Introduction
The ever increasing reliance on technology has led us to create a more digital presence. Such a digital presence in certain instances may be treated as property and therefore be subject to succession laws. Digital assets can be defined as information in the electronic form which could be either stored online or on any electronic device. RUFADAA (as defined hereunder) defines digital assets as “an electronic record in which an individual has a right or interest”. This may include online communications, media, digital files stores on a computer, domain names, etc. Therefore virtual assets in the form of cryptocurrencies shall also be treated as digital assets since they are stored electronically.
In order to address the issue of inheritance of digital assets, the Uniform Law Commission (‘ULC’) of the United States introduced Uniform Fiduciary Access to Digital Assets Act (‘UFADAA’) in 2014. UFADAA was revised after receiving certain criticism for not addressing the privacy issue and was later enacted as Revised UFADAA (‘RUFADAA’) in 2015.
Features of UFADAA AND RUFADAA
Fiduciaries are authorised users
A fiduciary is the estate administrator of the user. Therefore, in order to deal with the estate post user’s death or incapacity, the fiduciary shall need access to all the assets including the digital assets. Section 15 of RUFADAA states that such a fiduciary shall be treated as an “authorised” user of the property. Therefore, a fiduciary is treated as “authorised” for the purpose of state laws criminalising unauthorised access or fraud or digital identity theft.
Hierarchy for Overriding Effect
Under UFADAA, its provisions were given an overriding effect over the terms of service of such internet service providers (‘ISPs’) on the basis that contract terms of service were against the public policy. However, RUFADAA changes this position and provides for a hierarchy of authority.
(i) Online tool: The instructions left on the relevant social media or other online platforms take priority in dealing with such assets. For example, Facebook allows users to choose a legacy contact. Such legacy contact will be able to put a memorial post pinned on the top of the profile and will have access to the photos and videos uploaded online. However, legacy contact will not be able to view private chats. Similarly, Google provides for choosing an inactivate account manager, where if a user has been inactivate for a specific period and there has been no associated activity, such a trusted account manager will receive a notification along with a pre-specified message as may be written by the user. User may also permit access to certain data which may be downloaded by such inactivate account manager. Therefore inheritance of digital documents will take place as per such online tools available.
(ii) Legal Documents such as Wills: In situations where such online tools are either not available or if the user fails to choose a legacy contact, access will be granted as specified in legal documents which may be in the form of a will.
(iii) Terms of Service: In the instances where the user has not addressed digital assets in a will, terms of service of each online ISP shall be applicable. Therefore, even if such terms of service providers for a non-transferable right, such digital data may not be transferred for the purpose of estate devolution.
Access to Required Information
RUFADAA specifies that the fiduciary shall not have access to information like the online email communications unless the user has provided specific consent in this regard. Under the earlier version UFADAA, default access to fiduciaries was given to deal with it as a property. However, the revision ensures privacy. Such fiduciaries shall still be able to access the catalogue of the emails which will contain the sender and the receiver of the emails, which may be sufficient for the estate planner to inform himself about other related accounts with the company, which he may need to approach to shut such accounts.
Involvement of Court
Further, RUFADAA states that the fiduciaries may access the digital assets after they petition the courts with supporting reasons. The custodians may refuse access to such digital assets by fiduciaries unless the courts determine that such access is ‘legal’ and ‘necessary’. The position taken earlier under UFADAA was that the custodians must grant access to the fiduciaries when they request such access.
Modes of Access
Section 6 of RUFADAA allows the custodians with 3 (three) options to provide access to the fiduciaries:
(i) access the full account of the user;
(ii) access partly as sufficient to perform the task as a fiduciary; and
(iii) “data dump” of all digital assets held in the user’s account.
As per the earlier position under UFADAA, the mode of ‘access’ was not provided, however, it can be construed as granting full access by proving the login information to the fiduciary. Under RUFADAA, a data dump is likely to take more time since collecting all of the digital assets of the user which are available may be a cumbersome process for the custodian.
BlockSuits Comments
Since digital assets are not tangible, quite often than not, they are overlooked. However, considering that in a dot com era, most businesses are built online, it was imperative to include such assets in estate planning, which otherwise would leave many assets unaccounted for. It would, however, be unfair to compare the tangible assets with the digital assets and make digital assets subject to the same regulations considering that right to privacy is a fundamental right which cannot be waived. For estate planning, the applicability of such rights post demise of the user is considered. The United States of America has indeed been one of the first few jurisdictions to have recognised such a right.
UFADAA faced opposition from the tech companies because it undermined one’s right of privacy which was the basis of providing such services in the first place. However, RUFADAA has amended the position to address privacy concerns and make one aware of the succession options.
With respect to assets such as cryptocurrencies, in many instances, the fiduciaries may not even be aware of possession of cryptocurrencies. In order to effectively dispose of such assets as per the will, the fiduciary shall require access to the private key. Such privacy key is confidential since whoever knows the private key can dispose of such assets.
The Massachusetts Supreme Judicial Court, in the matter of Ajemian v. Yahoo!, Inc., [84 N.E.3d 766 (Mass. 2017)] determined whether the successors should be allowed to access the contents of emails. In this case, the siblings requested access to the emails for the purpose of memorial service and to identify the deceased’s assets. Yahoo’s defence was based on the provisions of the Stored Communications Act (SCA) and stated that unless the consented by the user, the contents of the emails could not be disclosed. However, the court ruled that this rule does not apply to personal representatives. The principle laid down in this case law is contrary to RUFADAA which states that access to online communications shall not be given unless there is a specific consent given by the user.
Authored by Shivani Agarwal, Founder, and Samaksh Khanna, Co-founder, BlockSuits.
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