Pennsylvania Trust

Protection in a Digital World

Protection in a Digital World

Have you ever used the internet to make a purchase? To get directions to a specific address? To send an email message? In this digital age, many of us use the internet for the majority of our communication with the outside world. We make purchases and interact with our financial institutions, checking our accounts, paying our bills, and making investments. But what happens if you become incapable of accomplishing these online tasks during your lifetime? Who will be empowered to administer your digital assets when you die? Although the law governing these issues is unsettled and varies from state to state, you can take several precautions to ensure continuity in the event of incapacity, and provide certainty to your loved ones after your death.

What is a digital asset?

Although no state or federal law presently defines this concept, the Uniform Law Commission Drafting Committee (an organization dedicated to drafting uniform laws such as the Uniform Trust Act and the Uniform Commercial Code) has suggested a definition of a digital asset as “an electronic record to which an account holder is entitled to access.” If you begin to consider it, you quickly realize this comprehensive definition includes, but is in no way limited to, email accounts; online bank and investment accounts; photographs, music, and documents stored on a computer; voicemail; and digital forms of information that may not yet exist.

What is the concern?

Three simple variables can be cause for uncertainty. First, the state of the law governing digital assets is unsettled. Second, the law that does exist can impose liability on those who are unaware of it. Finally, the concept of a digital asset is unclear.

Federal law may impose criminal penalties for unauthorized access to digital assets. The Stored Communications Act, which is part of the Electronic Communications Privacy Act, generally creates a criminal offense for intentional, unauthorized access to digital assets. In addition, custodians of digital assets are prohibited from providing access to digital assets without explicit consent of the owner. See 18 U.S.C. §2701-02. As a result, online custodians of digital assets (such as Yahoo, for email; Pennsylvania Trust, for access to investment accounts; Apple, for iTunes; and Flickr, for photographs) are unlikely to provide access to an individual’s accounts in the event of incapacity or death, absent a court order or other document, such as a carefully drafted power of attorney or language in a will. At the same time, agents under powers of attorney, or executors of estates, should be concerned about personal liability for accessing such accounts absent explicit authority.

What can you do?

Regardless of the state of the law or concerns discussed above, there are several things you can do to ensure you are protected.

Take a digital inventory. Spend some time making a list of the websites you visit that require a user name and password (including financial institutions, credit card accounts, and social networking websites). Make a list of those websites and the login information required to access them. Understand the locations of your digital music, photograph, and document files; if they are located on your personal computer, consider making a list of the locations of the documents, and if they are located in the “cloud,” ensure the method to access those documents is included on your list. Include your email addresses, and consider noting the purpose of each email address (such as personal, business, or online shopping).

Consider a digital power of attorney. If you have named a relative or trusted individual agent under a general power of attorney to act for you in the event you are incapacitated, review that document to determine whether it specifically gives your agent the power to access your digital assets. If it does not, consider consulting with your attorney to include appropriate language. If you have not yet executed a power of attorney, consider doing so, and in the process, ask your attorney to give your agent the explicit power to access your digital assets.

Provide for the disposition of your digital assets at death. Your digital assets have value, just as your home and investments. You may have spent years accumulating frequent flyer miles, money building an iTunes library, and time creating priceless digital photographs. You have the ability to dispose of those assets at your death, and you should consult with your attorney to ensure that just like other family heirlooms, the disposition is designed with your intentions in mind.

The concept of digital assets is relatively new to many of us and is certainly a topic that should be addressed with thoughtfulness. Pennsylvania Trust’s team of experienced professionals welcomes the opportunity to assist you in considering the administration and disposition of digital assets.