Law Office of John S. Palmer Attorney at Law

Digital Assets

Posted Monday, April 18, 2016 by John S. Palmer

Since the advent of the internet, estate planners have grappled with how to arrange for fiduciaries to have access to “digital assets” such as online banking information, emails, social media accounts, and intellectual property such as photographs and writings, in the event of a client’s incapacity or death. The client’s advance written instruction to grant such access was not always honored by the service provider due to federal privacy laws and terms-of-service agreements in which service providers stated they would not disclose the account holder’s information to third parties.

It has become more important for fiduciaries to be able to access digital assets as clients increasingly opt to receive and store personal information exclusively in digital format, rendering the traditional method for discovering this information (monitoring the principal’s snail mail) practically obsolete.

To address the problem, a model state law has been developed called the Uniform Fiduciary Access to Digital Assets Act. On June 9, 2016, Washington will join at least nine other states that have adopted the Act with similar legislation pending in another 18 states.

The law as adopted in Washington, SB 5029, defines a “digital asset” to simply mean any electronic record, and generally permits four classes of fiduciaries (trustees, guardians, agents acting under a power of attorney, and personal representatives of decedent’s estates) to access the digital assets of the principal they serve, unless access has been specifically prohibited by the account owner or user.

The owner or user may use an online tool maintained by the custodian of a digital asset, to authorize full or partial disclosure (or prohibit disclosure) of information held by the custodian to others, including the content of electronic communications sent or received by the user. If the online tool allows the user to freely modify or delete this direction at any time, then a direction regarding disclosure using an online tool overrides a contrary direction by the user in a will, trust, power of attorney, or other estate planning document. If a user has not used an online tool or if the custodian has not provided one, the user may authorize or prohibit disclosure to a fiduciary in a will, trust, power of attorney, or other record. A user’s direction via online tool or written instruction overrides any contrary provision in a general terms-of-service agreement that does not require the user to make a separate and distinct election with regard to disclosure.

Absent a court order or direction from the user prohibiting disclosure, custodians will be required to disclose a user’s digital assets to his or her fiduciary. With respect to email and other “electronic communications” as defined by the federal Electronic Communications Privacy Act, fiduciaries will be entitled to a catalogue identifying the date and time of each communication, along with the parties and their electronic addresses. In some cases fiduciaries may be entitled to obtain the content of the electronic communications.

The law does not give a fiduciary or a designated recipient any new or expanded rights other than those held by the user for whom, or for whose estate, the fiduciary or designated recipient acts or represents.

A custodian may assess a reasonable administrative charge for the cost of disclosing digital assets to a fiduciary, and need not disclose a digital asset deleted by a user. The law also contains provisions designed to ensure that a records request by a fiduciary or designated recipient is not unduly burdensome on the service provider.

A fiduciary acting within the scope of his or her duties is an authorized user of the principal’s property for the purpose of any applicable computer fraud and computer privacy laws, and has the right to access any digital asset stored on computers, tablets or other devices that the fiduciary has control over. A fiduciary may also request that a custodian terminate a user’s account.

Laws such as this will evolve as technology changes, in order to meet new challenges and balance competing interests, including an individual’s right to have a private life and keep certain information secret, even from loved ones.

If you have any questions or would like to schedule an appointment, please call us at (425) 455-5513, toll free at (877) 455-5513, or info@palmerlegal.com.