New North Carolina Law Allows Fiduciaries Access to Digital Assets, but Only If …

August 5, 2016

When people die or become incompetent, what happens to their digital assets? Who can legally access their email and handle it properly? Do their social media accounts remain forever open, accepting content and sending messages about the decedents? How do their executors identify their digital assets, value them and ultimately distribute them to the rightful heirs?

Until recently, there were no easy or practical answers to these questions. Digital assets are controlled by their terms of service, in the original contract created when someone sets up a digital account — the contract people seldom read but passively finalize just by clicking “I accept.” Those contracts generally protect privacy, not allowing legal access to others, while not dealing with death or other life events that would prevent an individual from controlling his own digital assets. 

This summer, North Carolina joined the majority of states in considering this problem, and enacted the Revised Uniform Fiduciary Access to Digital Assets Act (Session Law 2016-53) allowing North Carolinians to determine who can, or cannot, access their digital assets. Based on the individual’s decisions, fiduciaries can now access the individual’s digital assets to handle them appropriately. Those fiduciaries include executors, agents, trustees and guardians.

Specifically, North Carolinians can provide directions in their wills, powers of attorney, trusts or other records telling digital asset custodians to disclose (or not disclose) their digital assets to their fiduciaries. Importantly, individuals can use online tools for each of their digital assets, where available, to direct their digital asset custodians on handling their digital assets under various circumstances, such as death, or to designate who has various powers over their digital assets, known as a designated recipient. Under the new law, the online tools actually take precedence over instructions in a will, power of attorney or other such legal document.

If an individual has not specifically consented to allow his fiduciaries to access his digital assets, then his fiduciaries may still be able to access the catalogue for digital assets — for example, the “to/from” lines on emails, though this access may still require additional information and even court findings. Access to the content (substance) of digital assets is more difficult to obtain and is allowed only if the individual consented via an online tool, will or other legal document. Even then, the custodian may require further evidence and court findings before granting access. With proper evidence, fiduciaries can also terminate digital accounts.

Once the fiduciary provides the required information, the custodian has 60 days to give access, either as actual access or a “data dump,” and may charge for this service. Custodians do not need to disclose digital assets deleted by the actual user.

This new law puts the burden on individuals to direct who can access their digital assets, either through an online tool or in their legal documents. As a compromise between estate planners, who wanted automatic access to all digital assets, and the digital providers requiring more privacy safeguards (and arguably protection for themselves), the law is not a complete cure for the problems with digital assets. Still, it greatly improves the situation surrounding digital assets and fiduciaries needing access to them.

The most important point of the new law is that people need to use online tools, which digital custodians are increasingly providing, to give directions on how they want their digital assets handled, overcoming those original terms of service no one reads. Further, people should complement use of the online tools with instructions in their wills, powers of attorney, trusts and other documents, saying how to handle digital assets after death or incompetency, and specifying who can access those digital assets.

Digital assets live forever. People don’t. This new North Carolina law helps solve the associated problems, but only if people heed the law’s provisions.

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