AICPA’s National Advanced Estate Conference: RUFADAA Is Most Important Law You Don't Know About
By Jeffrey Levine, Director of Retirement Planning
Follow Me on Twitter: @IRAGuru4EdSlott
Greetings from the 2016 AICPA National Advanced Estate Planning Conference! Having presented the last of my three sessions here on Monday evening, I’ve been enjoying the rest of my time by meeting many CPAs and other professionals here, as well as attending a host of excellent sessions.
One session which I particularly enjoyed was presented by Anne Coventry and Karin Prangley, and covered the latest developments in the area of digital estate planning. That may not seem very important to you at first glance, but the reality is that it could be VERY important. And that importance is only likely to grow in the coming years.
Consider the fact that today, the average – the average! – American has over 20 accounts online. Couple that with the fact that roughly 95% of teenagers, and even 85% of adults, are internet users, and you begin to realize that you may have a fair amount of digital assets. Digital assets? Say what?
In short, digital assets represent anything created, communicated, sent, received or stored by electronic means. These assets may have their own financial value, such as a desirable domain name, may be the way to access assets with financial value, such as an online bank account that stores statements, or they may just have personal and/or sentimental value, such as a personal email or social media account.
During your lifetime, you can generally control these assets to a large degree, but what happens when you die? That’s where the train begins to go off the track. Our laws have simply not caught up with our technological advances, and in truth, technology companies have not really made the process easy either.
If you think you’ve got this all handled because somewhere, either on paper or digital form, you have some master list of your logins and passwords, think again. In many cases today, it is illegal for anyone other than you to access a particular digital account. You may think of “hacking” as someone sitting in dark room somewhere with a Guy Fawkes mask on feverishly typing away on a keyboard, but anytime someone accesses information without proper authorization, that – hacking – is exactly what they’re doing. Even if you give permission for an executor or other person to access your accounts, it may be moot. Many user agreements (terms of service) – you know, those longwinded popups where you quickly scroll to the bottom and click accept – expressly prohibit you from transferring your digital asset either in life or upon death. Consider the following excerpt from Yahoo!’s terms of service provided Coventry and Prangley:
“Yahoo! Terms of Service: No Right of Survivorship and Non-Transferability. You agree that your Yahoo! account is non-transferable and any rights to your Yahoo! ID or contents within your account terminate upon your death. Upon receipt of a copy of a death certificate, your account may be terminated and all contents therein permanently deleted.”
So basically, Yahoo!’s terms of service say that at the moment you die, your account and everything in it are poof ... no more. Do you have important emails with documents, pictures or other content you’d want passed along to children or made available to your representatives after death, such as bank, credit card or other statements? Too bad! And remember, you can’t – at least not legally – just pass along your login and password info for someone else to use, because that would be an illegal violation of Yahoo!’s terms of service – and hacking (hacking just sounds so much more nefarious, right?).
Clearly, this is not good. Thankfully though, help may be on the way. After years of battling against one another and killing each other’s proposals, representatives from the Uniform Law Commission – lobbying on behalf of the “little guy” – and lawyers for several of the big electronic communications services – think firms like Facebook – came together and worked out a compromise known as the Revised Uniform Fiduciary Access to Digital Assets Act, or RUFADAA for short.
RUFADAA solves many of the problems currently faced when it comes to executing a legal digital estate plan. Under the law, a fiduciary – such as your executor – can manage certain digital property, such as web domains and virtual currency (i.e., bitcoin) by default, and also allows a fiduciary to access emails, text messages, social media and other similar accounts IF – and only IF – you’ve properly consented.
So just how do you properly consent? It depends. Your consent may be in the form of a will, trust, power of attorney, on-line tool or other record. Want someone other than your executor to have access to your digital assets? Simply consider appointing a special fiduciary in your estate planning documents dedicated to that purpose.
One critical aspect of the law that will almost certainly play an increasingly important role in future years is that if you have two sets of instructions – say one via your will and another via an online tool – the instructions you leave in your online tool will trump any of your other instructions. Chances are that right about now you’re wondering “what is an ‘online tool?’” There aren’t many available today, but Facebook’s “Legacy Contact” would be a prime example. The tool can allow you to designate a specific person to take certain actions on your behalf after you’ve passed away.
Now if you’re a big company, like Twitter, would you rather create an online tool like this that can be automated, or would you rather spend time, money and resources to sift through users’ wills and/or other legal documents? Exactly! That’s exactly why during Coventry and Prangley’s presentation, they postulated that in the future we’ll see many more of these online tools. And I for one fully agree.
So the good news is that RUFADAA solves so many of the problems so many families have been dealing with for years. The bad news, however, is that RUFADAA is not a federal law. It’s a template law that must be adopted (and often slightly modified) by each state on its own. To date, less than 20 states have adopted the law, though about a dozen or so more have introduced it, so that number could rise soon.
For now, the best advice of many experts is to update your estate plan to specifically include access to digital assets and to create a master list of accounts, stored securely – either digitally or physically – that can be accessed when and if it becomes necessary.
Content Citation Guidelines
Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.
Please be advised that prior to distributing re-branded content, you must send a proof to email@example.com for approval.
For white papers/other outflow pieces:
Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.
Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.
For Slott Report articles:
Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.
Please contact Matt Smith at firstname.lastname@example.org or (516) 536-8282 with any questions.