Digital Asset Planning

Jul 23, 2019

Digital Assets

Do you know RUFADAA? Whether you know it or not, you’re living in the time of RUFADAA, also known as the Revised Uniform Fiduciary Access to Digital Assets Act. These days, nearly everyone has digital assets, which can be as simple as a Facebook account or as complicated as an investment account that exists only in the digital ether. The question that gives rise to the need for RUFADAA is “who can access the digital asset when the owner has become incapacitated or has passed away?” Perhaps an even better question is who should have access to digital assets?

 

RUFADAA is a revised version of its predecessor UFADAA, which provided very broad access to executors and/or personal representatives of an estate. There were objections and concerns over such broad access for a number of reasons, but in general, the concern was that digital assets were being treated like other assets, such as bank accounts or real estate, when in fact they are very different. For example, most people know that if they pass away, someone will access their bank accounts or sell their real estate. But do they also expect that someone will go into their email accounts and read every email they’ve ever sent or received? Or would they expect that every photo or screenshot that they’ve ever saved to their computer or cell phone would be seen by someone?

 

The revisions to the originally proposed law limited an executor’s access to digital assets and gave more discretion to companies or custodians holding the digital asset. Under RUFADAA, an executor would have limited or no access to digital assets unless the owner had explicitly granted such access. Further, even if such access had been granted, the custodian of the digital asset can still limit access based on the service agreement that the owner signed when the digital asset was established. It seems likely that a company would err on the side of caution and limit access to assets as much as possible for fear of breaching privacy expectations. So how can you avoid having your digital assets fall into this quagmire?

 

Perhaps the simplest thing to do in order to assist your heirs in handling such assets is to create a spreadsheet or simple list of assets along with usernames and passwords. This way, your executor will be able to access the digital asset without court involvement and without jumping through hoops mandated by the company holding the asset. Instructions can also be provided to the executor on what to do with the asset. For example, you can specify that you want your Facebook account immediately deactivated. Or perhaps you would like to leave one last tweet for your Twitter followers and then have that account deactivated. Such a list and instructions should be kept up to date and should be kept with other important documents, such as your will or living trust.

 

Of course, leaving such a spreadsheet or list assumes that the person in charge will comply with your instructions. It also raises the possibility that the list will fall into the wrong hands. If this is a concern, one option would be to provide the list only to a trusted third party, such as an attorney, to ensure that the assets are managed according to your wishes. You may also consider a “digital asset trust”, which is becoming a more and more popular instrument in this digital age.

 

Whatever you do, don’t put your head in the sand! Please feel free to contact Lantz Law if you’d like more information or would like to schedule a consultation.

 

Michael Coleman

Attorney Michael Coleman earned his Juris Doctor degree from Hofstra School of Law. He is also a member of the American Academy of Estate Planning Attorneys and the National Academy of Elder Law Attorneys, Inc. Attorney Coleman focuses his practice on various Estate Planning, estate administration, probate, retirement planning, and real estate matters. Lantz Law, Inc. has served the communities of Southcoast, South Shore, Cape Cod, and the Islands since 1969.

 

 

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