Virtual Assets and Real Advice - Clients Need Candid Advice Regarding their Digital Assets (5 of 10)

(Part 5 of 10 part series)

C. Federal Privacy Laws

There are no federal laws explicitly recognizing an owner’s right to control the disposition of digital assets at death or incapacity.[i]  There are, however, several federal laws aimed at protecting a person’s privacy that can act as a constraint on an owner’s ability to legally control the disposition of online digital assets at death or incapacity.[ii]  A full discussion of these laws is beyond the scope of this Article, but the Stored Communications Act (“SCA”) applies directly to anyone wanting access to certain online digital assets.[iii] Specifically, the SCA prohibits the unauthorized access to an electronically stored communication to anyone that is not a party to that communication.[iv]  The statute also prohibits online service providers from divulging the contents of an electronically stored communication without the “lawful consent of the originator or an addressee or intended recipient of such communication.”[v] If a personal representative is not a party to the communication, he must show that he was previously authorized by the owner to obtain access.[vi]  Unfortunately, “authorization” and “lawful consent” are not defined in the statute.[vii]  Thus, a third-party representative has no clear path to gain access to these digital assets.

In the wake of this uncertainty, some online service providers are crafting terms of service agreements to restrict access in favor privacy law compliance.[viii]  If the digital asset is governed by a terms of service agreement that prohibits access by anyone other than an owner, a request for access by an owner’s representative is likely to be denied.[ix]  In such a case, the representative’s only course of action may be to get a court order.[x]  In one highly publicized case, Yahoo! refused a family’s request to gain access to communications stored in an e-mail account belonging to their deceased son, Lance Corporal Justin Ellsworth.[xi]  Only after the parents secured a court order did Yahoo! comply with their request.[xii]  Yahoo! emphasized, that without the court order, it would not have complied because granting access to a third party would violate Yahoo!’s privacy policy.[xiii]

III. Inadequacy of Developing State Law

A. Developing State Law

While contract law favoring these online terms of service agreements has been fairly well-developed, property law has not kept up in protecting the rights of users to dispose of their online digital assets.[xiv]  A handful of states have considered legislation on the subject, but only eight have enacted laws meant to expand the powers of legal representatives over a person’s digital assets.[xv]  The laws that have been passed vary greatly in scope are too new to know how they will impact the current legal landscape.[xvi]

The first three laws, enacted by California in 2000, Connecticut in 2005, and Rhode Island in 2007, only cover a small subset of digital assets – e-mail accounts.[xvii]   California’s law is very limited in scope and does not directly address the disposition of these assets at death or incapacity.[xviii]  Instead, the law imposes certain notice requirements that a provider must meet before terminating an e-mail account.[xix]  This presents two problems in an estate planning context: first, such a requirement may be meaningless if notice is sent to an e-mail accessible only to a deceased or incapacitated person; second, even if the representative receives timely notice, the law does not require the provider to recognize the representative’s authority to gain access.[xx]  On the other hand, the statutes passed in Connecticut and Rhode Island require that providers give executors and administrators access to the deceased person’s e-mail upon written request, “accompanied by a copy of the death certificate and a certified copy of the certificate of appointment as executor or administrator, or by court order.”[xxi]  While these latter two laws deal directly with dispositional rights, they do not cover any other type of digital asset.[xxii]

(Rest of article continued in series)