Digital Assets of the Deceased, Privacy, and

the Law

November 8, 2016 By Michael Hellbusch, Esq., CIPP/US

TLD Law mhellbusch@tldlaw.com

A Presentation for the South Bay Estate Planning Counsel

Overview

• Overview of New Law

• Laws Affecting Access to

Digital Assets

• Fiduciary Obligations

• Why Digital Access is

Important

• The Revised UFADAA

• The Importance of Planning

EFFECTIVE JANUARY 1, 2017

CALIFORNIA PROBATE CODE, Part 20, Section 870, et. seq.

• Authorizes a decedent’s personal representative or trustee to access and manage digital assets and electronic communications.

• Authorizes a person to use an online tool to give directions to the custodian of his or her digital assets regarding the disclosure of those assets.

• Requires a custodian of the digital assets to comply with a fiduciary’s request for disclosure of digital assets or to terminate an account.

• Makes custodians immune from liability if acting in good faith.

Summary of Digital Assets

Four General Types of Assets Existing Online

• Personal Photos, Videos, Emails, Posts

• Social Media Facebook accounts, Twitter

• Financial

Online Financial Accounts, Paypal, Emails

• Business

Orders, documents, domain names, Emails

WHAT IS THE PROBLEM WITH ACCESSING DIGITAL ASSETS?

TERMS OF SERVICE

Violations of the Terms of Service Gmail’s Terms of Service and Privacy

Policy

• “Don’t misuse our Services. For example, don’t

interfere with our Services or try to access them

using a method other than the interface and the

instructions that we provide.”

• “To protect your Google Account, keep your

password confidential.”

Facebook’s Terms of Service

• “You will not share your password (or in the case of

developers, your secret key), let anyone else access

your account, or do anything else that might

jeopardize the security of your account.”

• “You will not transfer your account (including any

Page or application you administer) to anyone without

first getting our written permission.”

• “You will not use Facebook to do anything unlawful,

misleading, malicious, or discriminatory.”

• “You will not transfer any of your rights or obligations

under this Statement to anyone else without our

consent.”

CYBERSECURITY LAWS

Computer Fraud and Abuse Act

• The CFAA criminalizes unauthorized

access and obtains information from a

protected computer.

• Under strict construction, fiduciaries risk

criminal prosecution for unauthorized

access to digital accounts or devices.

• Ninth Circuit case law supports a narrow

reading of the statute.

• Criminal liability based on access to fulfill

fiduciary obligations is unlikely.

Questions Remain:

• Is “authorization” to act as trustee/executor

generally sufficient?

• Is specific authorization needed for each

account, device, etc.?

• Will the access given to fiduciary be

sufficient to comply with terms of service?

• If access is established, what constitutes

proper “use?”

PRIVACY LAWS

A provider of public electronic communications services can voluntarily disclose the contents of communications, but only if the provider has the “lawful consent” of “the originator,” and addressee or intended recipient of the communications, or the subscriber.

STORED COMMUNICATIONS ACT

THINGS TO NOTE

• Restrictions are on ISPs.

• Distinguishes between Contents of the

Communication and Non-Content

• An ISP is excused from prohibitions

when specified users give “lawful

consent” to disclosure.

In Re Facebook (923 F.Supp.2d 1204 (2012))

• Deceased user’s family members subpoenaed Facebook for user’s online postings in hopes they would assist in determining whether death was self-inflicted.

• Undisputed that deceased User did not provide consent to disclosure.

• Facebook opposed subpoena on the basis that it violated the SCA.

• Facebook actually suggested that the court make an Order “establishing [family’s] authority to tender consent on [decedent’s] behalf and compelling disclosure.

• Court agreed that SCA required consent which would permit production of communications and no consent was shown by User.

Negro v. Superior Court (230 Cal.App.4th 879 (2014))

• Discusses “consent” within the meaning

of the Stored Communications Act.

• Reinforces the idea that the User, and

only the user, may provide consent to

disclosure of the contents of electronic

communications.

• Persuasive authority that clear and

conspicuous showing of “actual consent”

is required before ISP will disclose

electronic communications.

• Account holder was living but refused consent to

disclose emails.

• Judge ordered that he email Google with

consent. Defendant complied.

• Account holder later argued he was “judicially

coerced” and did not provide actual consent.

• The appellate court held that consent to the

release of the contents of electronic

communications could not be imputed by court

order, but if ordered to provide consent, and did

so, then such was sufficient under the SCA.

Negro v. Superior Court (Continued)

• What effect does this case have on the claims by fiduciaries for release of emails under the SCA?

• Persuasive authority that actual express consent is required and judicial orders imputing consent will not suffice.

• Suggests that some writing or other indication of consent by the decedent is necessary for disclosure of electronic communications.

• There is still a question of whether actual consent imposes an obligation on ISP to provide communications, i.e. whether disclosure is mandatory from actual consent alone. (Discussing In Re Facebook.).

Fiduciary Obligations

Why Digital Access is Important

• Fiduciaries are responsible for: Finances, taxes, expenses, distribution of assets, protecting assets.

• More often relevant information for estate admin is stored online.

• Digital assets can sometimes have significant monetary value.

Why do Fiduciaries/Conservators Care About Digital Assets?

California Probate Code Section 16006

• “The trustee has a duty to take reasonable steps under the

circumstances to take and keep control of and to preserve the

trust property.”

• Very often digital assets will belong to the trust via a pour-over

will.

Problems Befalling the Fiduciary Marshalling Assets

Identifying Digital Assets

Locating Digital Assets

Determining Value of the Assets

How Do They Fit Within the Estate?

What to Do With Them?

Collecting and Preserving the Estate

What are the T.O.S. for each ISP?

Would access be considered unauthorized?

Do the ISP’s have protocols for decedents?

How long will it take to get access?

General Considerations?

Is the cost worth it to the estate?

How does one quantify sentimental value?

Will Trustee/Representative violate fiduciary duty by not attempting to marshall the particular asset?

How long will dealing with digital assets delay the distribution/administration of the estate?

Are there other privacy or property concerns involved?

Privileged information? Joint Ownership?

REVISED UNIFORM FIDUCIARY ACCESS TO DIGITAL ACCESS ACT

Signed by Governor Brown on

September 24, 2016

REVISED UFADAA

• "[T]o remove barriers to a fiduciary's access to electronic records and to

leave unaffected other law, such a fiduciary, probate, trust, banking,

investments securities, and agency law."

• "[T]o facilitate fiduciary access while respecting the privacy and intent of

the account holder."

• Addresses four different types of fiduciaries: personal representatives,

conservators, agents under POA, and trustees.

• Does not vary the underlying laws of management, descent, distribution,

that otherwise apply to all assets and property.

An Overview of the Law

Section 870: Title

Section 871: Definitions

Section 872: Application of Law

Section 873: Online Tool

Section 874: Rights and Access

Section 875: Method of Disclosure

Section 876: Disclosure of Contents of

Communications to Personal Representative

Section 877: Disclosure of Catalogue of

Communications to Personal Representative

Section 878: Disclosure of Contents of

Communications to Trustee

Section 879: Disclosure of Catalogue of

Communications to Trustee

Section 880: Duties Imposed on Fiduciaries

Section 881: Time for Compliance

Sections 882-884: Modifications to Other Laws,

etc.

Important Definitions

Catalogue of Electronic Communications

Means information that:

• Identifies each person with which a user

has had an electronic communication;

• The time and date of the

communications;

• The electronic address of the person;

Content of an Electronic Communication

Means information concerning the substance or

meaning of the communication, which meets

the following requirements:

• Has been sent or received by the user;

• Is in electronic storage by a custodian

providing service to the public (or remote-

computing service);

• Is not readily accessible to the public.

Important Definitions

Digital Asset: An electronic record in which an individual has a right or interest.

Does not include an underlying asset or liability, unless the asset or liability is

itself an electronic record.

Online Tool: An electronic service provided by a custodian that allows the user, in

an agreement distinct from the terms-of-service agreement between the

custodian and user, to provide directions for disclosure or nondisclosure of

digital assets to a third person.

Important Definitions

Electronic Communication: means any transfer of signs, signals, writing, images,

sounds, data, or intelligence of any nature transmitted in whole or in part by a

wire, radio, electromagnetic, photoelectronic or photooptical system that affects

interstate or foreign commerce, but does not include—

(A) any wire or oral communication;

(B) any communication made through a tone-only paging device;

(C) any communication from a tracking device; or

(D) electronic funds transfer information stored by a financial institution in a

communications system used for the electronic storage and transfer of funds;

(Same definitions as the Electronic Communications Privacy Act).

Application of the Law (Section 872)

This part shall apply to the following:

• A fiduciary acting under a will

executed before, on, or after

January 1, 2017;

• A personal representative acting

for a decedent who died before, on,

or after January 1, 2017;

• A trustee acting under a trust

created before, on, or after January

1, 2017;

• A custodian of digital assets for a

user if the user resides in this

state or resided in this state at the

time of the user’s death.

Does not apply to digital assets of employers used by employees.

ONLINE TOOL

• A user may use an online tool to direct the

custodian to disclose to a designated recipient

or not disclose some or all of the user’s digital

assets, including the contents of electronic

communications.

• If the tool allows the user to modify or delete

directions at all times, a direction regarding

disclosure using an online tool overrides a

contrary direction by the user in a will, trust,

power of attorney, or other record.

• If no online tool used or provided, user may

allow or prohibit in a will, trust, power of

attorney, or other record the disclosure to a

fiduciary of some or all of the user’s digital

assets, including the contents of electronic

communications sent or received by the user.

(SECTION 873)

Rights and Access (Section 874)

• Law does not impair or change rights of user/custodian under terms of service agreement;

• No expanded rights for fiduciaries;

• A fiduciary’s or designated recipient’s access to digital assets may be modified or eliminated by the user, by federal law, or by a TOS when the user has not provided any direction recognized in Section 873.

Disclosure of Digital Assets

(Section 875)

The Custodian May Choose the Following:

• Grant the fiduciary full access to user’s account.

• Grant the fiduciary partial access to user’s account sufficient to perform tasks with which the fiduciary is charged.

• Provide the fiduciary with a digital or paper copy of any digital assets that the user could have accessed when alive/capacitated.

Limits on Disclosure of Digital Assets

(Section 875)

• Custodian may assess reasonable administration charge for cost of disclosure;

• Custodian need not disclose deleted digital assets;

• If user directs disclosure of some, but not all, digital assets, custodian need not disclose the assets if segregation of the assets would impose an undue burden on custodian.

Limits on Disclosure of Digital Assets

(Section 875)

• If custodian believes direction is unduly burdensome, the custodian, fiduciary, or designated recipient may petition court for any of the following:

• Disclose subset limited by date

• Disclose all digital assets

• Disclose none of the digital assets

• Review in camera of all digital assets

PERSONAL REPRESENTATIVE’S ACCESS (SECTION 876)

In order to obtain access to the content of electronic communications of the user, the

personal representative must provide ALL of the following:

• Written request for disclosure in physical or electronic form;

• Certified copy of the death certificate;

• Certified copy of letter of appointment/affidavit;

• Unless online tool used, copy of will, trust, POA, or other record evidencing the user’s consent to disclosure of the content of electronic communications.

• If requested by custodian: Account identifying info;

Evidence linking user to account;

Court Order;

Court Order for Content of E-Comms (Section 877)

Custodian may request a court order finding the following before it provides the contents of electronic communications to a personal representative.

• That the user had a specified account with the custodian;

• That disclosure of the contents of the user’s electronic communications

would not violate the Stored Communications Act, provisions protection

customer privacy, or other law;

• That the user consented to disclosure of the content of electronic

communications;

• That disclosures of the content of electronic communications is reasonably

necessary for the estate administration.

PERSONAL REPRESENTATIVE’S ACCESS (SECTION 877)

In order to obtain access to the catalogue of electronic communications and digital

assets of the user, the personal representative must provide ALL of the following:

• Written request for disclosure in physical or electronic form;

• Certified copy of the death certificate;

• Certified copy of letter of appointment/affidavit/court order;

• If requested by custodian:

• Account identifying info;

• Evidence linking user to account;

• An affidavit stating that disclosure of user’s digital assets is reasonably necessary for estate administration;

• An Court Order finding either: 1) The user had a specific account with the custodian, or 2) Disclosure of user’s digital assets is reasonable necessary for estate admin.

TRUSTEE’S ACCESS (SECTION 878)

Unless otherwise ordered by the court, directed by the user, or provided in the trust, a custodian shall disclose to a trustee that is not an original user of an account the content of electronic communications sent or received by an original or successor user if the trustee gives the custodian all of the following:

• Written request for disclosure in physical or electronic form;

• Certified copy of the death certificate of settlor;

• Certified copy of trust instrument or certification of trust, evidencing settlor’s consent to disclosure of electronic comms to the trustee;

• Certification of trustee that trust exists and trustee is currently acting trustee.

• If requested by custodian: Account identifying info;

Evidence linking user to account;

TRUSTEE’S ACCESS (SECTION 879)

In order to obtain access to the catalogue of electronic communications and digital assets of the user, the trustee must provide ALL of the following:

• Written request for disclosure in physical or electronic form;

• Certified copy of the death certificate of settlor;

• Certified copy of trust instrument or certification of trust;

• Certification of trustee that trust exists and trustee is currently acting trustee.

• If requested by custodian:

Account identifying info;

Evidence linking user to account;

LEGAL DUTIES OF FIDUCIARY (Section 880)

• Fiduciary has duties of care, loyalty, confidentiality.

• Fiduciary’s authority subject to other applicable law, including copyright law;

• Fiduciary’s authority is limited by scope of fiduciary duties;

• Fiduciary may not be used to impersonate the user;

• Fiduciary with authority over the property of a decedent or settlor has right of access to any digital

asset that is NOT held by a custodian or subject to a TOS Agreement. (Does not require a

custodian to share passwords or decrypt protected devices).

• Fiduciary acting within scope of duties is an authorized user for the purposes of applicable

computer fraud and unauthorized-computer-access laws.

• Fiduciary has right to access tangible personal property has right to access property and digital

assets stored in it.

• Fiduciary can terminate accounts or request that accounts be terminated.

TIMELINE FOR DISCLOSURE (Section 881)

• Custodian shall comply with request within 60 days to disclose assets or terminate account;

• If Custodian fails, fiduciary or designated recipient may seek court order;

• Custodian may notify user or request for disclosure of digital assets;

• Custodian may deny request if aware of any lawful access to account following the date of death of the user;

• Custodian, officers, employees and agents are immune from liability for any act or omission done in good faith compliance.

Other Provisions (Sections 882-884)

Section 882: Modifies, limits, or supersedes federal law regarding e-signatures;

Section 883: Disclosure of contents of user’s account is subject to same license, restrictions, TOS, and legal obligations as applied to user.

Section 884: Severability provision for invalid provisions.

Important Notes

Does not include POA, trusts, and conservatorships where the principal,

trustor, and conservatee are still alive.

Three-tier priority system for determining user’s intent for disclosure or his/her

electronic communications:

Tier 1: Online tool--most current reflection of user’s intent for disclosure;

Tier 2: Estate Planning Documents;

Tier 3: Terms of Service Agreement;

THE IMPORTANCE OF PLANNING

• Discussion of digital assets is

crucial in the EP phase.

• At a minimum, email and other

communication accounts should

be addressed.

• Ensure fiduciaries are given

appropriate and express powers

in all wills, trusts, and POAs.

• Inventory of Digital Assets.

• Coordination in designation

instructions between online tools

and EP docs.

• How explicit do you need to be?

• EP Attorneys should update lists

of probable accounts and those

with online tools.

THANK YOU!

For Comments/ Questions Please Contact:

Michael A. Hellbusch, Esq., CIPP/US

Mhellbusch@tldlaw.com

949.756.0684