Successional Right of Digital Assets

[lokanot0]

Many people activate online accounts or have digital assets (e.g. widgets, flyer miles, online accounts, bitcoins, Facebook, Twitter, LinkedIn, Snapchat, PayPal, Google Wallet, Amazon, eBay, Robinhood, online bank accounts, YouTube account that generates revenue, Google+, Yahoo, etc.).

But what happens to these assets when an individual dies or becomes incapacitated?

Until very recently, the asset was typically locked and access denied. The only way to obtain access was:

-Through court order (typically expensive and time consuming)
-By logging on as the individual (requires knowing password and arguably not legal)
-By being on a contact list on a legacy or inactive account (very few online entities actually have an online system of succession rights).

But on September 30, 2016, Governor Cuomo signed into law the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). Thanks to RUFADAA, an individual may now authorize their fiduciary (be it an authorized representative, power of attorney, executor, or trustee) certain rights and abilities to access that individual’s “digital asset(s).” (A “digital asset” is an electronic record in which an individual has a right or interest.)

Granting access to one’s representative can be done by either specifying who can have access upon death or incapacity (i) directly on the website (e.g. Google Inactive Manager or Facebook Legacy Account) or (ii) in estate planning documents (Will, Trust, Power of Attorney, Authorization and Consent for Release of Electronically Stored Material).

It is particularly important to have the appropriate language in estate planning documents because many websites or online companies do not have pages, which will allow an individual to insert their succession rights. Indeed, online tools are sparse. If a website or online asset does not have an online tool that allows an individual to set forth the amount of access to authorize a fiduciary, then the clauses in the individual’s estate planning documents will govern.

Most digital custodians only have terms of service agreements. Therefore, appropriate clauses in your estate planning documents to authorize your fiduciary access to your digital assets are both simple to achieve and important to have.

Have you ever been in a case like this? Share you thoughts and experiences.

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[audaciousbeing]

Many people activate online accounts or have digital assets (e.g. widgets, flyer miles, online accounts, bitcoins, Facebook, Twitter, LinkedIn, Snapchat, PayPal, Google Wallet, Amazon, eBay, Robinhood, online bank accounts, YouTube account that generates revenue, Google+, Yahoo, etc.).

But what happens to these assets when an individual dies or becomes incapacitated?

Until very recently, the asset was typically locked and access denied. The only way to obtain access was:

-Through court order (typically expensive and time consuming)
-By logging on as the individual (requires knowing password and arguably not legal)
-By being on a contact list on a legacy or inactive account (very few online entities actually have an online system of succession rights).

But on September 30, 2016, Governor Cuomo signed into law the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). Thanks to RUFADAA, an individual may now authorize their fiduciary (be it an authorized representative, power of attorney, executor, or trustee) certain rights and abilities to access that individual’s “digital asset(s).” (A “digital asset” is an electronic record in which an individual has a right or interest.)

Granting access to one’s representative can be done by either specifying who can have access upon death or incapacity (i) directly on the website (e.g. Google Inactive Manager or Facebook Legacy Account) or (ii) in estate planning documents (Will, Trust, Power of Attorney, Authorization and Consent for Release of Electronically Stored Material).

It is particularly important to have the appropriate language in estate planning documents because many websites or online companies do not have pages, which will allow an individual to insert their succession rights. Indeed, online tools are sparse. If a website or online asset does not have an online tool that allows an individual to set forth the amount of access to authorize a fiduciary, then the clauses in the individual’s estate planning documents will govern.

Most digital custodians only have terms of service agreements. Therefore, appropriate clauses in your estate planning documents to authorize your fiduciary access to your digital assets are both simple to achieve and important to have.

Have you ever been in a case like this? Share you thoughts and experiences.

The issue of succession has never been an issue in the corporate world because in every endeavor where you are entitled to any benefit or otherwise, you are required to mention a next of kin who gets the right to administer all your property in case there is need for it eventually. However, this issue has been a subject of discourse when it come to digital assets. Other kind of digital assets (Facebook, Twitter, LinkedIn, Snapchat, PayPal, Google Wallet, Amazon, eBay, Robinhood, online bank accounts, YouTube account that generates revenue, Google+, Yahoo, etc.) won't be any issue because you get to release your details and accept some terms and conditions before allowing any access which is why I dont see any challenge as development continue to happen in that direction as it relates to these kind of digital asset.

For crypto currency in general is where the task would not be easy surmountable because of the nature of crypto itself which would be interpreted as being defeated when questions unveiling anonymity is being asked to make this kind of move effective and that is where we need to weigh the cost and benefit of every actions that aims to develop this industry and boost confidence of people as well.

[davis196]

Having an online account is like signing with a contract with the company,that provides the online services you are using,when you register that account.Every contract ends when the person,who signed the contract dies.I`m not OK with the idea of inheriting online accounts,liks Facebook,Youtube,Twitter or Linkedin.
Cryptocurrenices are money just like fiat money.Having a crypto wallet should be the same as having a bank account.The funds should be send to your relatives after you die.

[Hydrogen]

Good post, OP.  

There could be two neglected side angles to this.

#1 Estate Tax / Death Tax Digital assets left in a vacuum with no beneficiaries are difficult to tax.

An example of this is, imagine if a person has $1,000 on a crypto exchange. If they died in an accident & passed that $1,000 on to their son or daughter, it might avoid taxation. But if the exchange has beneficiaries listed, 40% of the $1,000 might be subject to an estate/death tax and their son/daughter would receive $600.

#2 Debt Inheritance A better, more defined, process for inheriting digital assets also could make it easier for people to inherit digital debt and financial liabilities of family members.

An example of this is, imagine if someone's uncle or grandma invests using leverage and is $2,000 in debt on e-trade. If they have listed beneficiaries, it could make it easier for their descendents to receive the $2,000 bill.

This could be one of those topics where only positive implications are publicized with real motives being concealed.

It might sound like a conspiracy theory but it happens in the US healthcare industry where sometimes a family member gets sick and passes away, then their family is left with a $50,000 - $100,000+ medical bill.

Debt collection may be an expanding business and the type of greater beneficiary support mentioned in OP's post could be one way for debt collection to build a bigger business model in terms of generating higher revenue for the private sector and state.

[Lampaster]

It seems to me that access to digital assets does not need to be further regulated by law. If the owner of these assets trusts you then you know where to find the key or password to access. If you do not have such access by default it means that the owner did not trust you. Is there a problem?

[kevoh]

It seems to me that access to digital assets does not need to be further regulated by law. If the owner of these assets trusts you then you know where to find the key or password to access. If you do not have such access by default it means that the owner did not trust you. Is there a problem?

Trust is not only required when passing on Crypto assets to beneficiaries. A beneficiary should at least have a basic understanding of what crypto is all about to be able to recognize what a private key and a wallet stands for else they lose all the inherited money to fraudsters in their bid to get help online.

[gentlemand]

I personally don't give a shit about my digital assets and won't leave the details allowing anyone else to access them when I'm a puddle of rotten meat.

The less bloody minded would do well to just leave a wee file with passwords and stuff. I wouldn't bother going through probate or whatever to access this stuff. Let them plunder it as soon as I start to go black and smelly.

[Ranly123]

It seems to me that access to digital assets does not need to be further regulated by law. If the owner of these assets trusts you then you know where to find the key or password to access. If you do not have such access by default it means that the owner did not trust you. Is there a problem?

That would be hard that our digital assets will be regulated by law. Digital assets should be kept by the owner confidentially and no third party should be able to read and access our accounts.

[cezariusss]

I don't know about all virtual assets, but when I signed a contract with my bank (debit card) it was written there that all my money and bonus assets (including miles) would be transferred to the closest relative in case of my death (if nothing about that is written in a bequest ofc).

[drm]

Having an online account is like signing with a contract with the company,that provides the online services you are using,when you register that account.Every contract ends when the person,who signed the contract dies.I`m not OK with the idea of inheriting online accounts,liks Facebook,Youtube,Twitter or Linkedin.
Cryptocurrenices are money just like fiat money.Having a crypto wallet should be the same as having a bank account.The funds should be send to your relatives after you die.

So how will your private key get stored, and more importantly who will safely store your private key?

[criz2fer]

It seems to me that access to digital assets does not need to be further regulated by law. If the owner of these assets trusts you then you know where to find the key or password to access. If you do not have such access by default it means that the owner did not trust you. Is there a problem?

That would be hard that our digital assets will be regulated by law. Digital assets should be kept by the owner confidentially and no third party should be able to read and access our accounts.

It will be like banks that are centralize. Confidentiality of your account will be not a problem if you would die, just make sure you have a pencil backup of all your passwords of all your accounts specially on your exchangers and 2fa.

[trecore4]

To be honest never thought that I will need to put my digital assets somewhere and will have to make copies of my password and stuff. I mean it never occurred to my mind that I will have to do stuff like this just to pass on the right to access my digital files and longs by someone else. I think I will max to max give the rights to my digital wallets and stuff to my kids if the crypto stays for that long or until it comes to preparation of my will. Lol.
I dont think there exists anything more valuable than money on this earth which we need to pass on to some one else for security purposes.