Delaware recently became the first state to pass a law that allows families broad rights to access the digital assets of a deceased or incapacitated individual. Signed into law on August 12th, the legislation, available here, allows fiduciaries to access digital assets, such as email, social media, financial management, health care and other accounts, just as they would take possession of physical ones. Previously, fiduciaries were bound by the deceased-user policies of the individual service providers, many of which were insufficient or simply nonexistent.
Though several other states have dipped their toes in the metaphorical digital asset access water, none have passed a law nearly as broad and sweeping as this one, which is based on the Uniform Fiduciary Access to Digital Assets Act adopted by the Uniform Law Commission earlier this year. It represents a major recognition by legislators that our laws haven’t been able to keep up with the rapidly evolving technological landscape and that broad action is required to attempt to bridge the ever-growing gap.
It’s important to note that this law will only apply to Delaware residents and estate planning documents governed by Delaware law and isn't otherwise binding on the number of tech companies, including Twitter and Google, that are incorporated in the state.
Another interesting point to consider is the possible effect on the state’s trust business. Though the recent trend has been a “race to the bottom,” whereby states attempt to drum up dynasty trust business by loosening or even repealing the rule against perpetuities and passing trust protector and decanting statutes, embracing the digital aspects of our lives may give Delaware, already considered a strong trust jurisdiction, a leg up on the competition. It’s an innovative way to offer added layers of protection and control, which are extremely attractive elements for those looking to set up dynasty trusts.
This legislation is major step forward for estate planning law in this country. Even though Delaware isn't populous, and we won’t really see the full impact such laws can have until a larger state, like California or New York, steps up to the plate, Delaware’s status as a highly desirable trust jurisdiction gives it outsized influence in the estate planning arena. Advisors would do well to pay attention to the potential fallout from this law.