In this interview, Suzanne Brown Walsh, chairwoman for the ULC committee that drafted the Uniform Fiduciary Access to Digital Assets Act (UFADAA) offers an inside look into the development of the uniform act and the future of planning for digital assets.
Walsh is an attorney at Cummings & Lockwood LLC in the West Hartford, Connecticut office. She is a highly active member of various estate planning associations and organizations. She chaired the ULC’s drafting Committee on Fiduciary Powers and Access to Digital Assets and has served on other ULC committees.
Historically, estates consisted of real property, cash, jewelry, investments, business equity, etc.—“classic assets”—but we now accumulate digital assets as well. Digital assets include items such as e-mails, blogs, tweets, Facebook posts, text messages, financial or health care account data online, usernames and passwords.
Digital assets pack a lot of value, as evidenced by a recent McAfee survey that shows people on average value their digital assets at over $35,000. Some digital assets are classified as financial assets. For instance, PayPal accounts may contain substantial sums of money, blogs and other online media may create income through advertisements and sponsors or all banking and billing is done online. These assets are includible in determining the overall value of a decedent’s estate, so it is vital for fiduciaries to have access to them during estate administration.
Only nine states have enacted laws governing the management and collection of a deceased individual’s digital assets. More states are looking to enact similar statutes for these assets that people value so highly, but the legislatures need more guidance.
In response to the need for laws directing proper disposition of digital assets upon an individual’s death or incapacity, the Uniform Law Commission (ULC) enacted the Uniform Fiduciary Access to Digital Assets Act (UFADAA) in July 2014. By the end of July, Delaware was the first, and thus far the only, state to enact UFADAA.
Bloomberg BNA: What was the main force behind enacting the UFADAA?
Walsh: There are few state laws governing fiduciary access to digital assets, none at the time were comprehensive, and as a result, problems and litigation were beginning to arise with more frequency.
Bloomberg BNA: What is the most important part of the UFADAA for trustees and personal representatives of estates to be aware of?
Walsh:UFADAA simply facilitates fiduciary access where the account holder’s intent was or is to allow it. So, it’s based on the premise of asset or media neutrality—it allows fiduciaries to access digital assets just as they can access traditional ones, such as paper letters and records.
Bloomberg BNA: What were the most challenging issues to resolve when developing and enacting the law?
Walsh:First, most of the federal and state privacy laws don’t mention fiduciaries, but they preclude custodians of certain electronic records from disclosing them without the account holder’s “lawful consent.” UFADAA specifies when a fiduciary has that lawful consent, allowing the custodian to grant the access without violating the federal Stored Communications Act.
Second, we had to effectuate account holder intent, whether it was to grant access or to preclude it.
Third, we had to ensure that boilerplate Terms of Service agreement (TOSA) provisions could not be inserted that would override UFADAA—an account holder can always opt out of fiduciary access in a TOSA, but he or she must do so knowingly and intentionally.
Bloomberg BNA: Who will benefit most from the UFADAA?
Walsh:Honestly, everyone will. UFADAA provides a clear set of rules governing fiduciary access. If you don’t like the default rules, you can plan around them easily, so it strikes a fair balance.
Bloomberg BNA: What are states most concerned with when deciding whether to adopt this particular type of law?
Walsh: The ACLU raised initial concerns about privacy in two states considering fiduciary access bills, then withdrew them when proponents explained that UFADAA actually protects privacy by expressly allowing an account holder to bar access to his or her digital assets, if desired.
Bloomberg BNA: How does the law reconcile the need for digital asset access for estate purposes and computer fraud statutes that penalize “unauthorized access” such as the federal Computer Fraud and Abuse Act?
Walsh: UFADAA specifies that a fiduciary has authority to access a person’s devices and digital assets. We believe that this is already true, but we added an express provision to eliminate any doubt.
Bloomberg BNA: What does the future hold for the UFADAA and fiduciary access to digital assets?
Walsh: We are hopeful for widespread enactment [by states] within just a few years. In all honesty, I’ve never seen this level of early interest in a uniform act, so we are cautiously optimistic.
Bloomberg BNA: Do you have any other comments regarding the UFADAA or accessing digital assets in general?
Walsh: Yes, it’s important that we all consider our wishes and plan for access to our digital accounts and assets after we are incapable or have died. Otherwise our businesses may fail or lose money, and perhaps most importantly, our digital legacies will vanish, there won’t be any photos at our memorial services and our families will have a more difficult time notifying friends and family members of our illness or death.
By: Sarah Mugmon
Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: How likely are states to adopt their own version of the Uniform Fiduciary Access to Digital Assets Act?
Sign up for a free trial of the Bloomberg BNA Premier State Tax Library and see a detailed discussion on estates, gifts and trusts.
Follow me on Twitter: @SarahM_SALT
Follow us on Twitter: @BBNAtax
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)