Fiduciary Access to Digital Assets Act

Recent data suggests that nearly 3 out of 4 American adults use at least one form of social media.  The use of online applications for storage of documents, photos, videos and other data is on the rise.  The vast majority of Americans who have digital assets or use social media are unaware or misinformed about what happens to these digital assets upon death.

When joining a social media site or signing up for a cloud-based storage account, you are presented with standard terms and conditions.  Let’s be honest – no one reads those terms and conditions!  However, the standard terms and conditions for some providers have provisions for “leaving” digital assets to heirs or individuals, or at least for granting access to these digital assets to specific individuals.

Until recently, Michigan had no specific provisions which would allow individuals to leave instructions or grant access to digital assets upon death or upon disability.  With the passage of the Michigan Fiduciary Access to Digital Assets Act (the “Act”), Michigan residents will soon have the right to leave instructions in a will, trust, durable power of attorney or other estate planning documents which allow others to access digital assets.

In order to take advantage of the provisions of the Act, it is important to make sure your estate planning documents contain language granting someone access to your digital assets.  As long as the governing document contains a provision granting such access, the Act specifically gives access to digital assets to:

  • Personal Representatives acting under a Will, regardless of whether the Will was signed before or after the Act took effect, and regardless of whether the decedent died before or after the Act took effect;
  • Agents acting under a Durable Power of Attorney, regardless of whether the Durable Power of Attorney was signed before or after the Act took effect;
  • A Conservator, regardless of whether the Conservatorship began before or after the Act took effect; and
  • A Trustee acting under a Trust, regardless of whether the Trust was created before or after the Act took effect.

The Act specifically applies to digital service providers if the user of that digital service resides in Michigan or resided in Michigan at the time of the user’s death.

Some digital service providers already allow users to designate a “beneficiary” that will have access to the digital assets following death.  For instance, Facebook allows users to designate a legacy contact, and Gmail allows users to designate an “Inactive Account Manager.”  If the particular service provider offers these types of controls, and you take advantage of them, the direction given to the service provider overrides a contrary direction in a will, trust, power of attorney or other estate planning document.  Therefore, it is important to make sure that these types of “beneficiary designations” associated with digital assets are consistent with estate planning documents which are in place.

There are some important caveats of the Act to be aware of, which include:

  • The Act does not apply to a digital asset of an employer used by an employee in the ordinary course of business. So, agents, personal representatives, trustees, conservators and the like really only have access to “personal” digital assets.
  • The Act does allow digital service providers to request verification of death and or disability before disclosing information or giving access to digital assets, and does allow the digital service provider to charge a reasonable administrative fee for disclosing digital assets.
  • The same legal duties imposed on a fiduciary when managing assets apply to the management of digital assets, including the duty of care, the duty of loyalty and the duty of confidentiality.

The Act does not become effective until June 27, 2016.  In the meantime, it is a good idea to update your estate planning documents to make sure that your estate planning documents contain language giving your agents access to digital assets in the event of death or disability.  It is also wise to double check all of your digital accounts to make sure that any designation with those digital assets, such a legacy contact or an inactive account manager, are consistent with your estate planning documents.

If you have questions or concerns about the Act or its impact on you, feel free to contact Kevin Huss to discuss this further.