Digital Assets in California

Estate Planning, Schlau|Rogers, Your Smarter Estate Plan, Digital Assets in California, Matthew Schlau, Orange County Estate Planning Attorney Lawyer

Digital Assets in California

California enacted AB-691, Revised Uniform Fiduciary Access to Digital Assets Act in 2016, and the law just took effect in January 2017, meaning there are now particular guidelines when it comes to digital asset planning in California.

Key Takeaways

In today’s world, doing things online is commonplace. We have social media that has become as ubiquitous as email – perhaps even more so in recent years. With Twitter, Facebook, Instagram, LinkedIn, Google +, etc., more and more people are using social media as their first means of connecting with friends, family and colleagues.

Then there is online banking and shopping. With the advent of Amazon Prime and Amazon Now, we really can get everything done with our computers and smartphones, all at the touch of a button. Want organic milk delivered to your door? Check. Want the Beatles to play on your home speakers? Check. Want to check your bank account balance and FICO score? Check. Baseball tickets? Check. Dinner reservations? Check. There really is an endless amount of possibilities.

But what does mean for your estate plan? Well, remember when you signed up for these online accounts? When you had to offer an email address, and some other personal, identifying information? When you uploaded ten thousand photos? Downloaded 20,000 iTunes songs? These accounts, and the personal information that comes along with them, are your digital assets.

Whether digital assets are transferrable is usually governed by individual Terms of Service Agreements.
— The Schlau|Rogers Team

According to federal law, digital assets are electronic records in which a person has a right or interest. There are various categories, like those mentioned above, including devices and data, electronic mail, online accounts, financial accounts and business accounts. For the most part, these assets are not inheritable as the websites that grant you access are technically only providing you a license to use their services. Whether items are transferrable is usually governed by individual Terms of Service Agreements. This means your iTunes songs may not be something you can pass along to your kids. Just ask Bruce Willis.

Yet, an American will have about $55,000 of value in digital assets. This means there is definitely some value in accounting for your digital assets when you’re designing an estate plan. But as these assets are inherently different than the other assets that make up your estate, there are particular issues that come along with them. These include access to accounts with passwords and the right to “break in” upon a person’s incapacity or death, and control – are these assets inheritable or transferrable?

For now, there is considerable uncertainty surrounding the possession, and conveyance of, digital assets. There is no uniform law governing digital assets. Federal law has provided guidance in the Stored Communications Act, along with the Federal Computer Fraud and Abuse Act and the Revised Uniform Fiduciary Access to Digital Assets Act. Various state laws, including those founded in computer fraud and abuse principles, as well as contract and probate law, have also helped.

The truth is, however, that about 70% of people that have a will have not addressed whether they have a digital executor. This means the majority of people will have to succumb to default laws that govern what happens to digital assets at the time of incapacity and death. Depending on your state, this could mean that “privacy” is the default upon your death. Essentially, if you live in a state like this, then your digital assets and accounts are not available to your executors, trustees and trust protectors. Once you are no longer available to access the accounts, they are no longer accessible.

Or, you may live in a state that follows the Revised Uniform Fiduciary Access to Digital Assets Act, which says your fiduciaries do not have default access to your accounts, but can be provided access if the decedent consented to access through proper lifetime planning. California became one of these “opt-in” states as of January 1, 2017. This means, as a resident of California, you can account for digital assets in your estate plan so long as you provide clear consent to disclose your personal information to your fiduciaries at the time of your incapacity or death.

But recognizing this should be your approach is just the first step. What we really have to do is make accessing online documents and communications a top priority in our estate planning, since we seem to be doing more and more things online day by day. A simple second step would be to list out your digital assets and how you access them. We would also encourage you to back up and/or archive this information, with the most important information being backed up in triplicate. The next step should be to include designation for access to this information in wills, trusts, and powers of attorney with the particular language suited to California's newly adopted law. You may also want to consider including language in your documents that would trigger the hiring of someone with technical knowledge to assist in locating and accessing digital assets when the time comes.

Schlau|Rogers can do all this for you and set up a discounted partnership with Docubank to help manage the security of your digital assets. Just another way to make your estate plan smarter. Schedule your strategy session today and get planning.

Matthew Schlau is a co-founding principal of Schlau|Rogers and an estate and business planning lawyer practicing in Orange, San Diego, Los Angeles and Riverside counties. He is a husband, father, blogger, crossfitter, and really good at helping people achieve their goals.

At Schlau|Rogers, we do more than just estate and business planning, probate and trust administration. Our objective is to provide individually-tailored plans that allow you the opportunity to reach your goals, all while minimizing headaches and risk, and maximizing peace of mind.

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