Addressing Digital Assets After Incapacity
As more and more of daily life becomes digitized, fiduciaries face significant challenges in ensuring that digital assets of a deceased or incapacitated individual are properly addressed. Just as with tangible assets, a fiduciary has the duty to access, value, protect, and transfer the digital assets. But the lag between technological innovation and legal innovation is creating difficulty for fiduciaries attempting to extend their traditional powers and authority into the digital realm.
The first challenge facing fiduciaries is defining what constitutes a digital asset. Generally, a digital asset is some sort of content owned by an individual that is stored and accessible in digital form. But this definition may not encompass all parts of an estate that have value. The value of digital assets may go beyond the sentimental value of a one’s on-line photo albums or e-mail. The intrinsic value of one’s digital asset may be tied not to the actual content but to how that content creates revenue. For example, revenue generating advertisements on a blog or the intellectual property saved to a cloud may be extremely valuable to the estate of a deceased individual.
Once the digital asset can be defined, fiduciaries are confronted with two additional problems. Most of the popular and widely used service providers do not allow a fiduciary to have full access to the account of someone who is incapacitated or dead. Many of these service providers will turn over the contents of a deceased user’s on-line account to the personal representative of that user’s estate. The production of the contents of the account is typically governed by Terms of Service contracts, often varied in specificity. First, the fiduciary must demonstrate to an on-line service provider or to a computer security professional that the fiduciary has the power to act on behalf of the incapacitated or deceased individual. Second, fiduciaries must prove their authority to access electronic data in the individual’s on-line accounts and digital property. This requirement is partly related to state criminal laws that penalize unauthorized access to computer systems and types of private or protected personal data. Some on-line service providers cite these data privacy laws as their reason to refuse full access to an incapacitated or deceased individual’s on-line accounts, even by a personal representative.
For example, the procedure to gain access to the contents of a deceased individual’s Gmail account is cumbersome and requires multiple paperwork steps. On death, the fiduciary must provide Google with not only proper identification but also the individual’s death certificate and certain information from an e-mail message received at the fiduciary’s e-mail address, from the Gmail address in question. On receipt of this information, Google reviews the request and decides whether or not to move to the next steps of the process. In the second step, the fiduciary is required to submit additional materials, and access to the account is not guaranteed. Even more costly, Yahoo! has required a separate court proceeding that names Yahoo! as a party before turning over the contents of a deceased user’s on-line account. Other providers, including Facebook and Microsoft, have similarly burdensome procedures, and the information required to gain access is not standardized.
In January 2012, the Uniform Law Commission approved the formation of a committee to study fiduciary access to digital property in cases of incapacity and death. Although still in its nascent stage, the committee will pursue the development of a statute that would grant a fiduciary powers and authority over an incapacitated or deceased person’s electronic devices and electronically stored information, including the power to obtain electronic information stored by a provider of on-line services. A uniform law may also address provisions that specify the reasonable time period for a fiduciary to find, access, and protect the electronic data in an individual’s on-line accounts before the on-line service provider is permitted to close the on-line account and delete the electronic data.
This project is a natural progression of some of the ULC’s previous work, most notably the Uniform Probate Code. The UPC primarily deals with the administration of a deceased person’s estate or the protection of a living person under disability. Similarly, under the Uniform Power of Attorney Act and the Uniform Guardianship and Protective Proceedings Act, a fiduciary has the duty to preserve the principal’s estate, which would include any digital assets.
As more states consider enacting similar legislation to address the significant challenges that fiduciaries are now facing in dealing with on-line accounts and digital property, a uniform law would provide needed consistency among the states and avoid the need for each state to develop its own solution. Currently, five states—Oklahoma, Idaho, Rhode Island, Indiana, and Connecticut—have laws governing digital asset management after death. In six other states, most notably Oregon and Nebraska, legislation is pending or under study. Until uniformity is achieved, a patchwork of state laws will hamper the ability of fiduciaries to fully serve in their role and leave estate planners struggling to ensure that all of a client’s assets are accounted and planned for in the event of incapacity.