Your Data Can Now Have a Beneficiary – Digital Assets

The internet has brought many advances to our lives. The world wide web, emails, blogs, cloud computing, social media and other online accounts are a common way to communicate with family and friends, manage finances or operate a business. Until recently, California law was silent on the right to access those accounts after the account holder’s death, leaving loved ones and personal representatives unable to obtain information, preserve photographs or other materials, or close on-line accounts.

Effective January 1, 2017, a new California statute allows the holder of a digital account to authorize a beneficiary, spouse, or other trusted person the right of access to his or her digital assets after death. The authorization must be in writing, and may be included in a separate consent, a durable power of attorney or a trust instrument. This authorization overrides any terms-of-service contract that the account custodian may require or that the account holder may have agreed to by a click on a computer. The account holder may grant rights to view, delete, copy, or close accounts.

The account holder may also consent to such access through an online tool offered by the custodian. Such online consent supersedes any written direction, provided that the holder may modify or delete the online consent at any time. An online tool for this purpose is an agreement with the custodian of the digital asset separate from the general terms-of-service contract the holder has with that custodian.

The new law applies only if an individual affirmatively opts for its application. The individual may select what access to grant, and may vary access by account or asset. The spouse, children, or other beneficiaries of an individual who does not prepare such a written consent have limited rights under the new law.

The new law allows a fiduciary limited access to digital information stored on an individual’s electronic devices. The trustee must comply with any terms-of-service contract that applies to a digital account, and the fiduciary may not impersonate the account holder. The new statute also does not require the account custodian to disclose passwords or decrypt protected devices. Therefore, it is important to prepare an inventory of digital passwords outside of any device and to provide that inventory, or access to that inventory, to a trusted person for use in the event of incapacity or death. An option is to create an online account with passwords and give a trusted person access to that account. Without proper planning, the account custodian may treat an account that is unused for a period of time as abandoned, and digital information stored on the account holder’s devices may be lost.

In the absence of the written consent of the account holder, a fiduciary may obtain by court order a catalogue of electronic communications sent or received by the account holder.  This catalogue would not include the content of any communications, but it may lead to relevant information regarding the estate administration. This access is only permitted if disclosure is reasonably necessary to the estate administration.

The authorization under this new law can be incorporated into existing estate planning documents. Those documents can serve two purposes: they constitute an account holder’s written consent to disclosure of digital assets and frame the terms of that disclosure, and they can give a fiduciary specific powers to retrieve and manage digital assets.

We would be pleased to discuss this new law and related planning with you in greater detail.