In a world, where data is the new oil, digital assets need to be managed appropriately, especially after the death of the owner. A thoroughly drafted estate plan will go a long way in saving the digital assets even after death.
FREMONT, CA: Digital records are under-valued in the estate plans. The information’s worth is only recognized after the assets are lost or are inaccessible, leading to a financial and sentimental loss along with it. An all-inclusive estate plan is of premium quality if it addresses the management, distribution of digital assets to avoid the extra administrative burden on fiduciaries.
Even if the meaning of “digital asset” is constantly evolving to comprise newer and innovative inclusions, the definition at present includes electronic communications, online reward programs, financial accounts, data, business accounts, and the most recently added cryptocurrencies.
After the death of the user, the access right for the person does not exist in a bundle. Instead, it is scattered throughout the interlinked web of user agreements, federal and state laws. These laws made to maintain the decedent’s privacy will act as a barrier for the fiduciary to access unless special instructions are provided.
Terms-Of-Service Agreements And The Law:
Before the creation of any digital asset, the digital service providers require the individuals to enter into a “terms of service agreement.” Since the majority of the users consider this a formality and not a crucial document which might inhibit the fiduciaries due to prohibition of third-party access. The agreement states that no third parties or fiduciaries will be granted access if the owner is incapacitated or dead and can be used against protecting the digital assets.
Fiduciary’s access to a decedent’s digital assets is limited and often deemed as unauthorized access by the federal laws. In general, these laws were framed to protect the privacy of the users and to combat cyber-crime. The federal laws in the most common sense provide broad protections through enforcements of terms-of-service agreements. Hence, the law calls it unauthorized access because the contract is broken when a fiduciary even with access to the accounts logs in them. Almost 41 states have agreed to enact together the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). And, the four additional states with Washington, D.C., have introduced it to the legislation.
Certain digital assets can be accessed, copied, and even managed with the courtesy of RUFADAA. But, it is a pre-requisite for the fiduciary to have affirmative consent from the original creator of the digital assets, allowing the full disclosure of the digital footprint. This consent will override the terms of service agreement and requires proper planning.
Making A Plan:
Acclimatizing to a client’s digital assets starts with the creation of an inventory. The clients will report all the digital assets they handle and who, how will continue to manage the assets after the event of death or disability.
A list is created, and the fiduciary should be able to state under the law, what the options available are for the planning of the assets. This plan includes guidelines with a will, trust, or a power of attorney that will enable the fiduciary to either access or destroy the digital assets. Terms-of-service agreements will also be considered as certain user accounts may have a different set of requirements to ensure fiduciary access.
In the digital age, the neglecting a client’s digital footprint in the estate plane is on the same levels as tailoring a plan to sacrifice the financial and sentimental value. The popular adage that “failing to plan is planning to fail” makes literal sense in the above context as no plan in place will result in loss of the digital assets. An ideal plan will safeguard the digital assets and provide the appropriate leverage for fiduciary to manage the data.