of the deceased person’s assets and accounts. Back then, we looked also at income tax returns to find the sources of his or her income.
That’s all changed.
Much or most of our financial information is now kept on the cloud, a hard drive or a smartphone (not in a filing cabinet). When a person dies, marshaling his or her assets takes place in the digital world.
Our digital assets extend well beyond the financial. The content of our social lives is online. When was the last time you mailed a letter? A decedent’s family will need access to his or her electronically stored photos and videos.
Gaining Access to Digital Assets is Difficult
Digital assets include data, user accounts, domain names and virtual currency, such as cryptocurrency. User accounts span areas from email to social media, document storage services to gaming. Without a digital estate plan, accessing data and user accounts is famously difficult and time-consuming.
One well-known case is Ajemian v. Yahoo!. After John Ajemian’s death in 2006, the administrators of his estate worked to access his email account. At the time of death, Yahoo!’s terms of service denied third-party access to an account and any right of survivorship.
The case dragged on until the Massachusetts Supreme Judicial Court ruled that under the Stored Communications Act (SCA), personal representatives of the estate could consent to disclosure of the emails through “lawful consent” and “agency” exceptions. The ruling did not happen until 2017, 11 years after Ajemian’s death.
Terms of service contracts—like those in the Ajemian case—can pose problems. Also, some federal and state laws aim to protect data privacy. All fifty states passed laws making unauthorized access to a computing device illegal. The Department of Justice takes the position that access to a user account in violation of the terms of service can be a criminal act. This includes using someone else’s password to access an account.
Law Changes Lets Users Create a Digital Estate Plan
To further clarify the rights of executors and agents in digital estate planning, many states have enacted the Revised Uniform Fiduciary Access to Digital Assets Act. “RUFADAA” provides a mechanism for fiduciaries to gain access to a deceased or incapacitated person’s digital property.
A “fiduciary” is an executor, trustee and agent under a power of attorney. RUFADAA also says that a person’s estate plan can provide the needed “lawful consent.”
First, the RUFADAA permits the use of an online tool that lets the user direct whether his or her account should be disclosed. Before writing this post, I logged into Facebook to name a “legacy contact.” (The legacy contact is a Facebook friend.)
The Facebook friend may keep the account “memorialized” but does not have the right to change existing content or friends. The user may also give the legacy contact the right to download a copy of the account. Alternately, Facebook lets you direct the deletion of your account upon death.
Google provides a tool called “inactive account manager.” If Google determines a person hasn’t logged in within a specified time, Google will notify the user and others designated by the user. Like Facebook, Google allows you to direct deletion of your account or data sharing with your designated individuals.
The major reform of RUFADAA is that your estate plan may explicitly grant access to digital property to your fiduciaries. Many practitioners have updated their digital estate planning documents (like a will or power of attorney) to address this. The documents can give fiduciaries broad management powers over digital assets.
Using Digital Estate Laws to Your Advantage
RUFADAA also allows you to sign a separate authorization that gives your fiduciaries access to your digital property. This is a short document—the digital estate planning version of a medical privacy waiver. It’s an easy fix for people with an old estate plan or no estate plan.
If you use a digital tool to name your successor users, that tool overrides your estate plan. For example, say I have named my sister as my Facebook legacy contact, but my last will and testament names my husband as my executor. My sister receives control over the account.
Other Considerations in Digital Estate Planning
Finally, consider that you may have your tax returns, financial records, personal records, photos, videos and correspondence all stored electronically. There may be little or no paper that instructs the people taking care of you or your estate what to address.
It is tedious (but critical) to make a list of all of your online accounts and other digital properties. Don’t forget to include:
- Online medical records
- Online IRA accounts
- Answers to security questions and details for second-step authorizations
- Automatic payments to creditors
- Website domains
Many choose to use an encrypted online service to record account and password information. Additional services are available that will provide that information to the people you designate in your digital estate plan.
Managing access to your digital assets is complicated and requires attention to detail. Those details are the only way to ensure your trusted friends or family members can protect you and your property when you cannot.
[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: Estate Planning & Asset Protection – 101 and Crypto-Currency 101. This is an updated version of an article originally published on July 12, 2017.]
©All Rights Reserved. April, 2020. DailyDAC™, LLC d/b/a/ Financial Poise™
Michelle Huhnke is a Partner at Sugar Felsenthal Grais & Hammer LLP. She focuses her practice on estate planning, charitable planning and wealth preser