Kissel and Olimb: New law affects estate planning for digital property

Kissel

By Richard O. Kissel II and Jessica M. Olimb

The Revised Uniform Fiduciary Access to Digital Assets Act took effect in Indiana on July 1, 2016. See Ind. Code § 32-39 et seq. The new law addresses the rights of a fiduciary, such as a personal representative, trustee, attorney-in-fact or guardian, to access digital property, such as online financial accounts, emails, texts, social media accounts and online document and picture storage. Ind. Code § 23-39-1-1(a). UFADAA replaced Indiana’s previous digital access statute, which applied only to personal representatives.

To date, UFADAA has been adopted by 15 states, including Indiana. In 2016, legislation was introduced or considered in at least 29 states and UFADAA bills are currently pending in approximately 17 states, including Illinois and Ohio.

Olimb

Individuals who wish to take full advantage of the features of UFADAA will need to take action, including updating their estate planning documents, as described below. Failure to take action may result in the loss of access to digital property (or even the deletion of digital property) upon a person’s death or incapacity.

Online tool

Under UFADAA, a company that stores digital property (referred to as a “custodian”) may provide an online tool that allows the owner of the digital property (referred to as the “user”) to specify whether the user’s digital property should be disclosed to others and, if so, to whom. Ind. Code § 32-39-2-1(a). If a custodian does not make an online tool available to its users or if a user does not take advantage of a custodian’s online tool, then the following rules will apply. Ind. Code § 32-39-2-1(b).

Estate planning documents

A user may include provisions in his or her will, trust or power of attorney document to either allow or prohibit fiduciary access to the user’s digital property. Adding express digital access provisions to wills, trusts and power of attorney documents will be beneficial for most individuals because it may be cumbersome to complete the online tool for each and every digital asset and because not all custodians are likely to provide an online tool, at least not initially.

Terms of service agreements

If a user provides no instructions, either by using an online tool or by adding digital access provisions to his or her estate planning documents, then each custodian’s terms of service agreement will govern whether the user’s fiduciaries will (or will not) have the ability to access the user’s digital property. Ind. Code § 32-39-2-1(c). For this reason, it will be important for most individuals to take action, either by using online tools or by adding digital access provisions to estate planning documents (or both).

Default rules

If a user does not use an online tool or add specific digital access provisions to his or her estate planning documents, and if the custodian’s terms of service agreement does not otherwise restrict fiduciary access, then the following default rules will apply.

Personal representative. A deceased user’s personal representative (i.e., executor or administrator) will be permitted to access the deceased user’s digital property for purposes of carrying out the personal representative’s duties but will not have access to the content of the deceased user’s electronic communications, such as emails and text messages, absent express authority in an online tool or a will. Ind. Code §§ 32-39-2-4, -5, and -6.

Trustee. If a user creates a trust and the user’s digital property passes to the trust, the trustee will be permitted to access the user’s digital property for purposes of carrying out the trustee’s duties but will not have access to the content of the deceased user’s electronic communications, absent express authority in an online tool or in the trust agreement. Ind. Code §§ 32-39-2-8, -9, and -10.

Attorney-in-fact. If a user authorizes another person (called an “attorney-in-fact”) to act for the user under a power of attorney document, the attorney-in-fact will be permitted to access the user’s digital property for purposes of carrying out the attorney-in-fact’s duties but will not have access to the content of the deceased user’s electronic communications, absent express authority in an online tool or in the power of attorney document. Ind. Code §§ 32-39-2-6 and -7; Ind. Code § 30-5-5-14.5.

Guardian. If a user becomes incapacitated and a guardian is appointed to manage the user’s financial affairs, the guardian will have very limited authority with respect to the user’s digital assets, absent express authority in an online tool or other estate planning document. The guardian may request that the user’s online accounts be suspended or terminated but otherwise will have no access to the user’s digital property without a court order that is issued after notice to interested persons and a hearing. Ind. Code § 32-39-2-11.

Individuals with significant digital assets and communications may wish to consider taking advantage of UFADAA’s provisions.•

? Richard O. Kissel II and Jessica M. Olimb are attorneys in Taft’s private client group. Reach them at [email protected] and [email protected]. The opinions expressed are those of the authors.