January 14, 2015
By Marie Arrigo, CPA
Fiduciaries need to access digital assets in order to prevent identify theft. Fiduciaries are obligated to preserve the assets of the estate they are managing. When an individual is unable to continue to monitor his/her online accounts, it becomes much easier for criminals to hack these accounts, open new credit cards, apply for jobs, obtain identification cards, etc. Thus, a fiduciary needs to monitor and protect these accounts as part of his/her fiduciary responsibilities. Further, the fiduciary must marshall and collect assets, and this is becoming increasingly impossible to do in today's internet environment.
State laws criminalizing unauthorized access to computers and data, as evidenced by the Federal and State Computer Fraud and Abuse Acts, often prevent fiduciaries from accessing decedents' accounts, Further, federal privacy law and TOSAs also impede the fiduciary's access to digital assets. The fact that a fiduciary is authorized by the owner or state law to use a computer or to act for an account user is not an absolute bar to prosecution, as he/she may be violating the TOSA. TOSAs are frequently silent as to fiduciary access or postmortem options, or they may simply prohibit postmortem transfer altogether.
The Uniform Fiduciary Access to Digital Assets Act ("UFADAA") was drafted by a committee appointed by the Uniform Law Commission for the purposes of creating a uniform act to vest fiduciaries with the authority to access, manage, and distribute digital assets. UFADAA aims to resolve many of these impediments to fiduciary access, so that they can carry out their duties. UFADAA is ready for consideration and enactment by states.
In the interim, estate planners can ask their clients to inventory their online accounts and passwords. Also, documents should provide for authorization of the fiduciary to access and terminate such accounts.
For more content stemming from the 2015 Heckerling Institute on Estate Planning, please click here.