Fiduciary Access to Digital Assets and Digital Accounts

On January 1, 2015, Delaware’s new Fiduciary Access to Digital Assets and Digital Accounts statute (“FADADA”, 12 Del.C. § 5001 et.seq.) went into effect.  This statute is meant to address the difficulties that fiduciaries—trustees, guardians, executors, powers of attorney, to name a few—face when attempting to handle digital assets and accounts in connection with the performance of their duties.  Section 5002 of FADADA defines “digital accounts” and “digital assets” quite broadly, including texts, emails, social media accounts, health insurance accounts, financial institution accounts, usernames, passwords, and virtually anything else that can be digitally transferred or stored.

In general terms, FADADA allows a fiduciary to exercise control over any and all rights in digital accounts and assets of an account holder.  Section 5005(a) provides that a fiduciary with authority over digital assets or digital accounts of an account holder shall have the same access as the account holder, and is deemed to have the lawful consent of the account holder, and to be an authorized agent or user under all applicable state and federal law and regulations and any end user license agreement.

Thus, at first glance, it would seem that any fiduciary acting on behalf of an account holder will, simply by virtue of being a fiduciary, have the same access to and control of the digital assets and accounts as the account holder.  However, as is often the case, things may not always be that simple.  Specifically, it appears that an agent acting under a durable power of appointment does not automatically obtain the same access as the principal, as seems to be indicated by FADADA.  This is due to Section 49A-201(b)(8) of Delaware’s Durable Personal Powers of Attorney Act, which states:

(b) An agent under a personal power of attorney may do the following on behalf of the principal or with the principal’s property only if the personal power of attorney expressly grants the agent the authority and exercise of the authority is not otherwise prohibited by another agreement or instrument to which the authority or property is subject:

(8) Exercise all rights and powers granted to a fiduciary under the Fiduciary Access to Digital Assets and Digital Accounts Act, Chapter 50 of this title.

In simple terms, this means that an agent acting on behalf of a principal under authority of a durable personal power of attorney does not automatically have the right to exercise the powers granted to other fiduciaries under FADADA.  Rather, the principal must expressly grant that authority to the agent.  Thus, it is critical that any person executing an estate plan that will utilize a durable personal power of attorney be sure to expressly grant the agent the power to exercise the rights and powers set forth in FADADA, either in the durable personal power of attorney document itself, or in a separate Digital Assets and Digital Accounts Authorization.  Also, as a practical matter, it is almost equally as critical that the principal prepare a list of digital assets and account numbers, including associated usernames and passwords, store the list in a secure place, and make sure that the agent knows how to access the list when necessary.