Author: Stephen Doyle, Associate Member, University of Cincinnati Law Review
On August 12, 2014, Gov. Jack Markell signed the Fiduciary Access to Digital Assets and Digital Accounts Act (FADADAA),[1] which will make Delaware the first state to permit heirs to inherit a decedent’s digital accounts or assets.[2] The law will become effective on January 1, 2015.[3] With increased technology use over the past decade, individuals have shifted from storing documents in physical locations to online accounts. Thus, this legislation provides many benefits for the decedent’s beneficiaries or any fiduciaries for the accounts, especially in the event of an unexpected death. However, the FADADAA poses potential privacy and contract issues, primarily for individuals and organizations not directly involved in the transfer of an asset under the law. Although it is too early to tell exactly what effects the Act will have, the advantages for beneficiaries and fiduciaries outweigh the negative implications the Act could have on third parties and consumer electronics companies.
The Text of HB 345
In July of 2014, the Uniform Law Commission passed the Uniform Fiduciary Access Digital Assets Act (UFADAA).[4] The FADADAA mirrors the UFADAA and Delaware is the first state to enact similar legislation.[5] Although Delaware is not the first state to enact legislation that grants beneficiaries or fiduciaries control of a decedent’s digital accounts and assets, it is the first to do so with broad language.[6] The FADADAA provides that “a fiduciary may exercise control over any and all rights in digital assets and digital accounts of an account holder.”[7] The terms “digital assets” and “digital accounts” are defined by the law and appear to encompass every kind of online account or information.[8] The law also includes provisions that void end-user license agreements if the agreements limit the “fiduciary’s access to or control over digital assets or digital accounts.”[9] However, the law only applies to intestate decedents residing in Delaware and those whose wills are governed by Delaware law.[10]
Issues with the FADADAA
Although the FADADAA has yet to take effect, there are uncertainties and potential conflicts surrounding the law. These issues include: (1) third-party privacy concerns; (2) contractual disputes with third parties and consumer electronics companies; and (3) conflicts with federal law. Even though the results of these issues are not certain until the FADADAA takes effect, when it does, an injured third party or company will have to bring its claim without any precedent. Nonetheless, these negative possible effects are not enough to outweigh all of the benefits the FADADAA brings to wills and estates law.
FADADAA and ECPA: Conflicting Communications Laws?
The Electronic Communications Privacy Act of 1986 (ECPA) criminalizes the intentional interception of electronic communications and disclosure of electronic content by a consumer electronics company.[11] If a third party claims that an interception of communications occurred during a FADADAA transaction, ECPA might impose liability on the beneficiary or fiduciary receiving the decedent’s digital assets, and even on the company with which the decedent had a relationship.[12] However, an exception to the ECPA does not criminalize the interception of transmissions when the owner of the communications consents or the government issues an order transferring the communications to the fiduciary. This exception would likely prevent a fiduciary or consumer corporation from facing liability under the ECPA for “intercepting communications” under the FADADAA. In addition, ECPA may actually provide a civil remedy outline to FADADAA, rather than criminalize actions taken under the law. In fact, an ECPA provision permits states to define what “lawful access” means under the act.[13] Delaware’s passage of the FADADAA would likely mean that a transfer within the scope of the FADADAA is “lawful access” consistent with ECPA. Therefore, it is unlikely that ECPA will impose penalties for transfers under the FADADAA.
Potential Contractual Disputes
FADADAA also poses contractual issues for companies in control of a decedent’s digital accounts and assets. Currently, the default rule is that the company that issued a decedent’s electronic account retains control over the account.[14] For instance, when a person dies, his iTunes collection is retained by Apple and not passed on to a relative.[15] Similarly, if a decedent provides in his will that he wants his Facebook account to be managed by his daughter, this violates Facebook’s terms of service.[16] However, the FADADAA will give control of those accounts to the appointed fiduciary or beneficiary, and may void end-user agreements to do so. The State Privacy and Security Coalition, which includes lobbying groups for Google and Facebook, has openly opposed the law for these reasons.[17] The invalidation of end-user license agreements that interfere with the assignment of a decedent’s accounts to a fiduciary or beneficiary will only increase opposition from consumer electronics companies.
Another issue will ultimately come down to what the fiduciary or beneficiary decides to do with the accounts, whether memorializing them for friends and family to remember the decedent, continuing them on the beneficiary’s or fiduciary’s own terms, or destroying them. The FADADAA does subject the fiduciary or beneficiary to legal duties and obligations.[18] However, if a beneficiary or fiduciary decides to continue operating an account on behalf of a decedent, the company in charge of the account may have a course of action against the fiduciary for violating the company’s terms of service, depending on how courts interpret the section of the FADADAA that deems end-user license agreements unenforceable.
FADADAA’s Benefits
The primary benefit of the FADADAA is that it accurately effects the decedent’s intentions. As mentioned, once an individual passes, his online accounts are currently managed by the companies that own the respective accounts, regardless of the decedent’s desire to pass on the accounts.[19] Physical accounts or assets are passed on to descendants, beneficiaries, or fiduciaries automatically, regardless of the owning company. Thus, the FADADAA is essentially bringing the law up to speed with Americans’ use of and dependence on technology by providing individuals with the right to dispose of their online accounts at death.
As for intestate decedents, heirs will be able to obtain control of a decedent’s online accounts via a request to the state. This control will provide closure for families who might wonder what will happen to the accounts and assets of the decedent, especially if the decedent’s death was unexpected. In addition, without the FADADAA, heirs would be incapable of receiving and controlling the decedent’s online accounts and assets, and the account would essentially die with the individual.[20] Once the FADADAA takes effect, this will no longer be the case. In sum, the fulfillment of a decedent’s intentions and the ability of an heir or beneficiary to control the decedent’s online account greatly outweigh any potential problems of the FADADAA.
Conclusion
Outside of issues with privacy concerns, federal law, and contract disputes, the FADADAA brings the law up to speed with society’s technological advances by passing a decedent’s digital accounts in a manner similar to her physical accounts. Many individuals are transferring information and assets from physical locations, such as safety deposit boxes and safes, to online accounts. The FADADAA is the first attempt to give relatives, beneficiaries, and fiduciaries the opportunity to control a decedent’s accounts in accord with the decedent’s wishes.
Ultimately, the courts will have to decide whether the FADADAA interferes with federal law, primarily the ECPA, or if it voids end-user license agreements with consumer electronics companies when the account holder dies. After that, other states may move forward with similar legislation that will protect the accounts and assets of decedents. Regardless of the courts’ decisions, the FADADAA is a step forward in protecting, destroying, or memorializing a decedent’s digital accounts and assets at a time when society is moving away from physical storage.
[1] 79 Del. Laws, 416, § 5 (2014).
[2] Jeff Mordock, Under New Law, Fiduciaries Can Access Deceased’s Digital Assets, Del. L. Wkly., Aug. 27, 2014, at 1. Tennessee and New York introduced similar legislation during their respective General Assemblies earlier this year, but only Delaware’s managed to survive the legislative process.
[3] 79 Del. Laws, 416, § 6 (2014).
[4] Mordock, supra note 2.
[5] Id.
[6] Id.
[7] Del. Code Ann. tit. 12, § 5004(a) (2014).
[8] See id. at § 5002(6)-(7). A digital account includes “electronic system for creating, generating, sending, sharing, communicating, receiving, storing, displaying, or processing information which provides access to a digital asset which currently exist or may exist as technology develops or such comparable items as technology develops,” while a digital asset includes “data, text, emails, documents, audio, video, images, sounds, social media content, social networking content, codes, health care records, health insurance records, computer source codes, computer programs, software, software licenses, databases, or the like . . .” Given terms such as “may exist as technology develops” and “the like,” this leads to the conclusion that the definitions of both of these terms encompasses many forms of online information.
[9] Id. at § 5004(b). An end-user license agreement requires the end user, or party accepting the account, to agree to a set of terms, mainly around sharing information in the account or arbitration matters, in order to be licensed to use the software they are purchasing or decline the terms and be unable to use the account. See generally, 6 Warren’s Forms of Agreements § 61.2.
[10] Mordock, supra note 2.
[11] 18 U.S.C.S. § 2511(1)(a) (2014).
[12] A District Court has held that emails are not subject to the ECPA, however. See U.S. v. Councilman, 245 F. Supp. 2d 319 (D. Mass. 2003), vacated, 418 F.3d 67 (1st Cir. 2005). The First Circuit Court of Appeals later vacated the decision but the case was ultimately dismissed without an additional hearing due to matters unrelated to the ECPA.
[13] See 18 U.S.C.S. § 2511 (2014).
[14] Adam Clark Estes, All States Should Adopt Delaware’s Sweeping New Digital Inheritance Law, Gizmodo (Aug. 19, 2014, 10:21 AM), http://gizmodo.com/all-states-should-adopt-delawares-sweeping-new-digital-1623803885.
[15] Id.
[16] Id. Facebook’s terms of service provide that a user may not share the password to his or her account. In transferring the account to a fiduciary, they would be sharing the password with the fiduciary.
[17] Mordock, supra note 2.
[18] Id.
[19] Estes, supra, note 14.
[20] The company in charge of the account could easily decide to manage it however it chooses. However, it is likely that a corporation will simply terminate the account once they are notified of the death of the account holder.
