WHAT ARE DIGITAL ASSETS?

Digital assets typically exist only in electronic form and may have monetary value. As executor, you should keep an eye open for evidence of these assets when inspecting a decedent's electronic devices or online storage accounts.

Digital assets can extend to ownership of websites, blogs, video and virtual characters (avatars). There might be domain names the decedent registered but never used. The decedent might have written books, plays or screenplays that were never published or published only online.

We have come to rely on the silicon chip to help us complete even the most difficult task in almost no time at all. Yet sometimes technology can have a different effect, making a time-consuming task even more demanding. That's the case for some estate administrators and executors today. Here's why:

  • Until recently an executor searching for important documents would look in a decedent's filing cabinet, personal safe or bank vault. But now that storing papers in digital form is commonplace, that search might need to include laptops, flash drives and smart devices as well as email accounts, online storage accounts and financial services accounts.
  • Many forms of digital storage cannot be accessed without a user's personal ID and password. If a testator fails to provide the necessary access codes, an executor may be unable to retrieve important documents.
  • Most state legislatures (and many online service providers) have been slow to address the issues of access to a decedent's digital assets. As a result, executors may be unsure of their legal rights and responsibilities.
  • A testator might nominate not only a traditional estate executor but also a digital executor โ€” someone who is tech savvy. This is a new and evolving role whose authority and legal standing are unclear. Moreover, problems can arise if a digital executor acts counter to the estate executor's instructions.

WHAT TO FIND

As an executor, you will need to locate important documents that name a decedent's beneficiaries and show what the person owed and owned. While all these documents can be stored electronically, some states accept only signed original copies of certain documents. You should look for:

  • Last will and testament
  • Financial statements from banks, brokerage firms and credit card companies
  • Proof of ownership of homes, automobiles, boats, planes
  • Recent tax returns
  • Other important documents

WHAT TO DO: PART A (BEFORE TESTATOR PASSES AWAY)

If the testator is still alive, these steps could save you headaches later.

  • Make sure the testator has stored all important documents in a location known to you.
  • Make sure you can access that location.
  • For paper documents, that may mean knowing a combination to a safe or the location of a key to a filing cabinet or safety deposit box.
  • In the case of digital documentation, it will likely mean knowing the online providers and obtaining an inventory of digital assets.

WHAT IS A DIGITAL EXECUTOR?

As a sign of the times, some testators pick not only a traditional estate executor but also a digital executor โ€” someone with enough tech savvy to deal with the technological side of estate administration. A digital executor should:

  • Be aware that this is a fairly new role, one whose authority and legal standing are as yet untested.
  • Act only with the approval of, and in accordance with any instructions from, the estate executor, who should have final say in all matters related to the estate.
  • Be familiar with state laws, so far as they exist, relating to third-party access to digital accounts.
  • Understand the terms of service established by email and other online account providers.
  • Terminate automatic bank payments, where possible, as well as close email, social networking, digital storage and shopping accounts, as appropriate.
  • Archive digital content such as photos, videos and websites.
  • Send a death notification to people in the decedent's digital address book.

WHAT TO DO: PART B (AFTER TESTATOR HAS PASSED AWAY)

If the testator died without leaving working access codes, you may still be able to get into some digital storage areas. Note that doing so may require technological know-how or legal proof of your role as executor.

  • Gather documents such as death certificate and certificate of appointment (or other documents appointing you as executor), as well as a court order granting you access to certain online accounts.
  • Take the computer or other electronic device to an expert in electronic access. Request the transfer of data to a DVD or other format. The expert will probably require the legal documentation you compiled earlier.
  • Contact the online service provider(s) and request access. Again, you will probably need to provide proof of your role.

WHERE TO LOOK

If the testator stored important documents but did not tell you where, you will need to search for paper copies or digital copies or a combination of both types.

  • Physical storage: Home office, filing cabinet, desk, safe, safety deposit box, with legal or accounting firms.
  • Device storage: Computer, external hard drive, thumb drive, tablet device, smart phone or DVD.
  • Online storage: Email accounts, financial services websites, digital storage sites.

LEGAL CONSIDERATIONS

As an executor, you should be familiar with the fiduciary laws of the state in which the estate will be administered. Notably, several states have begun to address issues related to a decedent's digital assets.

The Revised Uniform Fiduciary Access to Digital Assets Act (Revised UFADAA) modernizes fiduciary law for the Internet age. Fiduciaries are the people appointed to manage our property when we die or lose the capacity to manage it ourselves. Nearly everyone today has digital assets, such as documents, photographs, email, and social media accounts, and fiduciaries are often prevented from accessing those accounts by password protection or restrictive terms of service. Digital assets may have real value, both monetary and sentimental, but they also present novel privacy concerns. UFADAA provides legal authority for fiduciaries to manage digital assets in accordance with the user's estate plan, while protecting a user's private communications from unwarranted disclosure. UFADAA has been adopted by about 60 percent of the states as of this publication date.

Some estate executors hire a corporate agent to act on behalf of the executor or co-executor. By doing so you should be able to avoid having to deal personally with many of these complex issues.

LAWS AND CODES

Clearly, estate law has a long way to go to catch up with estate administration in the digital era โ€” and may always be a step or two behind. Yet states should at least begin to address more thoroughly the legal standing of estate executors and digital executors. Meanwhile, testators can make their executors' roles somewhat easier by supplying the location and updated access codes for all their important digital documents. Executors should also consider using estate funds to hire a corporate agent for executor to handle a very difficult task.


This publication is designed to provide general information about ideas and strategies. It is for discussion purposes only, since the availability and effectiveness of any strategy are dependent upon your individual facts and circumstances. Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

U.S. Trust operates through Bank of America, N.A., and other subsidiaries of Bank of America Corporation.

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