As our society becomes increasingly tied to digital technologies, the world of estate planning is faced with novel questions. Today, many people own substantial digital assets whether they realize it or not. Sentimental items such as electronically stored photos, videos, and social media accounts, as well as items of financial value such as domain names, blogs, bitcoin, and nonfungible tokens (NFTs) constitute digital assets that must be considered when preparing an estate plan.

Passwords, data encryption, criminal laws on “exceeding authorized access,” and data privacy laws may restrict a decedent’s family members from accessing their loved one’s digital assets if the proper authorizations are not in place. Now more than ever, it is important to have an updated estate plan that complies with the law, expresses your intentions with respect to all of your property, digital or not, and reduces emotional and financial burdens on loved ones after death.

Digital property should not be overlooked.

The digital world is a popular place. In its first quarter of 2022, Facebook reported 1.96 billion daily users. In fiscal year 2021, Google reported over 15 billion daily active views globally across its properties (e.g., Google, Gmail, and Youtube). Internet use in the United States ranks among the highest in the world, both in number of users and by percentage of population. Users of the internet accumulate digital property at incredible rates by uploading photographs and videos, publishing written material, developing online profiles, building subscribership accounts, and many other activities.

A 2011 survey found that U.S. consumers valued their digital assets, stored across multiple digital devices, at an average of $55,000 per person. While much digital property is primarily of sentimental importance to individuals, some items such as income producing social media accounts, advertising revenue from websites, domain names, cryptocurrencies and NFTs can have immense financial value. Furthermore, as more and more memorabilia are stored digitally, replacing outdated physical storage systems, there is good reason to protect and manage digital property regardless of its financial value.

Advancing technologies complicate fiduciary access to digital assets.

Unfortunately, simply sharing a list of usernames and passwords with your personal representative is insufficient to transfer digital assets at death. In 2016, the United States Court of Appeals for the Ninth Circuit ruled in United States v. Nosal (a/k/a “Nosal II”) that using another person’s password to access an account, even if freely given, is potentially punishable under the federal Computer Fraud and Abuse Act as it may violate the account’s Terms of Service agreement by “exceeding authorized access.” Furthermore, until recently, even duly appointed fiduciaries were prevented from accessing the contents of a deceased user’s online accounts in many circumstances by the privacy protections ensured by the Stored Communications Act (also known as the Electronic Communications Privacy Act).

In response to this problem, in 2015 the Uniform Law Commission promulgated the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”), which is enacted in 47 states today. Nebraska enacted RUFADAA in 2016 (the “Act”). Pursuant to the Act, a decedent may allow or prohibit disclosure of some or all of their digital assets, including the content of electronic communications sent or received by the decedent, to a fiduciary in a will, trust, power of attorney, or other record.

Access to digital assets and electronic communications under the Nebraska Act.

Social media and other online accounts are increasingly offering memorialization and legacy planning options for users, known under the Act as “online tools”. Pursuant to the Nebraska Act, if a user has used an online tool to direct a site (a “custodian”) to disclose or not disclose some or all of the user’s digital assets to a designated recipient, such designation must be respected.

Facebook’s online tool allows users to appoint a “Legacy Contact” for their account after death. A Facebook account Legacy Contact can: (1) download a copy of what the deceased user shared on Facebook (photos, videos, posts, profile information, contact information, events, friends lists, etc.); (2) write a pinned post for the deceased user’s profile to share a final message on the user’s behalf or provide information about a memorial service; (3) respond to new friend requests with the deceased user; and (4) update the deceased user’s profile picture and cover photo. Google’s Inactive Account Manager serves a similar function by allowing users to designate a Trusted Contact who will gain access to an account after a certain period of inactivity. A Google user may also choose to have information permanently deleted after a period of inactivity. Other sites such as LinkedIn, Instagram, Twitter, and Pinterest permit account memorialization or deactivation following a user’s death.

If a user has not appointed a designated recipient using an online tool, or if a custodian does not offer an online tool, the user may designate a fiduciary under a will, trust, power of attorney or other record to receive their digital assets and electronic communications. If a user has not made a designation using an online tool, and has additionally failed to appoint a fiduciary for digital assets as provided under the Act, the custodian’s Terms of Service agreement controls the user’s account.

What can you do to be prepared?

To properly protect the existence of digital property after your death and to ensure digital items of sentimental and financial value are transferred to your desired beneficiaries, you should first identify your digital assets. Take stock of your hardware, software, online information and accounts, and where you store photos, videos, and other items of sentimental value on your devices. Then, to the extent possible and desired, utilize memorialization features on social media and other websites to designate recipients and otherwise provide instructions for your digital assets following your death. Finally, ensure your estate plan is updated and provides your fiduciary access to your digital assets and electronic communications after your death in accordance with the Nebraska Act. Please contact a member of the McGrath North Tax Group to create a digital estate plan or to update your current plan to incorporate your digital assets.