The importance of digital asset management in estate planning

These days, New York estate planning usually includes a strategy on how to handle important online information. This is necessitated by various factors: most notably the rise of the internet as the world’s primary communication channel. Third parties now hold most letters, images and memories on remote storage devices. Commonly, large international tech companies, such as social networks, computer manufacturers and advertising companies, are the entities providing these services.

On one hand, the value of these digital items to an estate is often clear. On the other hand, some tech organizations build their reputations on high security and confidentiality. Furthermore, accepting fraudulent requests for information could lead to legal issues for the custodian of a digital asset. As such, companies might not see it in their best interest to divulge user information, even after the passing of the user in question. This issue engendered a federal law, known as Uniform Fiduciary Access to Digital Assets Act, which New York adapted and included in its own code regulating estate issues.

The New York law defines as custodians all parties that traffic in digital assets  and communications. The law describes many ways that these entities could interact with a user’s digital assets to qualify for custodianship thereof. Examples of custodians might include the following:

  • Social media companies
  • Email service providers
  • Chat application companies
  • Cloud data storage services
  • E-commerce retailers

The New York law also describes the process of requesting access to digital assets  from their custodians on behalf of an estate. This would typically involve presenting the custodian with proof of both the account holder’s death and the fiduciary appointment of the individual making the request. 

If a company or individual with custodianship of digital assets requests further information, the law may require executors to produce such. However, if a user specifically prohibits access to digital assets as part of an estate document — or if the court directs a custodian not to release the assets — there may be little the executor could do to access online accounts and communications.

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