The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA): A Cure for Our Digital Dilemma?

 In General

Legislative Update

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA): A Cure for Our Digital Dilemma?

The digital age has arguably presented the world with as many challenges as opportunities – some might even say more, though I digress.  Even the world of estate planning is not untouched by such modern issues.  The fact is – we’re working to catch up.  You see, historically, estate planning has revolved around planning for your tangible assets and just a few, specific intangible assets – such as investments and securities.  Enter Dropbox, Facebook, iTunes, and email to name but a few of the digital treasures at stake, and the status quo rapidly changed.  Though charged to manage all of one’s assets in an estate plan, attorneys attempts to address digital assets have been perplexed by digital custodians’ restrictive terms of service along with rigorous federal laws regarding privacy and anti-hacking statutes; these obstacles have made it a daunting if not altogether impossible task.

This fumbling of digital assets, however, is not due to indifference or incompetence.  Then to what do owe this unfortunate legal limbo?  While the speed at which this asset landscape has developed is certainly a factor, sometimes the simple fact is that these things just take time to flesh out – it’s a complex issue.  Legal solutions could not be developed until we untangled the web of competing legal interests and pinpointed the specific problems.  And frankly, this is likely not the end of the issue; this area of law will likely continue to be developed and even expanded as needed.

The good news is that now that the issue – namely, how we handle the digital assets belonging to a deceased individual – has had some time to play out in real life for a time, the legal experts have been able to do their due diligence.  They’ve parsed out some of the landmines and given us a proposed legal framework to sort through the confusion.  After some initial fine-tuning, that solution is now in the form of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). As of last August, 19 states had already adopted a form of this groundbreaking legislation, and 13 more states had begun the process by introducing the legislation – Texas joined those ranks in February.

Without out taking you too far into the legal abyss, the stated purpose of this Act is to give “Internet users the power to plan for the management and disposition of their digital assets in a similar way as they can make plans for their tangible property.”  Sounds straightforward enough.  But to accomplish this legislative fete, legal minds had to hold a healthy tension between two important, but competing interests that are at the heart of the issue.  On the one hand, there is a concern for protecting the privacy of the deceased – with zealous internet custodians and a lot of existing federal law focused on doing just that.  On the other hand, there is the obvious and very practical need of an executor or other fiduciary to be able to carry out the affairs of the decedent’s estate without his proverbial hands tied.

RUFADAA takes both of these issues seriously and provides us with a roadmap for navigating this important issue.

According to a summary of the legislation put out by the Uniform Law Commission,“this act extends the traditional power of a fiduciary to manage tangible property to include management of a person’s digital assets.  The act allows fiduciaries to manage digital property like computer files, web domains, and virtual currency, but restricts a fiduciary’s access to electronic communications such as email, text messages, and social media accounts unless the original user consented in a will, trust, power of attorney or other record.”

The following are some highlights of the legislation:

  • The custodian of the digital asset will be granted immunity from any liability action for all actions they take in accordance with RUFADAA
  • The fiduciary standards of digital assets will be the same as they are for tangible assets
  • Internet users will be empowered to decide whether a digital asset will be preserved, distributed or destroyed
  • A single legal standard will give fiduciaries equal access to digital assets from state to state
  • A digital asset that is considered a “private communication” will not be released unless the user had specifically granted access
    • A custodian may provide a “catalogue of electronic communications” in lieu of such specific grant; this information can include such information as the addresses of sender/recipient and date/time of any messages
  • The statute provides default rules for the four common types of fiduciary roles: an agent operating under a power of attorney, an executor, a trustee and a conservator
  • The statute presents a hierarchy of authority by which an individual may explicitly determine a fiduciary’s level of access:
    • Online tool (this would be provided by the online custodian and is not prevalent as of yet)
    • Estate planning documents (will, trust) or Power of Attorney
    • Terms of Service of the custodian
    • RUFADAA’s default rules

We have yet to learn exactly how useful RUFADAA will prove to be – but it is a start in the right direction.  Unfortunately, while the legislation may have provided clarity for this complex issue, it does not appear to have brought simplicity.  As we put the guidelines of RUFADAA into practice, it will be important to examine each digital asset and its corresponding custodian’s terms of service – a potentially tedious task.  So while we do have a framework to guide us, it’s too earlier to say if the process has been made any easier – time will tell.  If you’d like to talk about the specifics of your digital assets, schedule an appointment today!

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