Have you ever wondered what happens to your email account when you die? What about your PayPal account? New Jersey Gov. Chris Christie recently signed legislation into law that addresses who can manage a person’s digital assets when they die or become legally incapacitated.
Growth of Digital Assets
As technology grows, so does the number of digital assets that Americans own. Examples include email accounts, blogs, social media accounts, virtual currency, online financial accounts, websites, domain names, and computing hardware. However, most estate laws only address tangible assets.
"If a custodial party wants to guard their digital assets, they should be able to without regulatory barriers. Digital property such as email accounts, social media accounts and Internet-based currency is just as important as any other asset a person may have," said the lead sponsor, Assembly Majority Leader Louis Greenwald, D-Camden. "This will help individuals protect digital properties as they would their physical assets."
Uniform Fiduciary Access to Digital Assets Act
New Jersey’s Uniform Fiduciary Access to Digital Assets Act (UFADAA) authorizes an executor, agent, guardian, or trustee to manage the electronic records of a decedent, principal, incapacitated person, or trust creator under certain circumstances. It is modeled after legislation proposed by the National Conference of Commissioners on Uniform State Laws in 2014. To date, 23 other states have enacted similar laws, and another 18 are in the process of doing so. Below is a brief summary of several key provisions:
Definition of “Digital Assets”: The new law defines the term “digital assets” to mean a person’s digital property and electronic communications. It does not include an underlying asset or liability unless the asset or liability is itself an electronic record. It would also not apply to digital assets of an employer used by an employee during the ordinary course of business.
Authority of Fiduciary: The UFADAA authorizes fiduciaries, which may include executors or, agents appointed under powers of attorney, and trustees, to manage digital property, such as computer files, web domains, and virtual currency. However, it restricts a fiduciary’s access to electronic communications such as email, text messages, and social media accounts unless the original user (i.e., accountholder) consented in a will, trust, power of attorney, or other record. It further provides that a fiduciary would generally have access to a catalogue of the user’s communications (i.e. information that identifies each person with which a user has had an electronic communication, and the time and date of that communication), but not the content, unless the user consented to the disclosure of the content.
Accessing Digital Assets: If the user has not provided any direction, either online or in an estate plan, the terms of service for the user’s account would determine whether a fiduciary may access the user’s digital assets. If the terms of service do not address fiduciary access, the UFADDA’s default rules apply. Specifically, a fiduciary would be required to send a request to the custodian, accompanied by a copy of the document granting fiduciary authority, such as a letter of appointment, court order, or certification of trust.
Fiduciary Duties: Under the new law, fiduciaries for digital assets would be subject to the same fiduciary duties that normally apply to tangible assets. For instance, an executor would not be authorized to publish the decedent’s confidential communications or impersonate the decedent by sending email from the decedent’s account.
Relationship to Other Laws: The UFADAA acknowledges that a fiduciary’s management of digital assets may also be limited by other law. For example, a fiduciary may not copy or distribute digital files in violation of copyright law, and may not exceed the user’s authority under the account’s terms of service.
Liability: Custodians of digital assets are immune from any liability for an act or omission done in good faith in compliance with the UFADDA.
If you have any questions or if you would like to discuss the matter further, please contact me, Jeffrey Pittard, at 201-806-3364.