Even though digital technology has made several areas of life much simpler and more efficient, when it comes to estate planning, it has also created some additional problems. For instance, if you have not prepared correctly, finding and accessing all of your digital assets can be a significant or even impossible problem for your loved ones after your death or disability.
And in some situations, even though your loved ones can access your digital assets, doing so can breach privacy laws and/or the terms of service that regulate your accounts. You may also have some digital assets that you don’t want to inherit from your loved ones, so you’ll need to take action to limit and/or restrict access to those assets. There are a variety of special considerations you should be mindful of when including digital assets in your plan, considering the specific nature of your digital assets.
As per Michigan’s Fiduciary Access to Digital Assets Act (FADAA), a digital asset is “an electronic record in which the user has a right or interest,” although it “does not include an underlying asset or liability unless the asset or liability is itself an electronic record.”
Digital assets are considered part of your estate, just as with tangible assets. Ultimately, your family may face needless probate after your death without specific instructions as to your desires for your digital assets, and conflicts may occur between your loved ones. Michigan, however, has unique legislation regulating digital assets as discussed above.
Both Florida and Michigan passed the Digital Assets laws regarding Fiduciary Access. These laws were required to explain the legal rights of fiduciaries to access the online accounts and assets of deceased or disabled persons (including personal representatives or executors of estates, trustees, power of attorney holders, and guardians; the Michigan law also requires conservators). Four forms of fiduciaries who can get the digital assets of a deceased are identified by Michigan law:
A fiduciary working under the will or power of attorney;
When a fiduciary is properly appointed in a will or court order, the law of Michigan allows the fiduciary to provide the following documents to the digital custodian:
While these documents are normally adequate, it is not unusual for a digital custodian to also require:
The principal issues are privacy and access. For their financial accounts and correspondence, most individuals maintain online accounts. Account owners can now appoint an individual on their behalf to manage those assets. That person will be an agent under the power of attorney, executor, or trustee concerning digital assets. However, unless an individual is expressly allowed to obtain such records, access to the content of electronic communications is limited.
Many individuals have several digital assets and identities these days and may have difficulty maintaining their accounts and different passwords themselves. Imagine how difficult it would be for someone else to locate, access, and maintain or close such accounts if anything happens to the owner of the account and the account details are not well organized and open to family and fiduciaries. In certain situations, these assets and accounts have evolved to have a considerable monetary or emotional value that the account holder may not fully realize during their lifetime. It is necessary to take a careful inventory of all of your assets to complete a thoughtful and detailed estate plan, and digital assets are no exception.
The Fiduciary Access to Digital Assets Act deals with access to digital assets and not ownership of them.
To help fiduciaries and family members find useful and important online accounts and digital assets, we suggest compiling a full list of passwords, online user accounts, and other digital assets. This planning will keep the costs of administration down and will ensure that no digital property is neglected. Individuals may choose to keep this list in the same place as other essential records, or they may choose to keep the cloud up to date. If the above choice is selected, the cloud username and password must be included in a letter of instruction or with other relevant documents.
If you have digital assets that will require management by loved ones after your passing, it is best to consult our experienced estate planning attorney at the Leydorf Law Firm located in Lansing, Michigan.
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