15 May 2014

Digital Estates

In the US the Uniform Law Commission, an entity that drafts uniform legislation for the US states , has released [PDF] a proposed Fiduciary Access to Digital Assets Act (FADA) that would grant fiduciaries broad authority to access and control digital assets and accounts in the event of an individual's death.

The proposed legislation would clarify who can access online accounts post-mortem, creating four categories of fiduciaries -
  • a personal representative of a deceased person’s estate
  • someone carrying out a power-of-attorney
  • a trustee 
  • someone appointed by a court to act on behalf of a protected person.
Areas of contention include whether  assets should be treated the same irrespective of whether they are physical or  digital (with some fiduciaries not having automatic access under state law to digital assets)  and whether terms & conditions (typically on a clickwrap basis) will enable service operators to circumvent  law by requiring users to sacrifice future access by the fiduciary (especially by enabling the operator to preemptively close an account on death).

The Commission states -
The purpose of this act is to vest fiduciaries with the authority to access, manage, distribute, copy or delete digital assets and accounts. It addresses four different types of fiduciaries: personal representatives of decedents’ estates, conservators for protected persons, agents acting pursuant to a power of attorney, and trustees. As the number of digital assets held by the average person increases, questions surrounding the disposition of these assets upon the individual’s death or incapacity are becoming more common. Few laws exist on the rights of fiduciaries over digital assets. Few holders of digital assets and accounts consider the fate of their online presences once they are no longer able to manage their assets. And these assets have real value: according to a 2011 survey from McAfee, Intel’s security-technology unit, American consumers valued their digital assets, on average, at almost $55,000.  These assets range from online gaming pieces to photos, to digital music, to client lists, to bank accounts, to bill-paying, etc. There are 30 million Facebook accounts that belong to dead people. The average individual has 25 passwords. Some service providers have explicit policies on what will happen when an individual dies, others do not; even where these policies are included in the terms of service, most consumers click-through these agreements.
Only a minority of states has enacted legislation on fiduciary access to digital assets, including Connecticut, Idaho, Indiana, Oklahoma, Rhode Island, Nevada, and Virginia, and the existing statutes grant varying degrees of access to different types of digital assets. In addition, other states, including Massachusetts, Nebraska, New York, and Oregon, have considered, or are considering, legislation. Existing legislation differs with respect to the types of digital assets covered, the rights of the fiduciary, and whether the principal’s death or incapacity is covered.
This draft is for review by the Drafting Committee at our March meeting. The draft is divided into sixteen sections. Sections 1-3 contain general provisions and definitions, including those relating to the scope of the fiduciary’s authority. Sections 4-7 establish the rights of personal representatives, conservators, agents acting pursuant to a power of attorney, and trustees. Section 8 contains provisions relating to the rights of the fiduciary to recover property. Section 9 addresses compliance, and Section 10 grants immunity to custodians. Sections 11-16 address miscellaneous topics, including the effective date of the Act and similar issues. The act addresses only the rights of the four types of fiduciaries, and it is designed solely to provide access without changing the ownership of the underlying asset.