ULC Rewrites ‘Uniform Fiduciary Access to Digital Assets Act’
Almost exactly one year ago I wrote a blog post about the ‘Uniform Fiduciary Access to Digital Assets Act’ (UFADAA) that was adopted in July 2014 by the Uniform Law Commission (ULC). My post provided an overview about how the model legislation was crafted and what it provided, and explained that it would be considered — and perhaps enacted — on a state-by-state basis. But as they say: not so fast. Less than one year following its adoption, opposition to UFADAA forced the ULC back to the drawing board to make substantial revisions to its model legislation.
Technology Companies Flex Muscle
Shortly after ULC adoption, vocal opposition to UFADAA emerged from major internet and tech companies (and their lobbying group NetChoice). They objected largely on the basis that the law violated decedents’ privacy interests and would improperly override terms-of-service (TOS) agreements. Last October, I even wrote a blog post lampooning some of those claims made by a Yahoo spokesperson (“Big Internet Companies Oppose FADA Legislation — Really!?!“).
Civil liberty organizations also later expressed concerns.
While those interest groups were involved in the 3+ year process of crafting UFADAA, it was adopted despite their opposition. But as it turned out, the opposition didn’t accept the result lying down and didn’t limit themselves to critical blog posts. They did what interest groups do — they lobbied. Hard. And in the end, it seems they won.
State-by-State: UFADAA Fails
Early in 2015, the state-by-state legislative agenda for UFADAA appeared to be moving forward and on track. In the first half of 2015, UFADAA was introduced by legislatures in at least 27 states. Yet by mid-2015 none had enacted UFADAA (except in 2014 a modified version in Delaware) and the legislative process seemed to hit a brick wall.
Illinois SB1376 is one of the more interesting examples. As I followed its progress from March through May this year, it appeared to be easily heading for passage. The bill passed the Senate Judiciary Committee 9-0, then amended 11-0, then passed the full Senate 57-0, then passed the Civil Judiciary Committee 11-0 on May 13. Not a single vote in opposition. A slam dunk, right? Well, not exactly. On May 31, SB1376 was re-referred back to the House Rules Committee, which is basically where bills go to die.
What happened? I won’t pretend to truly understand the Illinois legislative process (and if I did I’d probably need to shower more frequently), but it appears something happened between the bill’s introduction in February and May 31 — and that something had to do with the powerful opposition to UFADAA. The fact that a similar scenario played out in more than 20 other states is another pretty good clue.
The PEAC Alternative to UFADAA
Tech companies didn’t merely object to UFADAA, they also created and promoted alternative draft legislation. The “Privacy Expectation Afterlife and Choices Act” (PEAC), introduced simultaneously in several states, presented an approach fundamentally different from UFADAA.
The UFADAA approach presumptively vests an estate administrator with the ability to access digital assets — to step into the shoes of the decedent for purposes of administering the estate. Unless the decedent affirmatively provided otherwise (in a will, trust or contract), the administrator would have authority to access digital assets (e.g. an e-mail account) for purposes of estate administration.
The PEAC approach is just the opposite. As NetChoice describes: it sets “privacy on” by default. Digital assets would be accessible by a fiduciary only when authorized affirmatively in advance by the decedent. In other words: no estate plan = no access.
Further, even when expressly authorized, an estate administrator might only get access to so-called “outside of the envelope” information. For example, while the administrator might discover that an e-mail was sent from an American Airlines reward program, they would not be able to open the e-mail to see the rewards account number, miles balance, etc.
PEAC has been introduced in three states (California, Oregon and Virginia) and has been enacted (in modified form) only in Virginia.
UFADAA vs. PEAC: Bridging the Gap?
“I think there are a lot of practical changes we can make that will bridge the gap between the two sides,” said Suzanne Brown, chair of the Uniform Law Commission, in article published May 28. Yet, as recently as June 15, the ULC strongly defended UFADAA in a letter to Pennsylvania legislators.
But in the face of widespread legislative defeat, the ULC sought to re-engage the opposition in an effort to “meet half-way” between UFADAA and PEAC. They went back to the drawing board to revise UFADAA. And they did it quickly. On July 15, 2015 the ULC officially approved Revised UFADAA, the text (16 pages) of which can be read at the following link:
Unlike the prior UFADAA, whose draft and numerous edits had been posted and dissected on the internet for years, Revised UFADAA was first posted only last week. And without much fanfare. I’ve yet to see a blog post, article or discussion about the revised draft, or even a press release.
Presumably, all of the pending bills based on 2014 UFADAA will die, and Revised UFADAA will re-enter state legislative consideration next year.
The Revised UFADAA Approach
Revised UFADAA didn’t simply redline certain portions — it is organized differently and is a complete rewrite. I’ve read through it a couple of times, but it’s going to take some time and analysis to really digest the terms and implications. So I’ll leave deep analysis for a later date, but just note a few initial impressions in terms of differences between 2014 UFADAA vs. 2015 Revised UFADAA:
1. “Online Tool” Introduced. Revised UFADAA introduces the concept of an “online tool” for directing fiduciary access. An online tool is defined as an electronic service provided by a custodian that is distinct and separate from the TOS. Some actual examples: Facebook’s Legacy Contact and Google’s Inactive Account Manager. Revised UFADAA expressly permits a custodian to offer an online tool and provides that a direction regarding disclosure using an online tool supersedes a contrary direction in a will, trust or power of attorney.
2. Catalogue vs. Content of Electronic Communications. Revised UFADAA draws a sharp distinction between disclosing a catalogue of communications (the “outside of the envelope” information described earlier) as opposed to the underlying content. If certain conditions are met, a catalogue may be provided to a decedent’s fiduciary without express prior consent, whereas the actual content may only be provided with express prior consent (and subject to numerous conditions).
3. Emphasis on Court Orders. It’s true that the devil is often in the details. One of my concerns with Revised UFADAA involve terms that seem to allow a custodian to require a court order whenever the custodian requests one — even when properly addressed in an estate plan. As a probate attorney, I suppose I should like this. But I don’t. The reality is that probate dockets are busy and obtaining court orders on a case-by-case basis is an impractical burden. I would prefer that clear estate plan directives are honored, without a probate judge having to re-confirm what is already in writing.
Estate Planning for Digital Assets: Enhanced Importance
The fundamental shift in approach in Revised UFADAA makes it even more important to: (a) have an estate plan; and (b) address fiduciary access to digital assets within that estate plan. Whereas the original UFADAA attempted to vest all estate fiduciaries with presumptive access to digital assets, Revised UFADAA gives increased importance and weight to specific direction provided in a will, trust and power of attorney (and in an online tool).
While the law in this area remains unsettled for now and the immediate future, a proactive planning approach addressing the issue is highly recommended. In addition to specific language within estate planning documents, it’s also important to leave a roadmap of information (accounts, usernames, passwords, etc.) for your designated fiduciaries.
As the law continues to develop in this area, I’ll keep readers updated on important developments in estate planning for digital assets.
UPDATE 7/22/15: The ULC posted to its website a comparison chart for the terms of 2014 Original UFADAA vs. the PEAC Act vs. 2015 Revised UFADAA. It is very helpful in understanding the differences between the three approaches.