We live in a digital world. We bank online, post vacation photos on Instagram, and buy bitcoin with one click on the phone. Considering how much of modern life happens digitally, it makes sense to provide access to heirs in an estate plan. Sharing digital assets is more complicated than leaving an antique vase or piece of jewelry to a loved one. Here’s what you need to know to include your digital property in your estate plan.
What Is a Digital Asset?
Digital assets are electronic records or materials that exist, as their name suggests, digitally. Digital assets cover a wide range of properties including social media accounts, email accounts, cryptocurrencies, PayPal or Venmo balances, credit card points, email, medical records, apps, documents, and photographs—to name just a few.
Some digital assets, like your photos, belong to you. But, unlike a physical print you can hand to another person, sharing a digital image requires using a third-party provider. All third-party providers have their own terms and conditions for digital asset access. Here’s what you need to know to extend your access in your estate plan.
The Uniform Fiduciary Access to Digital Assets Act: Why It Matters
In 2014, The Uniform Law Commission drafted legislation in response to heirs being unable to access social media accounts and other digital assets. This legislation was provided to states, which could choose to adopt it or not. At that time, few laws dictated what an heir could do to access a loved one’s digital assets. Due to privacy laws, unless the heir could provide logins and passwords, the heir was unable to access these accounts. As a result, companies would delete the account, or the digital assets would remain untouched on electronic mediums.
The first proposed Uniform Fiduciary Access to Digital Assets Act (UFADAA), gave an an executor or agent access like the owner. If they didn’t have the password, they could request access from the third-party provider. However, people were concerned that this version of the law invaded the deceased person’s privacy, created liability issues for the third party who had promised to keep accounts secure, and created conflicts with federal privacy provisions.
In response to privacy concerns, in 2015, the Uniform Law Commision updated the proposed legislation as the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This act removed blanket access and stated that heirs need written authorization from the deceased to access digital accounts. The current version of the law authorizes the following:
- The deceased person must have explicitly consented to disclosure for the agent/executor to have authority over electronic communications.
- The executor must petition the court to explain the need for access to a particular digital asset as it pertains to wrapping up the estate.
- If the executor doesn’t have permission through a will, trust, or other legal documents, the third-party provider may consult the terms-of-service agreement to comply with the request for access.
- Third-party providers may ask for a court order from an executor or heir, as well as limit access to a digital asset that is reasonably necessary to wrap up an estate.
- Third-party providers do not have to give access to deleted accounts or joint accounts.
Currently, 46 states have adopted RUFADAA. Louisiana, Massachusetts, and Oklahoma have yet to adopt it. Delaware still follows the original version.
Passing on Your Digital Assets: What to Know
Although RUFADAA is the law in most states, you can’t rely on it to ensure heirs get your digital assets. Legislation is relatively new, and precedent is still evolving.
There is, however, a three-tier system provided by the act that may make it easier for heirs. It is as follows:
- Extend access through specific platforms. Some third-party providers will allow you to designate online the individual who will have access to your account. Choosing to extend access in this way will trump any directive in a will, trust, or power of attorney. For example, Facebook allows individuals to list a legacy contact who can access their account if something happens to you. Google will allow you to control what happens to your account via the Google Account Inactive Manager feature. With it you may designate when your account should become inactive, what should happen to it, and who can access the parts of it you designate.
- Appoint a digital executor through your will, trust, or power of attorney. If you haven’t extended permission online, or there is no option to do so, you can list heirs who may have access to your digital assets. Keep in mind some digital assets are hard to pass on via a will because you don’t have licensing rights to things like social media accounts, subscriptions, and email, and the terms of the agreement may limit your rights.
- Rely on the third-party’s terms in the service agreement. In situations without extended access or a digital executor, the third-party provider’s terms of service agreement will govern access to your digital assets .
How to Make a Plan for Passing on Digital Assets
Making a plan to pass on digital assets is the ideal way to ensure heirs can access your electronic legacy. In general, go beyond giving your executor permission to your digital assets in a will, trust, or power of attorney. One way to do this is to include a note in your estate plan with instructions for accessing your accounts.
In preparing your note, do the following:
- Make a list of your digital assets and name who has access.
- List all usernames and passwords.
- Tell your executor what to do specifically with each account. Do you want your Facebook account deleted? Do you want your family to have access to all photos on your computer? Do you want your blog saved? Go through your digital life and make a plan for each segment. Be clear in your instructions about what you want to happen with each.
- Make certain this note or letter with the instructions is in a safe place. You can store this document with other important information like your will, passports, or health care power of attorney. Be sure this document is easily accessible because your executor will need quick access.
- Keep the information current. As any account information changes, make certain you update it in your letter/note.
As our lives move into the digital realm, digital assets are becoming as valuable as physical objects. That’s why it’s important to ensure you can share them with your heirs after you pass on.
Seniority is published by Finance of America Reverse LLC. The views expressed in this publication are those of the author alone and do not necessarily reflect the views and opinions of Finance of America Companies. This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.
