California law regarding digital assets and estate planning has evolved to address the growing presence of digital property in people's estates. The main legal framework governing digital assets is the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which was enacted in California in 2016. This law provides the legal guidelines for how digital assets can be managed and accessed by fiduciaries after an individual’s death or incapacitation. Here's how California law impacts estate planning for digital assets:
1. What Are Digital Assets?
Under California law, digital assets include a broad range of online and electronic records, such as:
Email accounts
Social media profiles
Online banking and investment accounts
Digital photos, videos, and documents stored on cloud services
Cryptocurrency holdings
Domain names
Loyalty program points
Any other electronic records associated with a person
2. RUFADAA: Key Provisions
The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) sets out rules for how fiduciaries, such as executors, trustees, or agents under a power of attorney, can access and manage someone’s digital assets upon death or incapacity. Some key points of the law include:
Fiduciary Access: RUFADAA allows a fiduciary (such as an executor of an estate, a trustee, or an agent under a power of attorney) to manage digital assets in the same way they manage tangible assets, but only with express permission from the account holder.
Online Tools Supersede Estate Plans: Some companies, like Google or Facebook, provide their own mechanisms (referred to as "online tools") for managing accounts after death, such as assigning a "legacy contact." These instructions take precedence over any provisions in a will or trust.
Explicit Consent Required: If you want your fiduciary to access and manage your digital assets, you must give explicit consent in your estate planning documents, such as in your will, trust, or power of attorney. Without this permission, many service providers may refuse access based on privacy policies.
Terms of Service Agreements: The law respects the terms of service agreements with digital platforms. If a company’s terms of service restrict third-party access to an account, that agreement may limit what a fiduciary can do unless specific authorization has been given.
3. How to Incorporate Digital Assets in Your Estate Plan
To ensure that your digital assets are properly managed and protected, it is crucial to include them in your estate plan by taking the following steps:
Explicitly Grant Access: In your will, trust, or power of attorney, explicitly grant your executor, trustee, or agent the authority to access, manage, and distribute your digital assets.
Utilize Online Tools: Where available, make use of online tools provided by companies like Google, Apple, or Facebook to designate someone who can manage your accounts after you pass away. This can help avoid complications and ensures that your wishes are followed.
Keep a Secure Record: Create a secure inventory of your digital assets, including usernames, passwords, and other access information. This list should be stored securely and shared only with trusted individuals or fiduciaries.
4. Challenges and Protections
California law also includes several protections and challenges related to digital assets:
Privacy Protections: RUFADAA is designed to protect the privacy of the deceased or incapacitated person by ensuring that their digital accounts are not accessed without explicit authorization.
Access Limitations: Some digital assets are non-transferable, such as accounts under terms of service agreements that prohibit posthumous transfer. In these cases, beneficiaries may not inherit the asset itself but may be entitled to the value of the asset (such as cryptocurrency or financial assets).
5. Cryptocurrency and Other Special Digital Assets
Cryptocurrencies like Bitcoin or Ethereum are unique digital assets that require special attention in estate planning due to their encryption and anonymity. Without proper planning, heirs may be unable to access these assets. It is essential to:
Include detailed instructions in your estate plan on how to access your cryptocurrency wallets, including any encryption keys.
Use a secure storage system, such as a hardware wallet or trusted digital vault service.
Conclusion
California’s RUFADAA ensures that digital assets can be managed after death or incapacitation, but only if the proper steps are taken. To make sure your digital legacy is protected, it's crucial to explicitly address digital assets in your estate planning documents, give clear consent for fiduciary access, and use online tools when available. If you're ready to include your digital assets in your estate plan or have any questions, reach out to me, Russell C. Miller, for assistance in creating a comprehensive plan that covers all your assets, both physical and digital.
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