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Estate Planning – Are Your Digital Assets Protected?

Prof. Michael Yu

For most people, estate planning is organizing what happens to your tangible assets after you die—your house, your car, your art collection, and other such valuables.

But what about your social media accounts, Dropbox, online banking or business accounts, PayPal and more— what happens to these? Under California law, they are all defined as digital assets.

How would your fiduciary gain access, change, protect, or download these digital assets after you die? California Western’s Prof. Michael Yu discussed these issues and others in a recent presentation to the North County Bar Association covering the California Revised Uniform Fiduciary Access to Digital Assets Act.

“A digital asset is defined as an electronic record in which an individual has a right or interest,” says Prof. Yu. “This can include financial accounts, business accounts like client files, investment accounts, cryptocurrencies, and most stored data including photos and emails.”

Prof. Yu stresses that the scope of digital assets goes much further than most people imagine and including these assets in estate planning is critical to avoid identity theft, fraud, and other breaches of cybersecurity.

“California law is now providing guidance on how a person can, while they are still alive, provide in their will or trust who should get access to their digital assets after they die,” says Prof. Yu.

The California Revised Uniform Fiduciary Access to Digital Assets Act became law in September of 2016 and enables an individual to name, in the individual’s will or trust, a personal representative or trustee to access and manage digital assets and electronic communications.”

"California provides a three-tier method a digital asset owner can use while living to ensure those assets are protected and handled in the way the digital asset owner would want after that owner's death," says Prof. Yu.

Tier one is using the tool provided by the online custodian if available. For example, Facebook has Legacy Contact, which allows a person of your choice to look after your account if it's memorialized.

“If, however, an online custodian does not provide for some kind of online tool within its program, or if an individual has not used an available online tool, then, as tier two, California law enables digital asset owners while they are living to use a will or trust to provide direction on how they would like their digital assets to be accessed for use or even not used after they die,” continues Prof. Yu.

If neither tier one nor two is chosen, then tier three provides that management of those digital assets defaults to the terms of service that were in use when the person signed up with that online custodian.

“Some lawyers say that people should consider having different fiduciaries for different kinds of digital assets,” says Prof. Yu. “For example, if you have business client files or client data you might have someone who's related to your business as a fiduciary for those digital assets. Likewise, as to your personal photos, your fiduciary might be a close family member.”

According to Prof. Yu, this new California law provides more guidance than had been existing before.

Previous laws had either been seen as too pro-business, too pro-online custodian or been recognized as too pro-owner, so this law was created pursuant to a sort of compromise among the online custodians and those groups that were advocating for individual digital asset owners’ (and their fiduciaries’) rights.

“California law now provides ways for fiduciaries to enforce their rights to access digital assets, and it’s worth remembering,” warns Prof. Yu, “the general terms of service that govern many digital assets tend to be very restrictive.”

“The takeaways,” says Prof. Yu, “is that people who want to direct control of their digital assets after their deaths, should use tier two and make it part of their estate planning.”