The first part of this article (available here) discussed the ways in which the digital world has changed our clients’ estate plans. The second and final installment of this article explore how the estate industry must respond to these changes.
The Need to Stay Current as Case Law Evolves
You will be surprised by what the estate administration process entails for your clients’ estate in the digital age. There are many jurisdiction-specific laws and rules when dealing with digital assets, and globally the world is still grappling with unregulated cryptocurrencies and what is and isn’t property and their associated rights.
But let’s focus on fiduciary access laws for a moment. As many estate lawyers in the United States know, most states have adopted fiduciary access laws regarding digital assets. However, there are significant implications to these laws that most clients will not be familiar with. Most clients likely assume their appointed fiduciary will be allowed access to anything the deceased person had access to, and even without a will most clients will assume the court-appointed fiduciary will have the same rights.
Not so with Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). Under RUFADAA, the fiduciary has some rights to access specific types of digital assets, but anything that is related to communication, such as e-mails, text messages, and social media accounts, must be preplanned by clients while they are living. More clearly, this means the law does not allow the fiduciary to deal with our digital lives unless it was documented in advance of death in a will or other appropriate legally recognized directive. Estate lawyers are going to have to double down when explaining this risk to clients and encourage them to update their will and estate plans.
The Need for Deeper Conversations with Clients about the Role of the Fiduciary
Traditional estate planning conversations about the executor focus on the selection process: identifying the right person who has the skills, time, and ability to manage the estate administration. But in the digital age, that’s not enough. Your client’s online footprint is the essence of today’s home office. Most people interact with their financial institutions online, transmit all their correspondence electronically, and conduct all their personal transactions from paying bills to booking travel and appointments online.
The fiduciary’s success is completely dependent on finding, inventorying, and securing the assets of the deceased. Corporate/professional fiduciaries, trust companies, and executor checklists have long relied on the traditional mailbox and paper statements to help the fiduciary confirm—or, in the worst case, reverse engineer—the testator’s life in terms of property and assets.
Not having access to a client’s asset inventory might mean the fiduciary is then scrambling to get access to a client’s e-mail. Without preplanning or a U.S. court order, the fiduciary won’t have access to the digital trail of the client’s assets, bills, liabilities, and contacts. This means the fiduciary’s job just got stymied, which will impact and frustrate the testator’s intentions, potentially leaving the beneficiaries less than what they expected. The issue is that our clients’ online accounts are virtual and leave an invisible trail; our clients stand to lose not only their digital assets but also the trail to their physical assets.
As it stands, very few technology providers have preplanning options. Facebook’s “legacy contact” and Google’s “Inactive Manager” are two examples where the account holder can identify and give preplanned access to an individual under specific conditions. The key, of course, is that preplanning must be done in advance. I hope that as consumers become aware of state-specific fiduciary access laws and the limitations imposed by providers, they will demand more preplanning options to deal with the entanglement of their physical lives with their ever-growing digital lives.
Any estate lawyer would be well advised to spend more time preplanning their clients’ digital assets and reminding them of the value of the age-old estate binder, which includes both their physical and digital assets, as a paper trail still has value in the digital age. Stepping up risk assessment associated with the fiduciary role and ferreting out the risks and mitigations that clients hadn’t considered about the fiduciary’s ability to find, access, and transfer assets as per their wishes are also key in the preplanning process.
So, what can estate lawyers do to raise the level of their digital awareness? Consider these starting points:
- Develop an understanding of the impact the digital age is having on the estate industry. Engage with your state bar associations and your local estate planning organizations to find special guidance, special interest groups, or communities of interest to share information about digital assets within your jurisdiction. Obviously, the laws will evolve and catch up, but law firms and associations will likely be simultaneously developing processes, practices, and tools to deal with digital assets.
- Consider joining the Society of Estate Practitioners (STEP) Special Interest Group (SIG) on Digital Assets. You do not need to be a STEP member to join, and there is no charge. STEP provides jurisdiction-specific guidance and checklists, such as building a Digital Assets Inventory checklist to use with clients.
- Get more comfortable with digital assets in your estate practice. The American Law Society already indicates the expectation that its members get more comfortable with the technology. Within the estate speciality, as a result of clients’ asset portfolio growth, this now invariably includes the digital asset implications of estate planning, incapacity planning, and estate administration. This could mean a variety of things from digging into the terms of service of your clients’ digital assets, to taking technology-use education, to becoming more aware about privacy and cybersecurity practices.
The amount of lost or inaccessible assets is going to grow, and estate administration will become more challenging with the proliferation of digital assets in our clients’ portfolios. Clients and their families (as beneficiaries) will be distressed if their assets are lost. They will ask you why you didn’t advise their families and friends about getting a will, about creating an assets inventory, about sorting out their digital lives, and about preparing the fiduciary. The digital age has changed everything. Fundamentally, how families communicate is part of this change. Who isn’t reliant on social media posts for the latest family news? But this also means that clients will expect an increased level of knowledge from their lawyer in how to deal with this new asset class and evolving fiduciary laws. The more you can do to ensure your clients are fully aware of how to maximize the value of all their assets––regular, unique, and digital––the greater value you will demonstrate to clients in this growing and evolving field.
Published in GPSolo eReport, Volume 9, Number 4, November 2019. © 2019 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association or the Solo, Small Firm and General Practice Division.