Fiduciary Access Goes Digital in Delaware

This will be the first in a series of articles about issues we think may be of interest to visitors to our page. Today’s article regards Delaware’s recently passed law (August 12, 2014), that takes effect January 1, 2015, which allows fiduciaries to be afforded the same rights as private citizens with regard to digital access to assets. What are the implications of this law? In a Nutshell: You or I can choose to access savings or checking accounts, pay bills, submit and review health insurance claims, review investments or access/change email and social media accounts, electronically. However, in most states, for an individual who becomes incapacitated or deceased, his or her legal surrogate, in most instances cannot access this information electronically. Legal surrogates include personal representatives, legal guardians, agents under a durable power of attorney and trustees. A few states including Connecticut, Indiana, Rhode Island, Oklahoma. Idaho, Virginia, Nevada and Louisiana, have passed significantly limited surrogate electronic access laws, mostly relating to email accounts. Why is this Important? In this digital age, the utility of this law for surrogates is significant and varied. With regard to financial records and accounts, it provides the same ease of access that would be enjoyed by the incapacitated individual. This provides significant relief to the many private individuals who are guardian or legal representative for a family member or friend. The ability to efficiently manage the assets in their trust provides significant relief to overburdened caregivers of aging parents or minor children. Further, in instances of individuals who become incapacitated or have died without leaving instructions regarding the location and types of assets they possess, locating those assets can be exceedingly difficult. Access to the incapacitated person email accounts can provide valuable information that might otherwise be unavailable. This is especially true when you consider that a previous commonly used method of asset location, monitoring the individual’s mail, will be less and less useful in the future, digital access becomes increasingly essential. As well, for professional fiduciaries, this law benefits their clients in that it allows for more time efficient management of assets. Less time means less money charged for services. Finally, a profoundly personal implication of this law is worth examining. Consider the situation in which a loved one who maintains one or more social media accounts subsequently dies. In these circumstances, family members may be faced with social media reminders of their loss with no recourse to close the accounts. This can be especially devastating in the case of the death of child or young adult. While some choose to maintain the account as a memorial, the law strengthens the ability to close such accounts if the effect is re-traumatizing. Further Implications: With increased electronic access comes the increased importance of ensuring the competence and trustworthiness the person or entity who becomes a fiduciary. Advanced planning through durable powers of attorney, trusts, wills and related instruments is a necessity in protecting assets. Additionally, as this law is new, it will undoubtedly take some time for Delaware institutions to develop procedures which comply with the changes. Finally, as Delaware’s law is ground breaking and comprehensive, Delaware fiduciaries may still encounter difficulties interacting with out of state based account custodians. Link to the legislation: http://legis.delaware.gov/LIS/LIS147.nsf/vwLegislation/HB+345