Uniform Fiduciary Access to Digital Assets Act Cuts Red Tape in a Digital Age
(TRENTON) – Legislation Assembly Majority Leader Louis Greenwald and Assembly members Patricia Egan Jones and Troy Singleton sponsored to help residents secure their digital assets under the same fiduciary that protects their tangible assets has been signed into law.
“This is a digital age we are living in. If a custodial party wants to guard their digital assets, they should be able to without regulatory barriers. Digital property such as email accounts, social media accounts and Internet-based currency is just as important as any other asset a person may have,” said Greenwald (D-Camden/Burlington). “This will help individuals protect digital properties as they would their physical assets.”
The law (A-3433) enacts the Uniform Fiduciary Access to Digital Assets Act (UFADAA), which was proposed by the Uniform Law Commission in 2014 and revised by the Commission in 2015. Twenty-three other states have enacted UFADAA legislation, and the bill has been introduced in eighteen other states.
Under the UFADAA, the traditional power of a fiduciary to manage a person’s tangible property when that person dies or loses the ability to manage his own property is extended to include digital assets.
“It is far more common today for an individual to have many digital assets,” said Jones (D-Camden/Gloucester). “Extending a fiduciary’s powers to include digital properties is the best thing we can do to protect all of our assets as we continue to navigate this digital era.”
“With the introduction of virtual money such as bitcoin and online banks that only exist in the virtual world, we must act to ensure protection of digital assets as we do our physical properties,” said Singleton (D-Burlington). “We needed to change the way the law views an individual’s assets and safeguard them as the Internet continues to evolve. Codifying the commission proposal is a step in the right direction for New Jersey.”
The act defines the term “digital assets” to mean a person’s digital property and electronic communications. Some examples of digital assets are financial accounts–such as online bank accounts, email accounts and social media accounts such as Twitter and Facebook.
The UFADAA allows fiduciaries to manage digital property, such as computer files, web domains, and virtual currency, but restricts a fiduciary’s access to electronic communications such as email, text messages and social media accounts unless the original user consented in a will, trust, power of attorney, or other record.
The act covers four types of fiduciaries: (1) executors or administrators of deceased persons’ estates; (2) court-appointed guardians of incapacitated persons; (3) agents appointed under powers of attorney; and (4) trustees.
It does not apply to digital assets of an employer used by an employee.
Also under the UFADAA, fiduciaries for digital assets are subject to the same fiduciary duties that normally apply to tangible assets. For example, an executor is not authorized to publish the decedent’s confidential communications or impersonate the decedent by sending email form the decedent’s account.
In addition a fiduciary’s management of digital assets may also be limited by other law. For example, a fiduciary may not copy or distribute digital files in violation of copyright law, and may not exceed the user’s authority under the account’s terms of service.
To gain access to digital assets, a fiduciary will be required to send a request to the custodian, with a copy of the document granting fiduciary authority, such as a letter of appointment, court order, or certification of trust.