Delaware became the first state to enact the Uniform Fiduciary Access to Digital Assets Act (UFADAA), a comprehensive law proposed by the National Conference of Commissioners on Uniform State Laws (NCCUSL) that places access to a wide range of digital assets, including electronic documentation of financial accounts, on par with access to traditional tangible assets. The Delaware legislation (HB 345) was signed by Governor Jack Markell on August 12.
The goal of the UFADAA is to remove barriers, such as federal privacy laws and state and federal computer fraud and abuse acts, which impede or prevent fiduciary access to the digital assets and records needed to manage and collect assets. This would be accomplished in part by declaring that access by fiduciaries is “authorized” under two federal statutes – the Computer Fraud and Abuse Act and the Stored Communications Act section of the Electronic Communications Privacy Act. These laws currently prevent public communications providers from disclosing certain electronic communications content without the sender or recipient’s consent.
At the same time, the Act leaves intact existing laws related to contracts, copyrights, banking, securities, agencies, employment, privacy, and trusts.
“As the number of digital assets held by the average person increases, questions surrounding the disposition of these assets upon the individual’s death or incapacity are becoming more common,” wrote the NCCUSL commissioners in the Act’s prefatory note. “Few laws exist on the rights of fiduciaries over digital assets. Few holders of digital assets and accounts consider the fate of their online presences once they are no longer able to manage their assets.”
Without changing the ownership of a digital asset, the Act establishes the fiduciary rights of personal representatives, conservators, agents acting pursuant to a power of attorney, and trustees, each with different opt-in and default rules. It also addresses the compliance requirements of the fiduciary for the purposes of requesting access, control, or a copy of the digital asset, and grants liability protection to custodians acting in good faith.
Several states have enacted more limited legislation on fiduciary access to digital assets, and several more have legislation under consideration. However, according to uniform state law commissioners, those measures differ with respect to the types of digital assets covered, the rights of the fiduciary, the category of fiduciary included, and whether the principal’s death or incapacity is covered.
“A uniform approach among states will provide certainty and predictability for courts, account holders, fiduciaries, and Internet service providers,” the NCCUSL commissioners stated. “It gives states precise, comprehensive, and easily accessible guidance on questions concerning fiduciaries’ ability to access the electronic records of a decedent, protected person, principal, or a trust.”