Uniform Laws Update

Uniform Laws Update provides information on uniform and model state laws in development as they apply to property, trust, and estate matters. The editors of Probate & Property welcome information and suggestions from readers.

2016 Legislative Update

This edition of Uniform Laws Update reviews the 2016 legislative activity for uniform acts involving trust and estate law and real property law.

Trusts and Estates

Much of the 2016 legislative activity involved the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). At press time, 20 states had enacted a version of RUFADAA. This innovative new law ensures that fiduciaries who manage the property of decedents and incapacitated persons will have access to on-line property and accounts as necessary.

In the Internet age, documents, photos, and web-based businesses exist in digital form. These digital assets can have real value, financial or sentimental. Before RUFADAA, fiduciaries too often were prevented from accessing digital accounts by restrictive terms of service and password protection. RUFADAA grants legally appointed fiduciaries access to most digital assets by default, with one major exception: the content of private electronic communications (for example, e-mail, text messages, and social media posts sent to a limited number of contacts, as opposed to the general public).

Electronic communications are subject to special privacy protections under the federal Electronic Communications Privacy Act. Consequently, fiduciaries may not access the content of electronic communications under RUFADAA unless the account holder granted access in a will, trust, or other document. Under RUFADAA, fiduciaries can access a log of electronic communications, when necessary, that shows only the addresses of the sender and recipient and the time and date the communication was sent. In most cases, this limited access should provide sufficient information for fiduciaries to identify the persons with whom the decedent or incapacitated person transacted business on-line such as banks, credit card issuers, and custodians of securities.

RUFADAA gives legal effect to a user's instructions for the disposition of digital assets, whether provided in a traditional estate plan, or using an on-line tool analogous to a beneficiary designation for a specific account. It is a necessary statutory update for the digital age and should be adopted by the remaining states in short order.

Three states adopted the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA) in 2016: Georgia, Louisiana, and North Carolina. This act is now law in 45 states plus the District of Columbia and Puerto Rico. UAGPPJA provides jurisdictional rules to govern interstate guardianships, preventing potential conflicts between courts and easing the financial and administrative burden for guardians and conservators who move across state lines.

South Carolina, Utah, and Washington adopted the Uniform Power of Attorney Act (UPOAA), bringing the total number of UPOAA adoptions to 21. UPOAA encourages the acceptance of powers of attorney by providing a clear liability shield for persons who take direction from an apparently authorized agent, while providing protection against financial abuse by holding agents to a high fiduciary standard of conduct. Alaska adopted a related uniform act: the Uniform Recognition of Substitute Decision-Making Documents Act (URSDDA). URSDDA allows for the cross-border recognition of powers of attorney executed in U.S. states and Canadian provinces.

Also in 2016, Missouri, New Mexico, and Virginia enacted the Uniform Powers of Appointment Act (UPAA), which codifies common law rules for creating, modifying, and exercising powers of appointment a common tool for estate planners. UPAA has now been enacted in six states.

Colorado and New Mexico were the first two states to adopt a brand new uniform act: the Uniform Trust Decanting Act (UTDA). And finally, after a multi-year legislative effort, New Jersey became the 31st state to adopt the Uniform Trust Code (UTC).

Real Property

The Uniform Partition of Heirs Property Act (UPHPA) creates special procedures for partition actions when the property to be partitioned qualifies as "heirs property." Heirs property is inherited land owned by relatives as a tenancy-in-common. Generally, this form of ownership is created when a landowner dies intestate, a common occurrence for lower-income landowners. After a few generations, the number of tenants can quickly multiply.

A tenancy-in-common is vulnerable to real estate speculation. Anyone can purchase one cotenant's share of the property and file a partition action. If the court orders a partition sale, the other cotenants may be forced to sell their inheritance for a price well below its fair market value. Cumulatively, this speculation strategy has resulted in the loss of millions of dollars in inherited wealth by families that can ill afford it.

UPHPA requires an independent appraisal for partitions of heirs property and grants heirs an option to buy out the cotenant who files for partition. If the property is ultimately sold, UPHPA requires an open-market listing of the property at the appraised price for a reasonable amount of time. If no adequate offers are received, a court can order a sale by other means.

Hawaii and South Carolina enacted UPHPA in 2016, bringing the total number of enactments to eight, so far.

Also last year, Wyoming became the 31st state to enact the Uniform Real Property Electronic Recording Act (URPERA). URPERA is enabling legislation that allows county recording offices to transition to electronic recording of deeds and related documents.

All told, there were 36 new enactments of uniform real property and trust and estate acts in 2016. More enactments of these and other uniform acts are planned for 2017, when all 50 state legislatures are in session. If your state statutes need updating, download an enactment kit for any of these uniform acts from www.uniformlaws.com, and contact the Uniform Law Commission for legislative support.