New Jersey recently enacted the Uniform Fiduciary Access to Digital Assets Act (the “Act”).  See the Act here.  In general, the Act provides executors, trustees, guardians, and power of attorney holders (“fiduciaries”) with the ability to access and control “digital assets” belonging to decedents, beneficiaries and wards.  The term “Digital Asset” is broadly defined under the Act as any electronic record, and includes e-mail accounts, social media accounts, virtual currency accounts (e.g., Bitcoin), domain names, blogs, photos and videos posted to the internet, music sharing services, cloud based storage accounts and more.

Obtaining Access to Digital Assets

Basically, the Act acknowledges that an individual has a property right in his or her digital assets, and permits an individual to designate a fiduciary to manage those assets.  The terms-of-service agreements (“TOSA”) used by many companies that store digital assets (e.g., Facebook or Yahoo), which are called “Custodians” under the Act, provide that an individual’s account is non-transferrable and terminates at death.  The Act essentially overrides the TOSA and allows individuals to authorize fiduciaries to access their accounts by serving a request and proof of authority on a Custodian.

Among other things, the Act seeks to address situations where a family member or loved one is denied access to a decedent’s account because the Custodian refuses to allow it.  For example, in a well-publicized case (In re Estate of Ellsworth, No. 2005-296, 651- DE (Mich. Prob. Ct. May 11, 2005), the family of a U.S. Marine killed in Iraq successfully sued Yahoo in a Michigan probate court for access to the decedent’s e-mail account.  Such a lawsuit now could be avoided under the Act in New Jersey if the decedent had authorized access during life.

The Act contains detailed procedures for obtaining or restricting access to digital assets.  First, a designation in an “Online Tool” (i.e., a tool provided by a custodian allowing an individual to grant or deny access) has priority over any designation contained in an individual’s estate planning documents or the TOSA.  If the individual does not use an Online Tool (or the Custodian does not offer one), then any direction contained in the individual’s estate planning documents controls.  If there is no Online Tool designation or direction contained in estate planning documents, then the Custodian’s TOSA will control.  See Section 4 of the Act.  Thus, an individual can specify which digital assets may be preserved for posterity, and those he or she prefers to take to the grave.

The Act does not apply to any digital asset of an employer used by an employee in the ordinary course of business.

Steps to consider

Individuals may now wish to consider:  (1) creating an inventory of their digital assets, which may include valuable domain names or virtual currency accounts; (2) using Online Tools to grant fiduciary authorizations or ensuring that estate planning documents include a specific grant of authority to access digital assets; and, (3) specifying any digital assets that they do not want fiduciaries to possess or ascertaining that the terms of the TOSA will suffice to achieve the desired restriction.

Obligations of fiduciary

The Act requires fiduciaries to act in a manner that is consistent with the individual’s wishes, and they cannot engage in conduct that violates the scope of authority provided to them.  Moreover, fiduciaries have a duty to marshal and preserve digital assets within their control and could, presumably, be held accountable for waste or mismanagement.

In sum, the Act modernizes New Jersey law by expressly recognizing and clarifying the rights and obligations of fiduciaries and individuals with respect to digital assets.