What Are Digital Assets and What Impact Does This Have on Your Estate Planning?
Digital assets have become a nearly inescapable part of our daily lives in recent years. From email accounts; to online banking and investment statements; to social media profiles; and photographs, business records, and other data all stored on the cloud; most of us own a plethora of digital assets.
But what happens to these assets if you become incapacitated or die? How would your agents, trustees, and executors (fiduciaries) access these accounts to get the important information that they need in order to manage your affairs or administer your trust or estate? How would your loved ones access priceless photo collections stored on a social media site or cloud-based storage platform?
Prior to the adoption of RUFADAA, Pennsylvania law provided no answer to these questions. The ability of fiduciaries to access digital assets was subject to Terms of Service Agreements (TOSA) with each custodian, such as Facebook, Instagram, Google, Wells Fargo, PNC, Fidelity, Vanguard, or other similar entities. The result was often frustration. Fiduciaries were faced with different rules for each custodian and procedures that were complex and difficult to navigate.
What PA RUFADAA Says:
Pennsylvania’s RUFADAA creates a tiered hierarchical system for determining priority of fiduciary access to digital assets.
The person named by the user through a custodian’s online tool is given first priority. The online tool mechanism is an agreement between the user and the custodian that is separate from the TOSA. It can be thought of as the digital asset equivalent of a beneficiary designation. Not a lot of custodians are utilizing an online tool yet, but the expectation is that this will eventually become the norm. Second priority is given to the person authorized in the user’s estate planning documents. If the user did not name a person through an online tool or through his/her estate planning documents, then the TOSA would control.
Impact on Your Estate Plan:
During your lifetime, your General Durable Power of Attorney (POA) gives the person that you designate as your Agent broad authority to act on your behalf. Your Agent can pay your bills, manage your investments, and sell your home, for example. Having the authority to access your digital assets is crucial to being able to effectively perform these duties.
After your death, your Executor or your Trustee is tasked with administering your trust or estate. These fiduciaries need to be able to pay outstanding debts, coordinate the closing and opening of financial accounts, manage real estate and business interests, as well as myriad other responsibilities. It is incredibly challenging to accomplish these tasks without access to the decedent’s digital assets.
An additional consideration that will become incredibly impactful as more custodians implement online tools on their platforms is coordinating online tool designations with the fiduciaries named in estate planning documents. You should absolutely consult with your estate planning advisor to ensure that the person or people named through a custodian’s online tool do not conflict with your planning documents.
In our modern, technology-focused world, an updated Digital Assets clause is vital to successful estate planning.
Our experienced team of PA estate planning attorneys are incorporating robust, thorough updates into our clients’ wills and powers of attorney to ensure that their desired planning outcomes are accomplished and that they coordinate with the new framework created by PA RUFADAA. Your planning documents should not be silent on the issue of access to your digital assets.
Call us today at 610-933-8069 to schedule a review of your current estate planning documents and to discuss including updated Digital Assets clauses in your Power of Attorney, Will and/or Trust.
We recently covered this topic in our Fall/Holiday Newsletter. <<< Click the link to learn more about this state law change, as well as other recent law changes that could impact your estate planning. You will also find some delicious holiday cocktail recipes to serve at your next party – whether it be in person or virtual!