Saturday, October 8, 2016

Who Inherits Your Digital Property? California Fills in Gap in Digital Privacy Law

On September 24, Governor Jerry Brown signed AB 691 that adopted the Uniform Fiduciary Access to Digital Access Act (UFADAA). The law places access to a wide range of digital assets, including electronic documentation of financial accounts, on par with access to traditional tangible assets.

What problems does the new law address?

Because of the current gaps in priobate, property, privacy and contract laws, the fiduciaries may have hard time accessing online property and records. Not all of the current laws have caught up with the digital age. In states where “digital assets” are not properly defined and regulated this creates a problem for heirs to access the deceased relative’s online records.

Methods of transferring traditional tangible property (e.g. real estate) are well established. So are the methods for transferring traditional intangible property such as stocks. But digital assets are harder to categorize using traditional legal approaches.

One of the biggest problems is that traditional contract and privacy laws prevent estate administrators from accessing password-protected accounts. It’s because when you sign up for an account, the use of that account is governed by the terms of service (TOS). When you sign up for an account, the TOS necome your contract with the online service provider. Usually, the TOS would state that the user cannot allow anyone else to access his or her account and must keep login credentials confidential. The TOS would normally disallow the transfer or assignment of an account. That precludes online service providers (e.g. Facebook, Gmail, online banking) from releasing access to online financial statements, emails, photos and other content - even after the owner is dead. That can create a particularly big problem in cases where the deceased preferred paperless forms of record-keeping.

So, if digital assets and login credentials are not properly accounted for in a will, the fiduciaries may have hard time accessing online property and records.

What solutions does the new law provide?

Probate law is mostly state law. Meaning each state gets to adopt its own probate laws. To address the access to digital assets problem, most states have now either introduced or enacted the Uniform Fiduciary Access to Digital Assets Act (UFADAA). Its main features are:

- If the terms of service do not address fiduciary access, the default rules of UFADAA will apply.
allows users to specify whether their digital assets should be preserved, distributed to heirs, or destroyed.

- Private communications like email and social media conversations are protected by federal privacy law. prevents the companies that store our communications from releasing them to fiduciaries unless the user consented to disclosure. Fiduciaries must provide proof of their authority in the form of a certified document. Custodians of digital assets that comply with a fiduciary’s apparently authorized request for access are immune from any liability under statutes that prohibit unauthorized access. A fiduciary’s authority over digital assets is limited by federal law, including the Copyright Act and the Electronic Communications Privacy Act.

- UFADAA’s rules attempt to balance the user’s privacy interest with the fiduciary’s need for access by making a distinction between the “content of electronic communications,” the “catalogue of electronic communications”, and other types of digital assets. The content of electronic communications includes the subject line and body of a user’s email messages, text messages, and other messages between private parties. A fiduciary may never access the content of electronic communications without the user’s consent.

- When necessary, a fiduciary may have a right to access a catalogue of the user’s electronic communications – essentially a list of communications showing the addresses of the sender and recipient, and the date and time the message was sent.  An agent under a power of attorney who has authority to access the principal’s business files will have access under UFADAA to any files stored in “the cloud” as well as those stored in file cabinets. Similarly, an executor that is distributing funds from the decedent’s bank account will also have access to the decedent’s virtual currency account (e.g. bitcoin).

- Under UFADAA, fiduciaries for digital assets are subject to the same fiduciary duties that normally apply to tangible assets. Thus, for example, an executor may not publish the decedent’s confidential communications or impersonate the decedent by sending email from the decedent’s account.