Management of Digital Assets and Accounts
October 23, 2014 - Posted by: admin - In category:
When we think about estate planning, asset protection and property transfers, we normally focus on real estate, bank accounts, retirement accounts and other investment accounts and related items. However, given the realities of modern life, including the fact that a great many people have substantial “digital assets”, we would do well to consider and plan for such things. What is a “digital asset” you ask? Great question. Thanks for asking.
“Digital assets” include (to cite just a few examples, this is NOT an exhaustive list): text messages, e-mails, audio files, video images, social media content, health records, software, software licenses and passwords, other online account passwords, online bank and other financial records, databases, blogs, and various other usernames and passwords of all types and flavors. To focus specifically on digital finances, we should also mention Bitcoin, Paypal, Google Pay, Apple Pay, and various other online payment services and resources which includes actual digital currency (like Bitcoin) as well as other online payment intermediaries. In short, you, me and almost everyone we know has one or several of these digital assets and therefore your estate plan should account for the proper care, control and transfer of the same.
Earlier this summer (2014), the Uniform Law Commission released the Uniform Fiduciary Access to Digital Assets Act (the “Act”), which is a model statute designed to ensure that account holders are able to retain control of their digital assets at all stages of their life and eventually dictate the terms and timing of the orderly transfer of the same. The Act provides that a legally-appointed representative can gain access to such digital assets in the event of disability or death of the original digital asset owner. However, very important to note, such access is permitted ONLY according to legally valid authorizations. In other words, the intent of the Act is to provide that digital assets can be accessed and managed in a manner that is similar to how other assets (i.e. real estate, bank accounts and other more traditional assets) are accessed, managed and transferred.
Delaware has recently adopted the Act, which will become effective on January 1, 2015 for Delaware law purposes. Given the widespread use of Delaware corporate services, including Delaware LLCs, Corporations, Trusts and other like vehicles, this adoption of the Act is no small occurrence and it will have geographic effects far beyond the borders of Delaware. Other states will surely follow Delaware in the coming days and this makes good sense. Even so, certain industry groups and specific tech companies oppose the Act and are fighting hard to limit its adoption and application. For example, Yahoo has gone on the offensive against the Act, given that Yahoo’s “terms of service” provide that upon the death of a person, when Yahoo becomes aware of the same through receipt of a death certificate, Yahoo will delete that person’s account and all related files. Yahoo is not alone in this approach, which is likely followed by many, if not most, of the likes of Google, Facebook, Pinterest, Youtube and the many, many, many similar social media and e-mail hosting companies.
You will be hearing MUCH MORE on this subject in the future. Stay tuned.
You can read more about the Act here.