Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation

Fiduciary Access to Digital Assets and Accounts

Think about the number of online accounts you have. There are social media accounts, financial accounts, e-mail accounts, cloud storage accounts, membership or professional accounts, music accounts and many others. Online accounts require less physical storage space, allow the user to access the account anywhere he or she has an internet connection and sometimes even provide a benefit for “going paperless.”

However, digital assets may cause issues for your executor, trustee, conservator or power of attorney (your “fiduciary”) in the event you become disabled or pass away. First, your fiduciary may not be able to determine what assets you have. Previously, a fiduciary could simply monitor a person’s mail to figure out what assets that person owned. But with more people handling transactions entirely online, the fiduciary may not receive statements in the mail and may miss the full picture of a person’s assets. Second, even if your fiduciary can determine what assets you have, he or she may have trouble accessing those assets or information about those assets. These two things can make it very difficult for your fiduciary to gather the information to prepare necessary tax returns and handle financial transactions on your behalf.

Earlier this year, the Arizona legislature enacted the Revised Uniform Fiduciary Access to Digital Assets Act (S.B. 1413). This legislation attempts to make it easier for a fiduciary to access the digital accounts of a disabled or deceased person. A person can specify in a will, trust, power of attorney or other record that his or her fiduciary is allowed to access the person’s digital assets. If the user does not provide direction in an estate planning document or complete a site specific tool (e.g. Google inactive account manager), then the fiduciary may still be entitled to access to some, but not all, of the information found in the person’s digital accounts under the new law.

There are several ways you can make it easier for your fiduciary to manage your financial affairs and digital assets if something happens to you:

  • Prepare an inventory of your digital assets – Make a written list of your electronic devices and online accounts that your fiduciary may need to access. This list should be easily accessible to the fiduciary, meaning you should not keep it in a safe deposit box or in electronic form on a device that your fiduciary cannot access. The list should include your usernames, passwords, account numbers, or any other information that may assist your fiduciary in handling your affairs.
  • Create a back-up of your digital assets offline – Keep a local copy of information, such as photos and important financial documents, on your computer, external hard drive or USB flash drive. This may make it easier for your fiduciary to handle your affairs because all of the information he or she needs will be in a central location.
  • Complete site-specific tools and institution-specific powers of attorney – If a website offers a site-specific form that you can complete to allow your fiduciary access to your account, take the time to fill out the form. Additionally, some financial institutions have an institution-specific power of attorney. Filling out these forms makes it less likely that your fiduciary will encounter problems with the institution not accepting other, more general forms.
  • Contact your attorney to update your estate planning documents to include a provision allowing your fiduciary to have access to your digital assets.

By Jenny Maas

Comments

  1. Laurie says:

    It is important to plan your estate and have everything documented. Great information, thanks for sharing!