Now and then, I’ll hear a fact or statistic that is bizarre or mind-boggling enough to completely shock my perspective towards the world we live in.
According to Harvard Magazine, humans produced more data between 2012-2014 than in ALL of human civilization up until that point. And if that isn’t ridiculous enough, the pace is accelerating at a rapid rate.
At this point in human history, we are the first people who must endure this unique circumstance of unpredictability that comes with the unstoppable and ever-changing force that is technology. Sure, we love our Smart TVs and new iPhones! However, where this really starts to become cause for concern is in the issues that can arise without the proper laws being in place as we wait for the government to catch up in creating and passing them. As you might expect, this has become an issue as the constant evolution of the digital world proves to heavily conflict with the slow and meticulous lawmaking process.
While the law is crystal clear about the handling of paper documents and other physical property; the law regarding digital properties is not so coherent. In fact, it wasn’t until 2015 that any law at all addressing the issue was even introduced – an entire decade since major data contributors Facebook, Gmail and YouTube were launched. Even so, the Fiduciary Access to Digital Assets Act [FADAA] has been enacted in 39 states at this point in time and was recently introduced for consideration in Pennsylvania, Massachusetts and Washington D.C. In short, the Uniform Law Commission drafted the law to govern access to a person’s online accounts upon death of the account owner – allowing them to appoint a fiduciary in which they can transfer the accounts to. The act presumes that lawful consent requires the descendant’s express authorization, such as in a will.
Yahoo! Inc. has gained a reputation for banning access and closing E-Mail accounts after a user’s death. This policy is currently being fought before the Supreme Judicial Court of Massachusetts in possibly the most high-profile case to date concerning post-mortem digital asset management, Ajemian v. Yahoo!, Inc.
John Ajemian was a Yahoo! Mail user until he died in 2006, leaving his account but no will or instructions about it. When John’s siblings inquired Yahoo for access to the account to inform his friends of his passing and identify his assets, Yahoo declined and told them it would be prohibited by the Stored Communications Act [SCA] and breach their Terms of Service. The SCA is a law that extends the Fourth Amendment “right to be secure” and applies it to personal information and records held by Internet Service Providers [ISPs] by limiting the ability of those ISPs to disclose content information to nongovernment entities.
In 2018, the court held that personal representatives may provide lawful consent on a descendant’s behalf, even in the absence of a will. This decision was crucial to the fate of the FADAA because it is the first case to set such precedent in which most states’ legislation relies. Supporters of Ajemian hope that the ruling can assist in a cleaner debate about the policy and default rules of digital inheritance.
Now that we’re aware of the newly realized importance of proper digital asset management, you may have a few questions and concerns regarding your own personal digital accounts. What accounts exactly are digital assets? What particular accounts are the most crucial to keep protected? Why does it even matter that I protect my e-mail account if I’m dead?
We’re going to use fictional client Larry Fisher as an example for this process.
Larry Fisher is in the midst of writing his will. His lawyer suggested based on the recent news involving protection of digital assets post-mortem that he includes the proper lawful consent to avoid retrieval issues for his family upon his death.
Larry deliberates the accounts he wants to consent to transfer - noting accounts that include personal records, have sentimental value or makes it easier on his representatives tasked with handling the post-death process.
Larry is 40 years old. His sister, Jane, is 10 years younger than him – and likely to outlive him. As someone Larry trusts and whom cares about his legacy, Jane is the perfect option. In case of her untimely passing, he signs on her two sons to gain access.
Larry records all changes he makes to his login information including usernames, passwords and secret questions/backup email accounts. He also updates the list with any additional digital assets that meet his criteria for protection. At the end of each year he sends the updated spreadsheet to his lawyer to adjust his will accordingly.
The reason why estate planning is one of the key areas of your overall financial plan is that without it, settling your affairs could have a long lasting and costly impact on your family.
The determined outcome of all that you’ve worked for in terms of financial worth and personal legacy could be left to someone else’s control. Very few of us would choose that. As a Financial Advisor, it is critical that I help my clients set things up to match their wishes. Clearly putting their ‘digital’ affairs in order is now part of this plan.
Going forward we will want to add digital asset management to our discussion of beneficiaries, insurance benefits, account tax structure, powers of attorney, and guardianship.
Authors: Jack Jeter, Intern, and David Jeter, CFP®, Partner and Financial Advisor | Allegheny Financial Group | August 2019
Allegheny Financial Group is a Registered Investment Advisor. Securities offered through Allegheny Investments, LTD, a registered Broker/Dealer. Member FINRA/SIPC.