Dealing With Digital Assets During Life and After Death

We live in a digital age. The advent of the personal computer, the rise of social media, online access to financial accounts and commerce, and the development of increasingly efficient programs and applications affording easy access to our finances, shopping, entertainment activities, and communications, have helped to create a world in which each of us likely spends a portion of most days online. The result is often a trove of digital assets that we have created, communicated, and stored. Some of these assets may have substantial inherent financial value (for example, frequent flyer miles and other award programs), some may have value because they are the means of accessing other assets (e.g., your bank account user name and password), and some may have sentimental value (such as your e-mail account holding personal correspondence).

Digital assets can present a challenge for fiduciaries. Items that 30 years ago would have had a physical existence, such as bank account statements, may now only exist in the digital realm. Because digital assets are intangible, identifying them and gaining access to them on behalf of their owners can be time-consuming and often, because this is a relatively new asset class and the rules governing it are still evolving, unsuccessful. Through planning, it is possible for individuals to take steps to protect what matters in their digital lives.
Most service providers include their policies regarding deceased users’ accounts in the terms of service provided when a user establishes the account, including what happens when the account owner dies. However, few people in practice pay attention to the provisions to which they are agreeing. It is sometimes the case that a service provider’s terms of service will cause all access to terminate as a result of an account owner’s death. Service providers are beginning to address the probability that many users would want someone to have access to the content the user has created or stored. For example, Google has an “Inactive Account Manager” function that allows users to determine what happens to the digital assets stored on Google sites after a period of inactivity. The user can request that Google either notify a specified individual and share information with that person, or can request that Google delete an account and its contents.

Several states, including Connecticut, Delaware, Florida, Idaho, Indiana, Michigan, Nevada, Ohio, and Rhode Island, have enacted laws to ensure that fiduciaries are provided the authority to access digital assets on behalf of an account owner. In New Jersey, Senate bill S2527, the Uniform Fiduciary Access to Digital Assets Act, has been referred to the Judiciary Committee for consideration. The Act would allow an executor, agent, guardian, or trustee to manage the electronic records of a decedent, principal, incapacitated person, or trust settlor.

Under the Act, a user may use a service provider’s online tool to direct or prohibit the disclosure of some or all of the user’s digital assets. If the user does not do so, then the user’s will, trust agreement, power of attorney, or other document may allow or prohibit a fiduciary’s or other person’s access. If the user has not provided any instructions in this regard, a fiduciary’s access may be modified or eliminated by federal law or a terms of service agreement. Hence, even when the New Jersey Act passes, addressing access to digital assets in estate planning documents will continue to be important for many people.

Until the Act becomes law, it is not clear whether a New Jersey fiduciary would be considered by virtue of his or her fiduciary status alone to have authority over the digital assets of another. Therefore a power of attorney should grant an attorney-in-fact the specific power to deal with and administer all digital assets. Similarly, a will should include the power for an executor to access digital assets and deal with them after the owner’s demise.

The uncertainties regarding whether the fiduciaries will be allowed access to digital assets reinforces the necessity in estate planning to think about and provide for such access. While in New Jersey it is arguable that one’s fiduciaries should have access even if not specifically set forth in a governing instrument, providing the appropriate powers in the estate planning documents takes the guesswork away. Even if New Jersey passes the Uniform Access to Digital Assets Act, it may make sense to continue to include specific directions in one’s estate planning documents about such access. Although the Act would generally grant to an executor the power to access all electronic records and assets, perhaps it would be appropriate for all adult children to also have access to certain assets, for example, to a decedent’s Facebook account.

It is also sensible to keep a list, whether with the estate planning attorney or wherever the estate planning documents are maintained, of all digital assets and accounts along with user names and passwords.