Digital Assets and Accounts - Can Life Get More Complex?
Passwords, Passwords, Passwords.
How many passwords do you have? It is amazing how quickly they have become a necessity. And don’t forget user names.
Keeping track of these passwords and user names and managing digital assets and accounts can be hard enough. But if you become incapacitated or die, do you have any plan for access and management by someone you trust?
You probably have more digital assets and accounts than you think you do. “Assets” can include domain names, contents of blogs and websites, emails, social media content, photographs and stored credits for airlines, credit card companies, debit card companies, PayPal, Amazon and countless others.
Many of us have agreed to have “paperless” accounts with our banks, investment companies, creditors and others, often at their urging. Having account statements and records saved electronically is a nice, neat way to go through life. However, we are now at the mercy of our computers, third parties’ computers and the internet. Additionally, cybersecurity is an increasingly significant concern that we all must deal with as best we can.
However, even if all assets and accounts are secure and accessible to us, if we become incapacitated or die, those who we leave in charge might have problems.
For example, a few years ago an owner of a building supply business suffered a stroke which affected his memory and physical well-being. He kept all his business records in a Yahoo! account - including accounts payable, accounts receivable, and inventory. His family attempted to get access to the account and continue operating the business. Yahoo! denied access. The business continued to receive deliveries and could not identify the customers or the sale prices for those products. The business rapidly declined.
Problems such as this can be avoided or minimized. As with any other delegation of authority to act, access to digital assets and accounts can be authorized in a comprehensive power of attorney. Of course, the agent you appoint under a power of attorney should be someone that you trust completely. The specific scope of authority should be spelled out as clearly as possible.
The authority under a power of attorney automatically ends when the principal dies. The authority to access and control all digital assets and accounts can also be given to your executor under your last will and testament.
Last year New York State passed a law that details the rules regarding the circumstances under which fiduciaries, including agents under powers of attorney and executors under wills, may have access to and control over digital assets and digital communications. The law is complex and, in my opinion, in some parts poorly worded. For those of you who would like to read it, the law is known as Article 13-A of New York’s Estates, Powers and Trusts Law.
What is clear is that, first, a “user” (a person who has an account with a “custodian”) may use an online tool to direct the custodian to disclose, or not to disclose, some or all of the user’s digital assets, including content of electronic communications. Those directions will override any contrary direction in a will, power of attorney or other document.
If there is no such direction on file with the custodian, this law states that the custodian, “at its sole discretion”, may grant a fiduciary access to a user’s account, in full or “sufficient to perform the tasks” necessary, or instead provide a copy of any digital asset that the user could have accessed. Aside from the rather nebulous language regarding sufficiency, this provision does not make it clear what I believe the law’s intent is: that the custodian must do one of those things.
Another section of the law states that “if a deceased user consented” (presumably in a will or trust), the custodian “shall” disclose to the estate’s representative the content of the user’s “electronic communications”.
Still another section of the law states that, unless the user directed otherwise before death, the custodian “shall” disclose to the estate’s representative a catalogue of electronic communications sent or received by the user “and digital assets, other than the content of electronic communications” if the custodian is given certain proof of authority and an affidavit stating that disclosure of digital assets “is reasonably necessary for administration of the estate”.
Likewise, another section states that if a power of attorney expressly grants an agent authority over the content of electronic communications, the custodian “shall” disclose that content, but only to the extent granted.
The next provision, 3.4, is where it gets particularly interesting, and confusing. This section requires disclosure of “digital assets” even if the power of attorney does not specifically authorize disclosure. However, the concept of control is not addressed. Therefore, if an agent does not have specific authority, control of, for example, a domain name or software license (including perhaps authority to renew them) could be lacking, possibly resulting in loss of the name or license. The exact results of “disclosure” remain to be seen. Suffice it to say, a power of attorney granting specific authority over digital assets is wise, if that is what is intended.
Similar provisions deal with the rights and authority of trustees and guardians. Virtually every one of these provisions permits the custodian to require “evidence linking the account to the user” or “a number, username, address, or other unique subscriber or account identifier assigned by the custodian”.
Confused? You bet. There are provisions throughout the statute for courts to get involved, to direct or prohibit disclosure. And they will. There is a lot potentially at stake, monetarily and emotionally. This new law, and the concepts of legal rights to digital assets and accounts in general, is sure to be hashed out during the coming years.
This is a complicated and intensely personal subject. Some people might not want anyone to have access to every email account, blog or other type of digital asset. However, careful consideration should be given to how digital assets and accounts are to be handled if you become incapacitated or die. The best you can do is prepare for the inevitable, and give clear, written instructions to custodians, and in powers of attorney and wills.
Copyright 2017 Joseph A. Bollhofer, Esq.
Joseph A. Bollhofer is the principal of Joseph A. Bollhofer, P.C., located in St. James, NY, and has been practicing law since 1985 in the areas of elder law, Medicaid, estate and business planning and administration, and real estate. He is also the president of Downstate Title Agency, Inc. His legal advice has appeared several times in Newsday’s “Ask the Expert” column, a weekly feature dedicated to elder law and estate planning issues. He is a member of the National Academy of Elder Law Attorneys, and of the Elder Law and Surrogate’s Court Committees of the Suffolk County Bar Association, currently serves as chair of the SCBA’s Real Property Law Committee, and is a member of the Elder Law, Trusts & Estates Law and Real Property Law Sections of the New York State Bar Association. He can be reached at email@example.com or 631-584-0100.