Digital assets and estate planning
Digital assets are non –physical assets which are stored or kept online. These days most people prefer to keep their assets online for various reasons. These assets could be digital photos, digital video files, documents, social medial accounts, digital currencies like crypto currencies, stocks, etc. these forms of assets could be stored in digital form to cloud storages, social media accounts, brokerage accounts etc. nowadays digital assets form a greater percentage of most people’s assets. As the world of technology is growing and expanding by the day, in recent times, majority of our daily activities are either done online or stored online.
It is not surprising that as the world of tech is advancing, cybercrime is developing and advancing alongside. Hackers are constantly hacking into victim’s online accounts to steal either information or even digital currencies. They are constantly deriving new methods of cyber theft. Issues of cyber insecurity are a big risk to persons who have most of their assets in digital form. These persons seek attorneys who will help them safeguard their digital assets and also help them handle the legal framework that controls digital assets.
There are legal bindings which protects digital assets from cyber criminals. For instance;
- The Computer Fraud and Abuse Act (CFAA). This act provides protection for digital accounts by criminalizing the intentional access of a computer system without authorization.
- The Stored Communication Act (SCA) this act provides protection for digital assets by prohibiting unauthorized intentional access to electronic communication.
Violation of either of these laws could attract a jail time and payment of fine. Some states adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This act grants access of client’s fiduciaries like the executors, power of attorney, trustee, guardians, etc. to the client’s digital assets in the case of incapacitation or death.
The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)
The RUFADAA is very useful as it makes it easy to access a client’s digital property. Without this act, accessing these assets would have been another ball game entirely. Some kind of digital assets which are unmonitored like those stored unto cloud are easily hijacked by cyber criminals.
Before enacting the RUFADAA, it was impossible for heirs to gain access to the digital assets of their loved ones. The RUFADAA made provisions via three tires in order to proffer solution to this problem.
RUFADAA TIER ONE – “ONLINE TOOLS”: RUFADAA TIER ONE online tools allows a user to provide information how their digital assets will be managed when they die or in the case of incapacitation. The user’s instructions will have priority over any and all other instructions, including Terms of Service (as long as that online tool can still be modified or deleted at any time).
RUFADAA TIER TWO – LEGAL DOCUMENTS: The second tire of the RUFADAA makes provision for a situation where by a user does not provide instructions using the online tool. In this case, the users’ legal documents, such as a will, trust, or power of attorney will be considered. Such documents can be used to explicitly grant a fiduciary access to any or all digital access or to restrict such access.
TIER THREE – TERMS-OF-SERVICE AGREEMENTS: This tire of RUFADAA provides that if it happens that the user does not provide online instructions via online tool (RUFADAA TIER ONE) neither did the user give specifications concerning his digital assets in his traditional legal document (RUFADAA TIER TWO – LEGAL DOCUMENTS) then the custodian of the account will determine who will have access to the account and who wouldn’t depending on the custodians terms of service.
Roles of estate planning attorneys in safeguarding digital assets
Estate planning attorneys can assist in safeguarding the digital assets of their clients in various ways. Estate planning attorneys can advise their clients to create a memorandum that;
- List their digital assets
- Provide assessment information of each of this digital asset
- Passwords to digital accounts should be stored in safe places.
- Estate planning attorneys should also assist their clients in ensuring that their clients provide detailed information in their estate planning documents as to how their heirs can access their digital assets in the case of incapacitation or death.
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