Don’t forget digital assets during estate planning
Planning for what happens to our assets after we pass has long included considering a standard list of financial accounts and physical possessions. These days, much of our business and personal lives are conducted electronically, bringing a whole new category of assets into the estate planning process.
With changing privacy laws, new ways of storing sentimental materials and even brand new currencies, it is wise to take digital assets into account in the estate planning process.
DEFINING DIGITAL ASSETS
Digital assets fall into four main categories. The first consists of purely electronic items that have actual monetary value, like bitcoin, other cryptocurrencies and domain names.
The second is online access to regular financial information like bank and investment accounts.
Third is electronic communications, which primarily include email accounts and public and private messages in various social media profiles.
The fourth category includes all other activities conducted online, including family photos and videos, hobbies, genealogy and information for volunteer organizations, to name a few.
The consideration of these digital assets in estate planning is becoming essential. The email account, for example, can be crucially important to gather other information about the estate.
Executors often have used paper mail to understand what the decedent owned. As statements and tax documents arrived, the executor could piece together a picture of the estate’s financial situation. Nowadays, many financial institutions require their customers to receive electronic statements or charge fees for paper statements.
However, email service providers often are unwilling to turn over account contents to an executor because the contents of electronic communications are subject to heightened privacy protections under federal law.
“For many years, planning for digital assets has been at a tricky intersection of contract law, federal cybersecurity law and probate law.”
If someone owns bitcoin or other cryptocurrencies, the private keys are the only way to recover those assets. If the decedent died without leaving information about how to access his or her keys, there often is no central mechanism to recover them, and the value of those assets will be lost forever.
On the more sentimental side, many people would like to provide family and friends access to photos and videos stored on smartphones and other devices, but Apple cannot provide the passcode to unlock an iPhone after its user is deceased. On the other hand, some individuals may want to prevent others gaining access to certain embarrassing or private information. A comprehensive estate plan can help in achieving either goal.
For many years, planning for digital assets has been at a tricky intersection of contract law, federal cybersecurity law and probate law. The recent Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in Ohio now provides guidance on the rights to access digital assets for four types of fiduciaries: executors, agents under powers of attorney, guardians and trustees.
RUFADAA gives these different fiduciaries different access based on whether the asset is content of communication (which gets higher protection under federal law) or any other type of digital asset.
By default under RUFADAA, executors, trustees and agents have broad access to digital assets, except that the user must affirmatively elect to give access to content of communications. The default rule can be modified to grant access to content of communications, or to cut back fiduciaries’ access to certain accounts. These elections can be made in estate plan documents or by using online tools, which are specific, customizable settings that service providers are increasingly offering for their accounts.
Examples include Facebook’s Legacy Contact setting and Google’s Inactive Account manager. RUFADAA gives these account-specific settings top priority in how digital assets are administered.
AN ATTORNEY CAN HELP
This is a new area of the law and many form wills do not give specific powers for digital assets. Experienced estate planning attorneys can customize estate plans to help their clients address their unique situations and develop comprehensive plans. An attorney can also help with the crucial step of developing an inventory of digital assets so survivors know where to look for them.
Similarly, if you are faced with the death of a loved one who hasn’t done this kind of planning, working with an attorney who understands the new laws that we have in Ohio, and the way to work with service providers to gain access to information, could be crucial to preserving the assets.