Typical estate planning documents do not include provisions for dealing with digital assets. Most people now have computers, mobile phones, data files, online accounts, user names, and passwords.
A Power of Attorney for Digital Assets allows a principal to grant power to an agent to access digital devices, computers, data files, online accounts, and passwords. This allows the agent to act on behalf of the principal, such as when the principal is unavailable, in a hospital or nursing home, or otherwise incapacitated.
Digital Assets Laws
This is a new and developing area of estate planning law. States are beginning to add new laws to deal with these assets. The Uniform Law Commission (ULC) has written the Uniform Fiduciary Access to Digital Assets Act (UFADAA) as model language for states to use, rather than writing new laws. Delaware was the first state to pass a comprehensive digital assets act in July 2014. Some other states have passed limited laws.
In 2016, Colorado enacted the Revised Uniform Fiduciary Access to Digital Assets Act, (RUFADAA), found at CRS 15-1-1501. Other states are also adopting RUFADAA. Check the status of new legislation on your state legislature website.
Service Provider License Agreements
Some service providers have user license agreements that state there is no right of survivorship or transferability or multiple user access for an online account. They may have the right to delete the user account when they are notified of the user’s death, by receiving a certified copy of a death certificate. Or, an account may be deleted or inactivated after a period of inactivity.
Service providers may also specify a choice of law provision, that the user agreement will be under the jurisdiction of the state where the service provider is located, although the user may reside in another state with different laws. This issue also needs to be addressed in state laws to allow a fiduciary to perform authorized duties on behalf of the principal.
If an account is deleted, family members and advisors may lose valuable records and information needed to analyze and wind down the affairs to settle the estate of a deceased loved one or client.
State laws are being written to give rights to fiduciaries to gain authorized access to user accounts, so the fiduciary can act on behalf of a principal who is deceased or incapacitated.
Sample Power of Attorney for Digital Assets
A sample Power of Attorney is available for download below. The sample form grants power to the designated agent, and potential successor agents, to deal with the assets on behalf of the principal.
Other documents are needed to include digital assets in a last will and testament, for final disposition by an executor or personal representative, or in a digital asset trust, for digital asset management and disposition by a trustee, or for a custodian or guardian agreement.
A power of attorney terminates upon the death of the principal, or when it is revoked, so a last will or trust is needed to deal with these assets after the death of the principal. A power of attorney can be durable, continuing in effect during the disability or incapacity of the principal.
A beneficiary agreement may be used to transfer account access and assets to a designated beneficiary upon the death or incapacity of the principal.
Digital Assets Inventory
The sample POA form grants power to the agent to use digital devices, access assets, and manage files and accounts of the principal. A separate Letter of Instructions for Digital Assets or Digital Assets Inventory lists details needed by the agent, such as account numbers, email accounts, websites, user names, passwords, security codes, answers to security questions, etc. The list needs to be updated when information changes.
For security, do not list the passwords on the same paper or computer file with the rest of the account information. Passwords may be kept in a separate secure file, protected by a strong password, or in a fireproof safe, safe deposit box, attorney’s office, or password manager such as LastPass, using two-factor authentication.
1. Power of Attorney for Digital Assets
2. Uniform Fiduciary Access to Digital Assets Act (UFADAA)
3. Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)
4. Digital Assets Inventory Worksheet