This is first part of an updated series on Digital Assets, which we hope will be helpful as the things we purchase and memories we store are more and more intertwined with technology.
Part I: What is a Digital Asset, and Why Should I Care?
It has been a few years since the passage of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). What’s remarkable about this is that, for the first time, property law recognizes the existence of digital property as a right that can be managed, conserved, and, in certain circumstances, accessed by third parties. This puts digital assets on a more even level with real and tangible property.
It’s important to note that it is now up to states to adopt this, as property and estate law are state-regulated. According to the National Conference of State Legislatures (NCSL), 48 states – including Maine, New Hampshire, and Vermont – plus the U.S. Virgin Islands have some form of law addressing the transfer of digital assets after death. Meanwhile, Massachusetts legislators have attempted for several years to push through RUFADAA (most recently in 2021), although the measure always seems to need more study first.
A digital asset as defined by RUFADAA is an electronic record in which an individual has a right or interest. These assets are held in online accounts, which is generally controlled by a “terms-of-service agreement in which a custodian carries, maintains, processes, receives, or stores a digital asset of the user or provides goods or services to the user.” This can include information stored on an individual’s digital devices, content uploaded to websites, and rights in digital property. Digital assets can include accounts, documents, information, records, and photos that are accessible primarily through the user’s electronic device.
You may be thinking, so what? Why do I care about this digital property?
Think about those long “Terms of Service Agreements” most of us never read and just simply click “I Agree” so we can get on with enjoying whatever benefits are offered by the site/software. Without planning around these assets, the unread agreement can be in the driver’s seat, which will usually end access to the digital asset upon the user’s death. In fact, in a RUFADAA state, digital asset custodians are prohibited from disclosing a digital asset to a someone unless the user has consented to the disclosure.
Many of us are now taking photos exclusively with our smart phones and storing them in the cloud. What happens if you unexpectedly pass away and your family (a) doesn’t have your log-in info, and (b) the site administrator doesn’t allow access to anyone but the person who opened the account as per their agreement? Those snapshots of memories may be lost forever. What about the digital music library that you’ve spent years accumulating? The following list may help to put the importance of this in a bit more perspective: email, social media, blogs, cryptocurrency, photos and videos posted on sites or stored in the “cloud”, reward programs/points (hotel, airline, etc.), media subscription accounts (iTunes, Spotify, Netflix, newspapers, magazines, etc.), calendar, contacts, text messages, and documents stored on a device’s hard drive.
As we look ahead to next month’s blog, you may want to start by taking an inventory of all your digital assets and identify your goal(s) regarding these assets during your lifetime and afterwards.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.