CY(D)A – Covering Your Digital Assets

Have you considered what happens to your digital accounts - and their value – if you become incapacitated or pass away? If you haven’t named a Legacy Contact for your online assets, your heirs could experience a costly problem.

What are Digital Assets?

Digital assets include any digital item that you own that has personal or financial value. The digital items are distinct from the physical hardware (ex., computer, iPad, mobile phone) on which the electronic data is stored. Common examples include:

• Cryptocurrency and non-fungible tokens
• Digital photographs and videos
• Electronically stored files and records
• Email and social media accounts
• Online bank accounts and mobile payment accounts (ex., PayPal or Venmo)
• Cloud storage accounts (ex., iCloud or Dropbox)
• Login credentials for accounts (including accounts with access to frequent flyer miles, credit card rewards, or digital gift cards)

Why It Matters?

If an heir is unable to access digital accounts with financial value, those assets - and any financial gain - may be permanently lost. Personal digital items, such as photos or videos, could be inaccessible, erasing years of memories. There is also the practical matter that an executor may need access to the mobile platform to manage affairs or to cancel accounts or unwanted subscriptions.

How do you know if you will be able to get into your loved one’s accounts?

Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)

Before 2015, access to digital accounts was controlled almost entirely by service provider account agreements. With the adoption of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), most states now follow a standardized legal framework for determining who can access accounts when the owner is unable.

Good news for those of us who click “Accept” without reading the terms of service!

RUFADAA establishes a clear priority order for account access.

1. Legacy Contact. First priority is given to designations made through custodians’ online Legacy Tools. Facebook, Apple, and Google all allow an account owner to name a Legacy Contact, which is the person who will be able to access your online assets if you are incapacitated or die. The designation overrides all other instructions – even those in a will. Reviewing these settings regularly helps ensure they still reflect your wishes.
   
   
2. Estate Documents. The next priority for access is provided through estate planning documents. Most recent wills, trusts, and powers of attorney include sections dedicated to digital assets. Prior to the adoption of RUFADAA, online custodians had to balance privacy protection with fiduciary access; they could reject documents out of concern that they might not be current. If your estate planning documents lack specific language regarding digital assets, you should discuss with your attorney the appropriate timeframe for updating them.
   
   
3. Service Terms. If Legacy Tools or formal estate planning documents do not exist, the custodian’s terms of service will dictate a fiduciary’s access. The worst-case scenario with relying on the service terms is when service providers terminate accounts upon a user’s death. This can be problematic for an executor who is monitoring online statements for account numbers and unpaid bills. The executor could also lose the ability to download treasured photos, blog entries, or personal documents.
   
   

Summary

Despite the amount of information we store digitally, many people have not taken steps to ensure smooth access to their online accounts for executors or loved ones. RUFADAA provides users and custodians clarity regarding account access priority following incapacitation or death. Using Legacy Tools and having estate planning documents in place helps ensure your financial and sentimental valuables are obtainable.

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