We are all living in a digital world these days, whether we like it or not, and it seems as though technology advances more and more quickly every day. This may leave you wondering whether your estate plan should to take into account your digital assets.
However, before you answer that question you may ask yourself, what exactly are “digital assets?” Well, that’s a great question and a good place to start. While there is no set in stone definition of “digital assets,” the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”) states that a digital asset is “an electronic record in which an individual has a right or interest” and “[t]he term does not include an underlying asset or liability unless it itself is an electronic record.” So, what does that mean? The comments to RUFADAA try to further explain such definition of digital assets, but in layman’s terms, digital assets will include but are certainly not limited to the following: e-mail accounts, social media accounts, websites, credit card and other rewards points, blogs, online photos and music (e.g. iTunes), electronic communications, cryptocurrencies (e.g. Bitcoin) online purchasing accounts (e.g. Amazon), text messages, electronic subscriptions and information stored on your computer, phone or tablet. As can be seen, there are many different types off digital assets, and they may be valuable for sentimental as well as financial purposes.
Just about every state has adopted a version of RUFADAA, including Arkansas, with the primary purpose of providing structure and guidelines for accessing your digital assets from a custodian in the event of your incapacity or death. A “custodian” is the “person that carries, maintains, processes, receives, or stores a digital asset of a user.” A “user” is the “person that has an account with the custodian.” Under RUFADAA, the following three tier priority system is established in order to determine a user’s intent with respect to his or her digital assets.
First it must be determined if an online tool has been used by, or provided to, the user to direct the custodian to disclose, in whole or in part, to a designated recipient the applicable digital assets, including the content of electronic communications. An online tool is defined as “an electronic service provided by a custodian that allows the user, in an agreement distinct from the terms-of–service agreement between the custodian and user, to provide directions for disclosure or nondisclosure of digital assets to a third person.”
If no online tool has been used, then the next step is to turn to the user’s estate planning documents to determine if the user has allowed someone to access their digital assets on their behalf. RUFADAA applies to (i) a fiduciary acting under a power of attorney or last will and testament, (ii) a personal representative of an estate, (iii) a court appointed guardian of an estate, and (iv) a trustee of a trust. Note that RUFADAA “does not apply to a digital asset of an employer used by an employee in the ordinary course of the employer’s business.” For example, if an employee used his or her work e-mail address to effectuate a financial transaction(s), access to such e-mails is not governed by RUFADAA.
Finally, if no direction has been provided in an online tool or estate planning documents of the user, then the terms-of-service that govern the digital asset account will apply. This is not where you want to end up, because generally the terms-of-service agreement will not provide a third party access to your digital assets.
Now, back to the original question, should your estate plan take into account your digital assets? The answer is clearly yes! It is imperative that you state your intent regarding access to your digital assets in your estate planning documents so that someone may access those assets in the event of your incapacity or death. You and your advisors should add this asset class to your estate planning checklist. Otherwise, it may be extremely difficult to access these important assets after your incapacity or death.
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