Transferability of Digital Assets
July 17, 2017
In the current day, virtually everything we do online is driven by a world of digital accounts, user names, and passwords. Our banking and investment accounts, email, photo sharing sites, messaging sites, and everything we sign up for online requires some form of access that is protected, for our benefit, from others hacking into our information, stealing our identity, or even our money. So what happens to these digital accounts when we die? Do they forever end up in a virtual blackhole, or can we rely on a trusted family member or friend to manage or close our digital accounts according to our requests?
These questions have become increasingly problematic in recent years, as online activity and storage of sensitive information, both personal and business related, has become such an integral part of daily life. When families or trustees need to access their deceased loved ones’ online information, they face complicated dilemmas because Terms of Service agreements restrict or prohibit the transfer of these accounts to a third party fiduciary.
Yahoo, for example, immediately shuts down a user’s account if a family member notifies them of their death. All profiles, emails, and other pertinent personal and business information that was accessed through Yahoo are completely shut down and inaccessible. On the other hand, some service providers such as Google and Facebook are addressing the issue by offering a Legacy account, where the original user can designate specific people to assume some level of accessibility should you die or go inactive for a 90-day period of time.
The problem is – there is a federal anti-hacking statute that prohibits the transferability of accounts, and technically it is considered a federal criminal violation. But now individual states are creating their own regulations. In 2016, the Maryland Fiduciary Access to Digital Assets Act was passed by Governor Hogan to address some of these issues. This act grants disclosure of digital information and communications to a Power of Attorney or assigned fiduciary, and makes it easier to gain access to a loved ones’ digital assets.
While this is a great step to addressing this issue, and more and more states are creating these new regulations, judges, operators of online sites, and laypeople all want to know… What does it mean? And does that federal statute overrule and pre-empt the state regulations? From a business perspective, companies like Google and Facebook might have the resources to create and regulate 50 different terms of service agreements for 50 different states, but do they want to have 50 different regulations laid out in their agreements. And what does it mean for startup service providers who might not have the capital to do this?
Time will tell us where this is headed and it is a still a relatively new area of law that is developing. In the meantime, having certainty in your affairs is valuable and you should have a discussion with a legal professional about providing ensuring access to your digital assets by a third party fiduciary should anything happen to you. To learn more, please call us at (410) 539-5195 to discuss your options.