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Don’t Forget That Your Digital Assets Will Outlive You

If you are reading this article, chances are you have at least one “digital asset.”  In fact, one statistic (that we, admittedly, found via a Google search) shows that 4.3 billion people have email accounts.[1] 

North Carolina law defines a “digital asset” as an “electronic record in which an individual has a right or interest.”  N.C. Gen. Stat. § 36F-2(10)  This broad definition includes email accounts, social networking accounts (e.g., Facebook and LinkedIn), blogs, and file storage accounts (e.g., iCloud).[2]

Over the past 10 to 15 years, custodians of digital assets (e.g., email service providers), courts, and state legislatures have grappled with the thorny question:  “Who, if anyone, should be permitted to access and control a person’s digital assets after he/she dies or becomes incompetent?”  Fortunately, in North Carolina, individuals have some control over the answer to this question.

In 2016, North Carolina adopted the Revised Uniform Fiduciary Access to Digital Assets Act, which authorizes a user (i.e., the owner of the digital assets) to:

  • Use an “online tool” to direct the custodian of the digital asset (e.g., an email service provider) to disclose or not to disclose some or all of the user’s information to a designated recipient; or
  • Provide instructions regarding the disclosure and/or use of the user’s digital assets in a will, trust, and/or power of attorney.

N.C. Gen. Stat. § 36F-4.

There are two important things to keep in mind in connection with these options.  First, the directions in the online tool will override contrary directions in a will, trust, or power of attorney, as long as the online tool allowed the user to modify or delete her directions at any and all times.  N.C. Gen. Stat. § 36F-4(a).  Further, a user’s directions, memorialized via an online tool or in traditional estate planning documents, will generally override a contrary provision in the terms-of-service agreement between the user and the custodian of the digital asset.  N.C. Gen. Stat. § 36F(c).

These options are intended to give the user more control over the disposition of her digital assets and to ease the burden on executors or other fiduciaries who are charged with protecting the user’s digital assets.  However, both options require the user to be proactive.

As the number and complexity of digital assets increases, businesses also need to think about implementing and, more importantly, enforcing policies regarding the use of personal digital assets for business purposes.  For example, many businesses have policies prohibiting the use of personal email accounts for business purposes.  This is an important policy for many reasons, including the fact that companies—absent instructions by the employee—cannot access an employee’s personal email account after the employee’s death or incompetency. 

Digital Asset Checklist – A Starting Point

This checklist is a helpful starting point when making decisions about your digital afterlife.

  1. 1. Draft an inventory of your digital assets, including passwords to access those assets. The inventory should include assets like:  email accounts; social networking accounts; file storage accounts; accounts for electronically stored music; financial information accounts; and online purchasing accounts.
  1. 2. Consider which of these assets, if any, to dispose of prior to your death or incompetency. For example, if you have an email account that you have not used for 10  years, consider whether the account can and should be deleted.
  1. 3. Determine which of these assets, if any, offer online tools that allow you to give instructions regarding access to the digital assets upon your death. For example, Google has a feature called “Inactive Account Manager” that permits the user to instruct Google as to:  (i) when Google should consider the account to be inactive; and (ii) what Google should do with the user’s data once the account is deemed inactive, i.e., disclose the data to a third person or delete the inactive account.
  1. 4. Consult with an attorney about updating your will and/or power of attorney to provide instructions for how to handle your digital assets. The instructions in these documents are particularly important for digital assets that do not offer online tools for providing such instructions.
  1. 5. If you designate one or more persons to access your digital assets after you become disabled or die, then you should let those individuals know about the designation.

Allison Buckner Parker is an attorney at Bell, Davis & Pitt. She concentrates her practice in the area of commercial litigation with a focus on insurance coverage litigation for corporate policyholders.

Citations:
[1] //expandedramblings.com/index.php/email-statistics/
[2] See Natalie M. Banta, Death and Privacy in the Digital Age, 94 N.C. Law. Rev. 927 (March, 2016).

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