By Hengameh Kishani 
January 2, 2018

 

With the boundless expansion of the digital age, nearly everyone has digital assets. Digital assets are electronic information of all kinds that are stored online or on computers, tablets, and phones, such as email messages and attachments, social media posts, blogs, documents and photographs. At the time of death, your digital assets may be a valuable component of your estate, may contain information vital to administering your estate, or may have sentimental value for your loved ones. Accordingly, it has become essential to address digital assets in estate planning.

Until recently, estate planning for digital assets was hampered by the absence of a legal framework. After the death of a loved one, access to their digital assets was often limited by the user agreements he or she entered into when each service or account was established. Companies like Facebook and Google all have different policies and procedures for, and restrictions against, granting access to user accounts after the death of the user.

Fortunately, California now provides new options for estate planning for digital assets. Under AB-691, also known as Cal-RUFADAA (“California Revised Uniform Fiduciary Access to Digital Assets Act”), which went into effect on January 1, 2017, it is now possible to plan for digital assets with more certainty, and estate fiduciaries now have more standing to receive disclosures of digital assets from custodians.

Cal-RUFADAA defines digital assets as electronic records in which an individual has a right or interest. Digital assets may include, but are not limited to, the content of e-mail communications, electronic bank statements, domain names, and photographs. However, a digital asset does not include the underlying asset or liability. For example, an email message regarding a bank account does not include the bank account as a digital asset per se unless the asset or liability is itself an electronic record. A custodian of a digital asset is a person or entity that carries, maintains, processes, receives, or stores digital assets of a user such, as Facebook, Google, and Yahoo!

To understand how Cal-RUFADAA workds, consider the example of an amateur photographer named Meg who posts her photographs on Facebook, stores them in her Google cloud account, and sells them on a commercial website called Meg’s Marvels. After Meg dies suddenly in an accident, her mother Tammy and her sister Maggie want access to her photographs both for sentimental reasons and because of their potential monetary value.

Under Cal-RUFADAA, a user who has digital assets may select who is able to take possession of such assets by designating fiduciaries using an online tool directly through the custodian or via a written record, such as an estate plan. And it establishes an order of priority:

     

(1) Online Tool. An online tool is an electronic service provided by a custodian that allows the user to name fiduciaries entitled to receive disclosures and the extent to which they may receive them. Designations via an online tool receive the highest priority.There are several widely-used custodians that offer a version of the online tool, mainly Google and Facebook, but as of now online tools are not a common option provided by custodians. Custodians that do provide online tools each have their own options regarding what type and to what extent a user can grant authority. For example, Facebook has a “legacy contact” feature which allows users to designate someone to manage their page in the event of their death. The designated person is allowed to do things like write a post, respond to new friend requests, and download posted material, but cannot log in as the deceased, view private messages, or perform certain other actions.

Returning to the example above, if Meg set up her “legacy contact” on Facebook and named her sister Maggie as her designated contact, Maggie would be able to log into Meg’s account and view her pictures, but would not be able to delete or alter them. Maggie could save Meg’s photos for sentimental reasons, but because a “legacy contact” is a fiduciary, Meg could not personally profit off the photos (i.e. sell them) solely because she has access to them. 

(2) Written Record. Written records prevail in the event there is no online tool indicating the decedent’s wishes. A written record is any written instrument, including an estate plan document such as a trust, will, or power of attorney. If a written record contradicts the online tool, the online tool still prevails, as it is given the highest priority, with very minor exceptions. But written records are more powerful, because they can be used to allow broader access to digital access, compared to online tools which often provide more limited options.

In Meg’s case, if Meg left a Will that names her mother Tammy as executor and grants the executor the power to access her digital assets, then Tammy should be able to access Meg’s Google cloud account and her commercial website. But what about the Facebook account? The authorization for digital assets in the Will appears to contradict the online tool naming Maggie as the “legacy contact.” But given that the Will provision grants broader powers than the online tool, would both Tammy and Meg have access, each having different powers? How such a conflict would be resolved is not entirely clear. Meg would have been better off making the Will and online tool consistent, i.e., naming the same person in each role, or simply leaving the online tool blank and relying solely on the Will to grant access.

(3) Terms of Service. If there is no online tool in effect or written record regarding digital assets, the terms of service control. Terms of service is the user agreement entered into between the user and the custodian prior to beginning the use of the service.

Besides the issue of who can access digital assets, there is the issue the what exact digital assets can be accessed. Cal-RUFADAA draws a critical distinction between records and content. Generally speaking, records are a data set with information about the content, whereas content is the actual digital material itself. For example, email records would be a list of sent and received emails, including the date, time, subject, and sending and receiving parties of each email. Email content would be the written body of the emails themselves, including documents or images attached to the emails. 

Requesting records requires a written request by the fiduciary, a certified copy of the user’s death certificate, and evidence of fiduciary authority over digital assets. Requesting content, however, requires something more — evidence that the user wanted the fiduciary to have access to the content itself. Therefore, if users want to grant access to content, they should explicitly say so in their estate plan documents.

In the above example, if Tammy was trying to access the photos in Meg’s Google cloud account using the authorization granted in Meg’s Will, Tammy would have examine the language of the Will carefully to confirm that it explicitly grants access to ditigal content. If the Will does include such language, then Tammy should be able to use the Will as evidence of Meg’s intent and should be granted access to the actual photos.

Before making disclosures to a fiduciary, the custodian has the authority to request supplemental information, such as information identifying the user’s account. If a custodian does not comply with a proper request, a fiduciary may seek a court order. When a fiduciary requests a disclosure of digital assets, the custodian has some discretion in granting access. For example, the custodian may grant the fiduciary full access, partial access sufficient to perform necessary tasks, or only providing hard copies of digital assets. A fiduciary who gains access to the user’s digital assets is still bound by the terms of service of the custodian and is required to uphold the fiduciary duties of care and loyalty. That is, the decedent’s digital assets can only be used or applied for the benefit of the user’s estate beneficiaries.

In sum, if you have not updated your estate plan recently, you may need or want to update it to address your digital assets, and more specifically, to make sure that it gives your estate fiduciary access to your digital content, to the extent you wish. If you have questions about Cal-RUFADAA or how it applies to your estate planning, contact your estate planning attorney.

 

DISCLAIMER: This article contains general information about legal topics. It is not, and is not intended to be, legal advice. Your use of information in this article does not make Joseph Ferrucci, Attorney at Law P.C., or any of its attorneys, your attorney and does not establish an attorney-client relationship. Every case must be analyzed independently, based on the specific and unique facts of the case. If you have questions about your particular case, consult with a licensed, qualified attorney. This article is intended for personal use only, and not for publication or distribution. 

© 2018 Joseph Ferrucci, Attorney at Law P.C.