Financial Poise
digital estate planning, digital assets

Digital Assets Estate Planning

What happens to your digital assets at death?

Who can access your online data when you are incapacitated?

Recent law changes make it possible for you to design and control your digital estate plan.

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:

  • identifying all of the decedent’s assets,

  • protecting them and

  • retitling 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 property expands well beyond the financial. The content of our social lives is online. When was the last time you posted a letter? A decedent’s family will need access to his or her electronically stored photos and videos.

Gaining Access to Digital Assets can be Difficult

Digital property includes data, user accounts, domain names and virtual currency. User accounts span areas from email to social media to document storage services to gaming. 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 death, Yahoo!’s terms of service denied third-party access to an account and any right of survivorship.

Reportedly, the case drags on and the family still has no access to the email account.

Why is it so hard?

Terms of service contracts—like those in the Ajemian case—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.

Finally, the Stored Communications Act generally requires service providers to keep data private. A provider may provide access to a third party with the user’s “lawful consent.“

But does an executor or agent retain the user’s “lawful consent” under the Stored Communications Act? Can a fiduciary step into the user’s shoes to give that consent? The law remains unclear.

Law Changes Lets Users Create a Digital Legacy

As a response, 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. Or, 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 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 plan 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.

What Else Should You do to Complete Your Digital Estate Plan?

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 property.

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.

Managing access to your digital property 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.

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About Michelle Huhnke

Michelle Huhnke is a Partner at Sugar Felsenthal Grais & Hammer LLP. She focuses her practice on estate planning, charitable planning and wealth preservation.

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