Extending Real-World Fiduciary Protection To 'Digital Assets'

Online financial tools, virtual currencies, even email and social-media accounts can ‘outlive’ their owners — and that can be a serious problem

Many of us have had the unsettling experience of receiving a Facebook prompt for a birthday or anniversary for a friend or family member long since deceased. Nowadays, most people have a robust digital life, and without action, that life remains intact. As more and more New Jersey residents accumulate “digital assets,” use online banking, and even virtual currencies as personal-finance tools, the state law that establishes how assets can be protected and managed after someone dies or is incapacitated has become outdated.

To bring the law up to speed, state legislators have been working for more than a year on a bipartisan bill that would help residents better protect those digital assets, including online banking, as well as email and social-media accounts.

Among other changes, the bill would ensure that digital assets are given the same fiduciary safeguards as physical or tangible assets, and it would also establish restrictions for accessing someone’s private emails and text messages after they die.

Digital bill on governor’s desk

The Assembly voted overwhelmingly in favor of the digital-assets measure earlier this week, and that action followed the Senate’s late-June approval of the same bill. That means the legislation is now on Gov. Chris Christie’s desk awaiting final consideration.

Similar legislation has already been adopted in 23 other states, and sponsors in the New Jersey Legislature say as digital technology continues to advance, it’s important to make sure there are enough legal safeguards in place to cover all of someone’s digital property.

“This is a digital age we are living in,” said Assemblyman Lou Greenwald (D-Camden).

The proposed “Uniform Fiduciary Access to Digital Assets Act” came from the Uniform Law Commission, a more than 100-year-old, nonpartisan organization that promotes consistency among state laws. New Jersey is among 18 states that are considering adopting it.

Protecting physical and digital assets

The idea behind the digital-assets legislation is to make it possible for someone who is serving as a fiduciary, like the executor of a will or a trustee, to manage and protect a person’s digital assets in the same manner as their physical assets. The bill covers things like online bank accounts, computer records and files, and virtual currencies like Bitcoin, which exists solely on the Internet. But it would also allow for the protection and management of other online accounts and content, including email, web domains, and social-media accounts like Facebook and Twitter.

The bill would apply to those serving as the executors of wills, trustees, those with power of attorney, and court-appointed guardians of an incapacitated person. To gain access to the digital records, which are defined as all digital properties and electronic communications, a person would have to produce a document demonstrating they have been granted fiduciary authority, like a court order, letter of appointment, or certification of trust.

The bill’s language also makes clear that it would not cover the digital assets of an employer that were being used by one of their employees. And while a fiduciary could manage someone’s digital assets if the measure becomes law, it would still restrict access to things like email, text messages, and social-media accounts unless that access has been authorized in a will or trust or some other official record.

The measure also establishes that publishing someone’s confidential communications or using their email or social-media accounts to impersonate them is not authorized. Someone granted access to manage digital assets would also have to adhere to any terms of service policies, and abide by copyright laws and other and restrictions, according to the bill.

The measure was introduced in the Assembly in 2016, after the Uniform Law Commission first proposed a digital-assets law for states to consider adopting in 2014. The bill passed the full Senate by a 35-0-5 margin on June 29. In the Assembly, the measure was posted for final passage on Monday as members of the lower house came to Trenton for a rare late-July voting session that was called to make sure legislation providing back pay to state workers who were sidelined during last month’s three-day government shutdown could be enacted in an expedited manner. The digital-assets bill cleared the Assembly on Monday in a 68-0 vote.

Extending fiduciary power to cover digital assets is “the best thing we can do to protect all of our assets as we continue to navigate this digital era,” said Assemblywoman Patricia Egan Jones (D-Camden).

“It is far more common today for an individual to have many digital assets,” said Jones, a primary sponsor of the bill.

Greenwald, who is also a primary sponsor of the bill, said the proposed changes to the law would also remove “regulatory barriers” for those who are trying to safeguard digital assets as technology advances.

“Digital property such as email accounts, social-media accounts, and Internet-based currency is just as important as any other asset a person may have,” he said.

“Codifying the commission proposal is a step in the right direction for New Jersey,” said Assemblyman Troy Singleton (D-Burlington).

Original Article