One of the biggest complications in estate planning for digital assets is that the law is still catching up to technology. The Uniform Law Commission has worked for the past several years on a law that could solve that. A recent Investment News article, “New Bill Aims to Ease Access to Online Accounts after Client’s Death” looks at some of the implications of the proposed law.
The Uniform Fiduciary Access to Digital Assets Act (or UFADAA) was revised last year to address privacy concerns raised by experts, companies and lobbyists, and seeks to extend a fiduciary’s powers to include the management of digital assets. The Act would allow a designated fiduciary to access computer files, web domains, virtual currency such as Bitcoin and the like.
However, in a nod to privacy concerns, access to the content of communications such as emails, text messages and social media accounts must be specifically given to the fiduciary. These specific instructions could be placed in a will, trust, power of attorney or similar document.
The Act has certainly gained momentum; at the time of this post, twenty states had adopted the Act with twelve more reviewing it in various state legislatures. Proponents emphasize that someone needs lawful access to online accounts and the current default (similar to laws of “intestacy,” when someone dies without an estate plan) is to follow companies’ terms of services agreements. Some companies like Facebook, LinkedIn and Twitter have developed policies to deal with the accounts of deceased users, but many are still unaware of these policies.
There’s also the risk that an account statement is delivered solely via email. It’s an increasingly popular option for consumers, but without access to that email account, a fiduciary may never discover its existence! For other online accounts such as credit cards, online-only banking or even PayPal accounts, there is a risk that a hacker might obtain access, draining accounts or racking up credit card debt that the estate could be liable to pay. And if no one has the right to lawfully access and review these accounts, that risk is certainly there.
Some technology companies are already trying to close this gap. One such company is Directive Communications Services (DCS). DCS holds account information—though not passwords, for privacy and security reasons—and help an appointed representative gain access to online accounts after a death. They also assist users in compiling a list of all online accounts and work with the companies so users know their options for the account after their death.
Laws regarding digital assets are changing almost daily, so this aspect of estate law will certainly continue to evolve. While the Act has yet to be introduced in the Commonwealth of Massachusetts, either the Act or something similar are likely to be introduced at some point. At Family Estate Planning Law Group, we continue to monitor these changes in the law so we can best serve our clients.
For more information on the Uniform Fiduciary Access to Digital Assets Act, visit the Uniform Law Commission page.
Reference: InvestmentNews.com (January 22, 2016) “New Bill Aims to Ease Access to Online Accounts after Client’s Death”