O Brave New [Digital] World

 

The phrase “Digital Assets” has come to describe both assets purchased through a digital marketplace, such as songs in Apple’s iTunes store or placed into a cloud-based storage service, like Dropbox, as well as the pictures and comments we make on Facebook, Twitter, and Instagram.

The legal status of “Digital Rights” is in flux. Since at least 2007, Indiana has recognized the right of an executor of an estate to retrieve digital records from the holder of the records after someone’s death. See I.C. 29-1-13-1.1.

Shatner
You haven’t lived until you’ve heard his cover of Dylan’s “Mr. Tambourine Man,” and after that, you won’t want to.

Apple’s iTunes Store doesn’t really sell a user ownership of a song, at least not in the way that most people think about ownership. Instead, iTunes sells a license for a user to play a song during his/her lifetime. Contract law allows Apple broad discretion in determining the terms of its contracts with users.  As a result, Apple can prohibit a user from allowing a friend or relative to access his digital assets if the user is ill or unable to function. These types of digital rights, by contract, essentially evaporate upon the user’s death, and the executor or personal representative of an estate would have nothing to access. Some social media outlets, like Twitter and Facebook, have developed their own policy to classify an account as inactive or terminate it entirely, after receiving some documentation, such as a death certificate.

But what if someone is not acting as the executor of a deceased person’s estate, but merely acting under a Power of Attorney for a still-living person—does that person have the same right of access? Although Indiana’s Power of Attorney statutes, particularly I.C. 30-5-5-19, could be broadly interpreted to include a right to access digital assets, there has historically been another hurdle: licensing agreements.

Without a law that forces the data holders to recognize the authority granted in a Trust or Power of Attorney, the Terms of Service with the original user will control the assets.  The result is that if Tom signs a Power of Attorney to allow Jerry to access his assets while he is ill, that will work fine for the brick-and-mortar bank, real estate agent, or brokerage firm, but it may be impossible for Jerry to help Tom handle his purely-digital assets.

This all may seem like a silly, academic discussion. After all, how valuable are my digital William Shatner spoken-word albums or pictures of last summer’s road trip to see the World’s Largest Ball of Twine?  For now, perhaps it does seem a bit superfluous to think of access to my online assets as anything approaching an essential part of my estate planning. (And that’s exactly what it is: estate planning. Dead or alive, your stuff is your estate. Deciding who controls it when you can’t is the heart of estate planning.) But consider how many creative assets (songs, movies, books, pictures, etc.) you only have in a digital format.  Is it more than half yet? Next, consider how many more of these you have in digital-only formats than you did 10 years ago. If this digital category is growing, then every year that someone can’t help you manage these assets is a year your estate plan is less effective than it used to be.

Indiana’s upcoming legislative session will bring with it an attempt to expand the ability of fiduciaries (a term which includes trustees and those granted authority under a power of attorney—not just executors of estates) to access digital assets. The bill will attempt to adopt the Revised Uniform Access to Digital Assets Act (RUFADAA). Similar attempts in 2015 failed, but the bill’s language has been amended to address privacy concerns, and many expect it to become law. This would pave the way for a Power of Attorney to clearly convey authority to access both digital—and conventional—forms of assets.

 

 

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