Digital Assets
The Basics of Cyberspace Estate Planning.
By Gerry W. Beyer
The 85th Legislature enacted the Texas Revised Uniform Fiduciary
Access to Digital Assets Act as Chapter 2001 of the Estates Code, which
adds clarity to the steps you need to take when planning and
administering estates. This article aims to provide the basic
information you need to be well informed about the cyberspace estate
planning interface.
What terms of art do I
need to know before we start our discussion?
To have a common ground for discussing the Texas Revised Uniform
Fiduciary Access to Digital Assets Act, or TRUFADAA, you need to know
the definitions of several key terms of art.
Digital assets are electronic records (think binary 1s and
0s) in which a person has a right or interest. Examples include emails;
text messages; photos; digital music and video; word processing
documents; social media accounts (e.g., Facebook, LinkedIn, Twitter);
online financial, utility, credit card, and loan accounts; and gaming
avatars.1
A fiduciary means a personal representative of an estate
(executor or administrator), an agent under a non-medical power of
attorney, a guardian of an estate, and a trustee of a
trust.2
A user is a person who has an account dealing with digital
assets such as the decedent, principal, ward, or
trustee.3
The custodian is the person who carries, maintains,
processes, receives, or stores a digital asset (e.g., the user’s email
provider such as Yahoo, Google, or Suddenlink; the hosts of the user’s
social media accounts such as Facebook or LinkedIn; and the user’s
financial accounts maintained online in banks, brokerage firms, utility
providers, credit card issuers, and mortgage companies).4
Why does a fiduciary care about the digital
assets of the person represented?
There are many reasons why a fiduciary would desire access to the
user’s digital assets.
(1) Many people forego paper statements for financial accounts such as
bank accounts, retirement accounts, and brokerage accounts. A personal
representative may seek access to the contents of the decedent’s email
messages to ascertain where these accounts are located and to gain the
information necessary to complete the estate inventory, pay bills, and
distribute the funds appropriately. Likewise, an agent or guardian may
need this information for similar purposes.
(2) Many people forego paper statements for utilities, credit cards,
car loans, and home mortgages. The fiduciary may need to give notice to
and pay these creditors and thus needs to be able to access email
messages to determine the names of the creditors and the amounts
owed.
(3) Some digital assets like domain names, customer lists,
manuscripts, and compositions may have significant economic value. The
personal representative needs to have access to these assets for
management, inventory, and distribution purposes.
(4) Some digital assets like family photos and videos do not have
monetary value but they have great sentimental value and need to be
preserved or transferred to the proper heirs or beneficiaries.
Does it matter when the decedent died, the
power of attorney, will, or trust executed, or guardianship
opened?
No. TRUFADAA applies to a fiduciary regardless of when the decedent
died, the power of attorney or will executed, the guardianship
commenced, or the trust created.5
How is priority for access to a decedent’s digital assets
determined?
First priority is given to the user’s instructions using the
custodian’s online tool, that is, the custodian’s service that allows
the user to provide directions for disclosure (or nondisclosure) of
digital assets to a third person.6 Examples include Google’s
Inactive Account Manager and Facebook’s Legacy Contact.
Second priority is given to the user’s instructions in the user’s
will, power of attorney, or trust.7
If the user has not provided instructions through an online tool or
other writing or electronic record, then the service provider’s terms of
service agreement (the “I agree” button) will govern the rights of the
decedent’s personal representative. Typically, these provisions will
prohibit access by third parties.
Is there
anything special about “access” that I need to know?
Yes! There is a major difference between two types of access. The
first type is access to the contents of electronic communications, which
refers to the substance or meaning of the communication such as the
subject line and text of email messages.
The second type of access encompasses both the catalogue of electronic
communications (e.g., the name of sender, the email address of the
sender, and the date and time of the message but not the
subject line or the content), and other digital assets (e.g., photos,
videos, material stored on the user’s computer, etc.).
I am drafting a client’s will. How do I proceed with regard
to digital assets?
You need to address digital assets from two perspectives. First, you
need to ascertain if your client owns any digital assets that are
transferable upon death. If so, you need to determine whom your client
wants to receive them just as you would any other type of property. If
you do not make a specific gift of digital assets, they will pass under
the residuary clause.
Second, you need to find out your client’s desires regarding the
executor reading the substance of email messages, texts, and private
social media postings. If your client wants the executor to have this
access, express language granting access must be included in the
will.
I am drafting a client’s durable
power of attorney for property. How do I proceed with regard to digital
assets?
You should ask whether the client wants the principal to have access
to contents of electronic communications and/or the catalogue of those
communications and other digital assets. Under the statutory durable
power of attorney form (power “N”), the agent will have full access to
digital assets including contents.8 If this is not the
principal’s intent, the principal should not initial powers “N” or “O”
(the power that grants all powers listed on the form). The principal may
also cross out clause “N.” If the principal wishes to grant partial
access, you should include appropriate language in the “special
instructions” section.
I am applying to the
court for my client to be appointed as the guardian of the estate of a
ward. How do I proceed with regard to digital assets?
Access to digital assets is not automatically granted to a guardian by
virtue of the fact that the person is appointed as a guardian. If there
is a hearing on the matter, a court may grant a guardian complete access
to the ward’s digital assets.9 Without a hearing, a guardian
may obtain access to the catalogue and digital assets other than the
content of electronic communications but a court order is still
required.10
I am the executor of a decedent’s estate. How do I get access
to the contents of the decedent’s electronic
communications?
Section 2001.101(a) enumerates what you need to provide to the
custodian to obtain access to the contents of electronic communications.
The custodian will also have the right to request additional information
and even court findings under § 2001.101(b). If the deceased user did
not consent to the disclosure of contents (e.g., no express language in
the will or died intestate), you will not be able to obtain access to
the contents.
I am the executor of a
decedent’s estate. How do I get access to the catalogue of decedent’s
electronic communications and other digital assets?
Unless prohibited by the user or court order, the personal
representative is granted access to the catalogue and digital assets
other than the content by default upon providing the custodian with the
specified required documentation.11
Is there a practical problem for a personal representative to
gain access to a decedent’s digital assets?
Yes! The ability of a custodian to request a court order under any
circumstance makes access very burdensome for personal representatives
as well as the courts. This author has heard from custodian
representatives that they will always require a court order for
fear of liability for improper disclosure.
Because of the likelihood that a custodian will require a court order
before granting access, include the appropriate language in the earliest
possible pleading in the administration of the estate of a deceased user
such as the application for an independent administration, determination
of heirship, or admission of a will as a muniment of title. (Note: It is
uncertain how judges will react to being asked to make these findings in
these proceedings.)
I am an agent for a principal. How do I get access to the
principal’s digital assets communications?
The rules for agents under powers of attorney are similar to those for
personal representatives of decedents’ estates and are detailed in §
2001.131 (contents) and § 2001.132 (catalogue and other digital
assets).
I am a trustee. How do I obtain
access to digital assets?
If the trustee is the original user, meaning that the trustee, in his
or her capacity as the trustee, opened an online account or procured a
digital asset, the custodian must provide the trustee with all content,
catalogues, and digital assets of the trust under § 2001.151. If the
trustee is not the original user (for example, a settlor has a digital
asset and then transfers it to a trust, either during life or at death),
then different rules apply based on whether the trustee is requesting
content or non-content material.12
How long does the custodian have to comply with my disclosure
request?
The custodian must comply with a request to disclose not later than 60
days after receipt of a proper request along with the required
documentation.13
If the user is
alive, will the custodian notify the user of my request?
The custodian may, but is not required to, notify the user, e.g., the
principal or ward, that a fiduciary made a disclosure
request.14
The custodian may properly deny a disclosure request if the custodian
is aware of any lawful access to the account following the receipt of
the request. Thus, if the principal or ward is still using the account,
the custodian may properly deny your request for
access.15
How does a custodian
disclose the information I requested?
The custodian may grant disclosure completely or partially in writing
or electronically, charge a reasonable fee, and even refuse if the
request imposes an undue burden.16
What if the custodian ignores my request or refuses to
disclose?
If the custodian does not disclose, the fiduciary may apply to the
court for an order directing compliance.17
Once I obtain access, what fiduciary duties do I have with
regard to the information?
The legal duties imposed on the fiduciary normally also apply to
digital assets such as the duty of care, loyalty, and
confidentiality.18
Once I obtain
proper access, am I treated as an authorized user under the
law?
Yes. A fiduciary acting within the scope of the fiduciary’s duties is
deemed an authorized user “for the purpose of applicable computer fraud
and unauthorized computer access laws, including all laws of [Texas]
governing unauthorized computer access.”19
Where can I get more information about TRUFADAA?
Comments to the Uniform Act are found at uniformlaws.org and a more detailed
discussion with sample language for documents is available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2166422.TBJ
GERRY W. BEYER
is the Governor Preston E. Smith Regents Professor of Law at Texas
Tech University School of Law where he teaches courses dealing with
wills and trusts, estate planning, estate administration, and property.
He is the editor-in-chief of the REPTL Reporter, the quarterly
publication of the Real Estate, Probate, and Trust Law Section of the
State Bar of Texas.