Two groups are battling it out in the hopes of creating a uniform national rule for fiduciaries to access digital assets such as emails and online accounts once the owner of those properties dies.
Digital assets, a somewhat new piece to the puzzle of estate planning, can be anything from photos on a website and social media profiles to accounts with money and files in them, like PayPal and iTunes.
Financial advisers are bound to come across challenges when working with clients' estates, as more and more information is being stored electronically. Because there is no strict legislation, companies abide by their own terms of services, which may leave an adviser or personal representative barred from a decedent's accounts until legally appointed. Delays could take weeks, even months.
While technology companies are beginning to recognize these issues — Facebook for example started a legacy feature, which turns the deceased's profile into a memorial page and locks down access from outsiders trying to enter the account — it still leaves advisers and their clients in the dark.
Only a handful of states have any sort of provision for handling digital assets; Connecticut, Idaho, Indiana, Nevada, Oklahoma and Rhode Island's legislation refers only to a decedent's email, text messages, social media and blogging accounts.
- Law: SB 262
- Effective: 10/1/2005
- What it does: The official appointed by the account holder must show the state proof of the account holder's death and his or her appointment, before being given access to the decedent's email account.
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The Uniform Fiduciary Access to Digital Assets Act and Privacy Expectation Afterlife and Choices Act are looking to address the gap. In each, someone appointed by the original account holder would be able to work with technology companies to smoothly close up accounts and transfer out funds.
A total of 26 states introduced the UFADAA, which would enable account-holders to designate fiduciaries to have authority of their digital property upon their death or incapacitation.
The main issue — and what caused UFADAA to be shot down in all but one state — is privacy. Most states either postponed or killed the bill following opposition by technology companies and industry coalitions. Delaware was the only state to enact the bill last August.
The Uniform Law Commission, the committee that drafted the UFADAA bill, is in the process of amending the bill for next year's legislative sessions.
"I think there are a lot of practical changes we can make that will bridge the gap between the two sides," said Suzanne Brown, chair of the Uniform Law Commission.
Ms. Brown said some solutions include revising the bill to clearly state how companies can authenticate the appointed person entering the account. Another revision would be to define the obligations of a fiduciary — to be loyal and responsible with an account holder's content. Although the role of a fiduciary is pointed out in the federal privacy law, Ms. Brown said, it could be spelled out better in the bill's text.
Separately, NetChoice, a trade association representing companies including AOL Corp., Lyft Inc. and PayPal Holdings, Inc., created the PEAC Act. The PEAC Act aims to let fiduciaries have access to digital service providers to view select contents of accounts. Fiduciaries would only see "outside of the envelope" communication, such as the company holding the account and time stamp, but not the contents within the emails, instant messages and accounts. The PEAC Act has the support of the Internet Coalition, an organization that represents technology companies including Amazon.com Inc., Google Inc. and Facebook Inc.
The PEAC Act will be effective in Virginia as of July, and is also currently being reviewed in California.
|Uniform Fiduciary Access to Digital Assets Act||UPrivacy Expectation Afterlife and Choices Act|
|Backed by: Uniform Law Commission, a non-profit of lawyer-only members from each state||Backed by: NetChoice, a coalition for technology companies|
|Goal: To grant fiduciaries, as appointed by original account holder, access and authority of one's online accounts — including email, text messages, blogs, ecommerce and those not yet invented — upon death or incapacitation.||Goal: To grant fiduciaries, as appointed by original account holder, access to view the “outside of the envelope” information — such as the company with which the account holder had an account and time stamp of communication — without access to the contents, unless explicitly written.|
Both bills, or a compromise of the two, would help financial advisers transfer their deceased clients' funds to family members. But financial advisers warn that they shouldn't wait for laws. "Bottom line is that consumers have to be better prepared — with or without this legislation," said William Bissett, a financial adviser with Secrest Blakey & Associates in Davidson, N.C.
Advisers should be proactive by working with their clients and state attorneys to clearly write the language for how they would like their digital assets maintained after death, Mr. Bissett said. "Advisers should start to make sure digital assets are addressed in documents so that it's clear what their intent is," he said.
Mr. Bissett is also chief executive of Principled Heart, an online tool that organizes information for estate planning, including digital assets.
Kelly Pedersen, a financial planner and founder of Caissa Wealth Strategies in Bloomington, Minn., said she is in the middle of updating dozens of her clients' estate documents to address their digital assets.
"Many advisers are either not aware of or not paying attention," Ms. Pedersen said.