Illinois Enacts Law Governing the Disposition of Digital Assets

It’s that time of year again.  There’s a chill in the air, the Christmas music is playing and decorations line the streets. It can only mean one thing – it’s time to review your estate plan.

The holiday season is the perfect time to review your estate plan, as you reconnect with friends and family and recount the changes that occurred over the past year.  Whether you’ve acquired new assets, sold off some property or welcomed a new family member into the fold, any significant life change must be accounted for in your estate plan.  As you review your plan this year, one question you may need to consider is whether you’ve included your digital assets in your planning documents.

In August, 2016, the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA” or “the Act”) was enacted in Illinois.  It defines a digital asset as “an electronic record in which an individual has a right or interest.  The term does not include an underlying asset or liability unless the asset or liability is itself an electronic record.”

Those pictures you have saved on your Facebook profile?  They’re digital assets.  So is your online music collection, your emails, files in your cloud, online gaming avatar, PayPal account and your online bank statements and automatic payment instructions. The list goes on. The Act was designed to deal with confusion that often arose when a person died without leaving instructions on how to distribute or dispose of their online property – or the passwords necessary to access their accounts.  Without any such direction, internet service providers relied upon the terms-of-service (“TOS”) agreements that everyone accepts when signing up for a service, but which no one reads.  In order to protect the privacy interests of its users, these service providers, as custodians of the digital assets, strictly enforced their TOS agreements and often denied or restricted access to family members after their loved ones died or became incapacitated.

Under RUFADAA, a user may direct a custodian (e.g., Facebook, Google, your bank, etc.) to disclose their digital assets to a designated person, or fiduciary, using an “online tool.”  (Currently, Facebook’s “Legacy Contact” and Google’s “Inactive Account Manager” are the only such online tools.)  If an online tool has not been utilized, a user may allow or prohibit the disclosure of digital assets in a will, trust, power of attorney or other record.  Both methods of direction will override a contrary provision in a service provider’s TOS agreement.  In the absence of any such direction, a custodian’s rights will survive a user’s death or incapacity.

Of course, in today’s online world, there are many websites with which we interact.  And if you’re prudent, you likely have strong and varied passwords for all your accounts.  The Act attempts to strike a balance between giving fiduciaries the legal authority to manage digital assets the same way they manage tangible property while at the same time giving custodians of digital assets the authority to deal with fiduciaries while protecting a user’s wishes and expectation of privacy.  Therefore, in the absence of properly-drafted planning documents, a custodian’s TOS agreement will control what happens to your digital assets when the inevitable occurs.

So, after you finish your shopping this holiday season, give your loved ones one more gift – the gift of an estate plan that will make the administration of your estate as convenient as possible.

 

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