What Is Michigan’s Fiduciary Access To Digital Assets Act?

 

In 2016, Michigan was one of several states to pass its version of the Uniform Fiduciary Access To Digital Assets Act to update the state’s estate planning and probate administration rules to conform with the realities of the digital age.  In the past, if a parent died or became legally incapacitated, the personal representative or some other fiduciary would go through private papers at home, in a safe, or in a bank safety deposit box to find property or account information so those assets can be managed.  However, most private information has shifted to online accounts and data is now stored in the cloud or kept on network servers at financial holding companies.  This information is not readily accessible and many companies were refusing to provide fiduciaries the credentials necessary to access these online accounts out of fear of civil liability or privacy rights.  Now, Michigan law provides these fiduciaries the legal tools to access these online accounts and carry out the wishes of the deceased or incapacitated person.

 

DEFINITIONS

Michigan’s Fiduciary Access To Digital Assets Act uses the following terms under the following definitions:

• “Digital asset” means an electronic record in which a user has a right or interest. MCL 700.1102(j). This includes, but is not limited to, email accounts, social media accounts, brokerage accounts, online banking accounts and cloud storage accounts.  For the purposes of this act, a digital asset of an employer used by an employee in the ordinary course of business is specifically excluded.  MCL 700.1003(4).

• “Digital custodian” means a person that carries, maintains, processes, receives, or stores a digital asset of a user. MCL 700.1002(k).  “Person” means an individual or an organization.  MCL 700.1106(o).  Digital custodian includes companies that control access to digital assets such as Microsoft, Yahoo!, Apple, Facebook, Twitter, etc.  This can also include financial institutions like banks, investment firms and insurance companies that maintain online access to banking and brokerage accounts.  “This act applies to a digital custodian if the user resides in this state or resided in this state at the time of the user’s death.”  MCL 700.1003(2).

• “Fiduciary” means a person who is an original, additional, or successor personal representative, conservator, agent, or trustee. MCL 700.1002(p).  Specifically, this act applies to the following fiduciaries:

• • “A fiduciary acting under a will or power of attorney executed before, on, or after the effective date of this act.” MCL 700.1003(1)(a).
  • “A personal representative acting for a decedent who died before, on, or after the effective date of this act.” MCL 700.1003(1)(b).
  • “A proceeding involving a conservator commenced before, on, or after the effective date of this act.” MCL 700.1003(1)(c).
  • “A trustee acting under a trust created before, on, or after the effective date of this act.” MCL 700.1003(1)(d).

• “Designated recipient” means a person chosen by a user using an online tool to administer digital assets of the user. MCL 700.1002(h).  This is the person designated by the user in the digital custodian’s records to be able to contact the digital custodian and obtain digital assets such as a spouse, family member or friend who is not necessarily acting as a fiduciary.

 

DISCLOSING DIGITAL ASSETS

Upon request, a digital custodian may at its sole discretion do any of the following:

• “Grant a fiduciary or designated recipient full access to the user’s account.” MCL 700.1006(1)(a).

• “Grant a fiduciary or designated recipient partial access to the user’s account sufficient to perform the tasks with which the fiduciary or designated recipient is charged.” MCL 700.1006(1)(b).

• “Provide a fiduciary or designated recipient a copy in a record of any digital asset that, on the date the digital custodian received the request for disclosure, the user could have accessed if the user were alive and had full capacity and access to the account.” MCL 700.1006(1)(c).

However, this access by a fiduciary or designated recipient can be limited as follows:

• “A user may use an online tool to direct the digital custodian to disclose or not to disclose to a designated recipient some or all of the user’s digital assets, including the contents of electronic communications. If the online tool allows the user to modify or delete a direction at all times, a direction regarding disclosure using an online tool overrides a contrary direction by the user in a will, trust, power of attorney, or other record.” MCL 700.1004(1).  This means that the user can override the access of a personal representative, trustee, conservator or other fiduciary to access their account if they used the online tool to designate a person with authority to access the account (e.g. Facebook allows a user to designate a legacy contact with the right of access after death, which trumps even court-appointed personal representatives or conservators in their power to obtain disclosure.

• “If a user has not used an online tool to give direction… or if the digital custodian has not provided an online tool, the user may allow or prohibit in a will, trust, power of attorney, or other record disclosure to a fiduciary of some or all of the user’s digital assets, including the contents of electronic communications sent or received by the user.” MCL 700.1004(2).  This means that if the user explicitly designates in their estate planning that they do not want the fiduciary or anyone else to have access to the digital asset, then those wishes will be respected.

• “A digital custodian is not required to disclose under this act a digital asset deleted by a user.” MCL 700.1006(3).

• “If a user directs or a fiduciary requests a digital custodian to disclose under this act some, but not all, of the user’s digital assets, the digital custodian is not required to disclose the requested digital assets if segregation of the requested digital assets would impose an undue burden on the digital custodian. If the digital custodian believes the direction or request imposes an undue burden, the digital custodian or fiduciary may seek an order from the court to disclose any of the following:”

• • “A subset limited by date of the user’s digital assets.” MCL 700.1006(4)(a).
  • “All of the user’s digital assets to the fiduciary or designated recipient.” MCL 700.1006(4)(b).
  • “None of the user’s digital assets.” MCL 700.1006(4)(c).
  • “All of the user’s digital assets to the court for review in camera.” MCL 700.1006(4)(d).

In order for the fiduciary or designated recipient to receive digital assets, he or she must provide the following items to the digital custodian:

• A written request for disclosure in physical or electronic form.

• A copy of the death certificate if the user is deceased.

• A copy of the person representative’s letters of authority, the trustee’s certificate of trust, the conservator’s letters of authority, or the power of attorney document granting authority to the fiduciary.

The digital custodian may also require the following additional information from the fiduciary or designated recipient before disclosing any digital assets or information:

• A number, username, address, or other unique subscriber or account identifier assigned by the digital custodian to identify the user’s account.

• Evidence linking the account to the user.

• An affidavit stating disclosure of digital assets is necessary to administer the estate.

• The digital custodian may even compel the fiduciary or designated recipient in some cases (e.g. personal representatives and conservators) to go to the probate court and compel the judge to make the following findings:

• • The user had a specific account with digital custodian which is identifiable.
  • Disclosure of the content of the user would not violate applicable federal or state laws.
  • Unless the user provided direction using an online tool, the user consented to the disclosure of the electronic communications.
  • Disclosure of the contents of electronic communications of the user is reasonably necessary for administration of the estate.

In the case of a decedent’s estate, an interested person may file a petition with the probate court asking for an order to limit, eliminate or modify the personal representative’s powers with respect to the decedent’s digital assets. MCL 700.1017.  On receipt of such petition, the court shall set a hearing date not less than 14 days but not more than 56 days after the date the petition is filed, except for good cause.  Id.  “Interested person” includes, but is not limited to, the incumbent fiduciary; an heir, devisee, child, spouse, creditor, and beneficiary and any other person that has a property right in or claim against a trust estate or the estate of a decedent, ward, or protected individual; a person that has priority for appointment as personal representative; and a fiduciary representing an interested person.  MCL 700.1105(c).  Such a petition may arise when a family member is interested in protecting the privacy or reputation of the deceased user.

 

FIDUCIARY’S RESPONSIBILITIES

“A fiduciary with authority over the property of a decedent, protected person, principal, or settlor has the right to access any digital asset in which the decedent, protected person, principal, or settlor had a right or interest and that is not held by a digital custodian or subject to a terms-of-service agreement.”  MCL 700.1015(3).  However, “[t]he legal duties imposed on a fiduciary charged with managing tangible personal property apply to the management of digital assets, including… [t]he duty of care, [t]he duty of loyalty, [and] [t]he duty of confidentiality.”  MCL 700.1015(1).

The fiduciary is limited to using the digital asset within the scope of the fiduciary’s duties and not for personal gain.  MCL 700.7015(2)(c).  The fiduciary is absolutely forbidden from using the digital asset to actually impersonate the user.  MCL 700.7015(2)(d).  The fiduciary of a user has the power to request the digital custodian to terminate the user’s account.  MCL 700.7015(7).  “A fiduciary is immune from liability for an action done in good faith in compliance with this act.”  MCL 700.7015(8).

 

DIGITAL CUSTODIAN’S RESPONSIBILITIES

A digital custodian must comply with a written request by an authorized fiduciary or designated recipient to disclose digital assets or terminate an account with 56 days after receipt.  MCL 700.1016(1).  “[I]f the digital custodian fails to comply, the fiduciary or designated recipient may petition or otherwise apply to the court for an order directing compliance.”  Id.  Failure to comply could lead to civil liability and an award of attorney fees and costs to the petitioning party.

A digital custodian has the right to notify the user (if living) that a request for disclosure or to terminate an account was made under this act.  MCL 700.1016(6).  In addition, “[a] digital custodian may deny a request under this act from a fiduciary or designated recipient for disclosure or to terminate an account if the digital custodian is aware of any lawful access to the account following the receipt of the request.”  MCL 700.1016(7).

The digital custodian has the right to obtain a court order (or to require the fiduciary or designated recipient requesting disclosure to obtain a court order) that does any of the following:

• “Specifies that an account belongs to the protected person or principal.” MCL 700.1016(8)(a).

• “Specifies that there is sufficient consent from the protected person or principal to support the requested disclosure.” MCL 700.1016(8)(b).

• “Contains a finding required by law other than this act.” MCL 700.1016(8)(c).

“A digital custodian and its officers, employees, and agents are immune from liability for an action done in good faith in compliance with this act.”  MCL 700.1016(9).

 

THE BOTTOM LINE

Michigan law has changed with evolving times to address the need for fiduciaries and designated persons to obtain digital assets for proper administration of those estates.  However, the owners of these digital assets should be aware of their ability to limit or prohibit the ability of these fiduciaries to access certain information that they would prefer to keep private after death such as confidential emails and unposted social media messages.  Anyone concerned with their privacy in an increasingly digital world should work closely with a skilled probate lawyer to ensure that their wishes regarding private electronic information is respected.

If you or a loved one have further questions about Michigan’s Fiduciary Access To Digital Assets Act or need legal representation, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.