By Lawrence Garbuz and Adina Lewis
Nowadays, so many of our accounts are accessible only online or may even be completely digital, such as cryptocurrency. Additionally, we have social media accounts and email accounts which also can only be accessed by usernames and passwords. So what happens to them when we pass or when we become incapacitated? It is important that someone has the ability to access both financial (such as bank accounts, brokerage accounts and IRAs) and nonfinancial (such as emails and social media), which may only be able to be accessed online.
In order to provide for access to online accounts (financial or otherwise), New York and New Jersey have both enacted rules that outline access to these accounts when the account owner passes or in the event of the account owner’s disability or incapacity. These laws broadly define “digital asset” as an electronic record in which an individual has a right or interest, and can include an asset of personal value, such as email, contacts or social media, or an asset of monetary value, such as cryptocurrency.
The New York and New Jersey laws provide some guidance as to how an executor of an estate or an agent under a power of attorney can access a “catalogue of electronic communications” and/or the “content of an electronic communication.” A “catalogue of electronic communications” includes the names and email addresses for individuals with whom a person has emailed. The “content of an electronic communication” includes the substance of a communication that has been sent or received, which communication is (i) being held in electronic storage by a custodian and (ii) is not readily accessible to the public.
It may be difficult and time consuming for an executor to discover information regarding assets that can only be accessed online. As a preliminary matter the last will should provide the authority to the executor to handle digital assets. Names of individuals previously emailed may be the best way to find out the names of online (that is, paperless) bank or brokerage accounts where an account is held.
In order for an executor to gain access to this information, the executor would generally need to provide a written request, documentation from the local court reflecting the appointment and all other documents requested by the online custodian, including an affidavit stating that disclosure of the digital assets is necessary for the administration of the estate, and a court’s decision-making certain findings to provide access. The process may take some time, since (i) the named executor needs to wait for their appointment by the court and (ii) even after the executor’s appointment, the custodian of the records has 60 days or more to comply with the executor’s request.
Therefore, it is recommended to prepare (and periodically update as needed) a list (hard copy) of (i) all assets and the account numbers; (ii) the approximate value of each asset; (iii) for any online accounts, the website required to gain access to such online account; and (iv) the username and password for each online account. Although privacy concerns may prevent disclosure to a nominated executor during a person’s lifetime, it is important that the nominated executor know the location where such a list is kept, perhaps together with your other important legal documents.
During a person’s lifetime, a nominated agent under a power of attorney should know the whereabouts of online accounts or at a minimum the location of the list of where accounts are held. In the event of a person’s incapacity, the location of those assets may become critical to handle financial affairs if the need should arise.
Any list of assets should also include cryptocurrency, such as Bitcoin. Since cryptocurrencies may be held within a digital wallet, an executor and agent would need to know the username and password to access the digital wallet. However, even knowing the username and password for digital assets may not be enough. The executor and agent might also need to be able to access the person’s mobile device if multi-factor authentication is required. Therefore, the nominated executor or agent might need to know where to find (i) the list where the username and password to the person’s digital wallet may be held, (ii) the passcode to the person’s mobile device, and (iii) the mobile device.
The list of assets (including usernames and passwords) is not only essential for a nominated executor or agent; rather, such a list will help to ensure that a person can access his or her own digital assets. Multiple accounts, usernames and passwords may make it difficult to remember how to access these accounts. Forfeiture of digital assets has been reported in the media and is a real possibility for many.
Of course, ensuring access to digital assets is only part of the planning process. It is important to seek professional representation from counsel who focuses their practice on trusts and estates and who can therefore provide guidance in these types of matters.
Lawrence I. Garbuz, Esq. and Adina Lewis, Esq. are partners with the firm of Lewis and Garbuz, P.C. and have intentionally limited their practice to the fields of trusts and estates, elder law planning, estate litigation and guardianship. They can be reached at 212-867-9140 or at Law@LewisGarbuz.com. This article is for informational purposes only and should not be considered legal advice.