Think about how much digital data you have accumulated in just the past few years? It’s mind-dumbing. We all have various forms and amounts of digital data such as Facebook, LinkedIN, and other social media sites, photos, passwords, usernames, etc., etc., etc. See a longer list below.
Over the next many years, you’re highly likely to accumulate even more digital data as our lives are increasingly tied to digital devices, app’s, online services and the web. The “porch pirate” phenomenon reflects how much our lives are tied to the Internet, as more and more people make more and more purchases online and have things delivered. We now buy gifts, groceries, lawncare services, legal services, and more online. We get our news and entertainment online, and we communicate online to the exclusion of more traditional ways of communicating (such as phone calls and in person conversations). At any family restaurant, look at the other patrons at other tables, and you will see most people with a smart phone in hand. The average teenager will spend a sizeable portion of her waking hours online, and that will not change as that teenager ages and begins making routine purchases of goods and services. If anything, the portion of our lives spent online will only increase. And as we do more online, our digital data will grow.
So, what is digital data?
Digital data is roughly defined as different types of information, documents and data you hold on personal computers, smart phones, tablets, home security systems and many other devices, services and systems. Here are some common examples of digital data you probably own-
- Usernames
- Passwords
- Digital content
- Account data
- Mementos, music, photos and video assets
- Communications (instant messages, emails, text messages, etc.)
- Subscription services
- Picture and document storage
- Gaming assets
- Social media content
- Metadata
- Client and other business data
There are two increasingly important considerations with these data: (1) Data Protection & (2) Estate Planning. This article is mostly about Estate Planning, but you should start the process of managing your digital data by protecting it now.
Data Protection
Data protection starts with protecting your usernames and passwords. We are lawyers, not IT experts, but we work with IT experts who tell us that there are some basic steps anyone can take to protect data-
- Vary your usernames & passwords. Don’t use the same username/password for multiple log-in’s.
- Don’t write your usernames & passwords on a piece of paper or record them on an electronic document, which can be stolen or lost.
- Use a third-party password service like LastPass, which can maintain your electronic data in an encrypted format.
- Use two-step verification whenever possible.
- Don’t share your usernames & passwords.
- Don’t access the Internet by using use public Wifi, unless you add another level of encryption.
- Consult your own IT expert.
This list is not exhaustive of ways to protect your digital data, and an IT expert might suggest different ways to protect your data. Dedicate some time and resources to protecting your digital data.
Estate Planning
So what does happen to your Facebook account when you die?
First, understand that we all will die with active online accounts. Current laws in most states do not adequately address this issue. Secondly, the online provider of a service had you sign an online user agreement, which may address how your account will be handled at death. As much as we dislike reading those online user agreements, they are enforceable contracts that control how our data and accounts will be treated.
The next step in this process is to consider our goals for how our online accounts will be handled when we pass away. There are three options, as our data and accounts can be: (1) saved; (2) deleted; or (3) transferred to another person. Again, the user agreement for each online provider may have already addressed this issue and made a choice for you in the user agreement. Continuing with our Facebook example, Facebook allows you to request that your account become a memorialized account. Facebook also allows you to have your account deleted at death.
Not every form of digital data will be controlled by a user agreement, however. As a result, your digital assets need to be considered when you are establishing or revising your estate plan.
According to the National Conference of State Legislatures, Indiana is one of at least 46 states since 2013 that has enacted legislation addressing digital assets upon death of the account owner. In Indiana, The Revised Uniform Fiduciary Access to Digital Assets Act (“UFADAA”) became effective on July 1, 2016. Prior to enactment of the 2016 legislation, Indiana residents relied on a 2007 law that quickly became outdated and inadequate. Although helpful in determining how digital assets would be handled upon death, the old 2007 law was limited, and it was silent on rights during incapacity. The adoption of the UFADAA provides much more guidance on how, when, by whom and to what extent digital assets can be accessed following the death of the account holder. The new law also provides guidance as to these same questions when an account holder is incapacitated for a short or longer period of time. In other words, the UFADAA addresses the handling of your digital data both during your incapacity and after your death.
The UFADAA will apply in Indiana where rights and authority to control digital are not addressed in (1) your will or trust or (2) in the online user agreement provided by an online custodia, such as Facebook, Twitter, Google, etc. Under the UFADAA, there are four (4) fiduciaries who may be granted access to your digital assets:
- Personal Representative;
- Trustee;
- Attorney in Fact; or
- Guardian.
The rights of access granted to these four fiduciaries are limited under the UFADAA. In the case of the Personal Representative, Trustee and Attorney in Fact, authority to access the digital assets will be limited to only what is necessary to carry out that fiduciary’s duties. There will be NO ACCESS to the content of electronic communications such as emails, text messages, etc. Absent express authority by the account owner before incapacity or death, the actual content will be restricted from access. For example, under the UFADAA, a personal presentative will only receive a “catalogue of electronic communications” of a Facebook account for purposes of estate administration if the account owner failed to include express consent for access to content through their estate plan or online. A “catalogue of electronic communications” is defined under the statute as a list identifying each person with which the user had electronic communication, the time and date of the communication, and the electronic address of the person. It does NOT INCLUDE THE CONTENT of the communication. So, a fiduciary will know who and when, but not what, was discussed or shared with the other person.
Although the new law is very helpful, absent consent through estate planning documents or online agreements, it does not prevent Facebook, Twitter or Google from blocking access pursuant to their service agreements. Data such as photos, details of conversations that may be crucial to an estate or care of an incapacitated person are lost without consent being provided in estate planning documents or online. Those photos of grandma and grandpa with your children the summer before they passed away that you posted on Facebook are now lost forever, if steps were not taken to grant authority for access after your incapacity or death. All those cherished memories are gone without the proper planning. Your 4,000-person customer-following on your personal social media account that you have grown over the years to promote and sometimes even conduct your small business. GONE.
IMPORTANT BUSINESS NOTE: If you own a business, large or small, you probably have digital assets that are important to your business’ income or value. Failing to treat these assets as business assets can be harmful. Thankfully, there are cost-effective solutions.
Digital assets that hold value to you and your company. Just like trade secrets, client lists and other data, your digital assets are something you want to protect and be able to transfer to successors or perhaps sell long-term. Under your personal media account, those digital assets would be governed by your estate plan. If you have failed to express consent to access that data and the user service agreement prevents access, that data may be lost forever. Planning is crucial. In many cases, the best solution is often to transfer ownership of accounts or account data to a limited liability entity or assign those assets at death.
To summarize, here are the four steps we recommend for managing your digital assets:
- Develop a plan to protect your digital data now. Get professional help to accomplish this goal.
- Check your online user agreements.
- Add language to your Power of Attorney, Last Will and/or Living Trust to address your digital data.
- Convert your business digital assets from a personal account to a business account.
