Colorado Legislative Update

Colorado Legislative Update

The Colorado legislature recently enacted the Revised Uniform Fiduciary Access to Digital Assets Act (“Act”) which sets forth the conditions under which certain fiduciaries may access digital assets of a principal or decedent, effective August 10, 2016.

 

COLORADO SENATE BILL 88

 

The Act sets forth the following definitions:

  • “Digital asset” is defined as an electronic record in which an individual has a right or interest, but does not include an underlying asset or liability unless the asset or liability is itself an electronic record.
  • “Electronic communication” means any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce, but does not include (i) any wire or oral communication; (ii) any communication made through a tone-only paging device; (iii) any communication from a tracking device; or (iv) electronic funds transfer information stored by a financial institution in a communications system used for the electronic storage and transfer of funds.
  • “Court” means the District Court, except in the City and County of Denver, where it is the Probate Court.
  • “Custodian” is a person who carries, maintains, processes, receives, or stores a digital asset of a user.
  • “Person” means an individual, estate, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.
  • “User” is a person that has an account with a custodian.
  • “Account” is an arrangement under a terms of service agreement in which a custodian carries, maintains, processes, receives, or stores a digital asset of the user or provides goods or services to the user.
  • “Online tool” means an electronic service provided by a custodian that allows the user, in an agreement distinct from the terms-of-service agreement between the custodian and user, to provide directions for disclosure or nondisclosure of digital assets to a third person.
  • “Terms of service agreement” is an agreement that controls the relationship between a user and a custodian.
  • “Designated recipient” means a person chosen by a user using an online tool to administer digital assets of the user.

 

The Act applies to all of the following:

  • A fiduciary acting under a will or power of attorney executed before, on or after August 10, 2016;
  • A personal representative acting for a decedent who died before, on or after August 10, 2016;
  • A conservatorship proceeding commenced before, on or after August 10, 2016;
  • A trustee acting under a trust created before, on or after August 10, 2016; and
  • A custodian if the user resides in Colorado or resided in Colorado at the time of the user’s death.

 

The Act does not apply to a digital asset of an employer used by an employee in the ordinary course of the employer’s business.  It also does not apply to a digital asset of an entity used by a manger, owner, or other person in the course of the conduct of the internal affairs of the entity.

 

A user may use an online tool to direct the custodian to disclose to a designated recipient or not to disclose some or all of the user’s digital assets, including the content 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 any other record.

 

If a user has not used an online tool to give directions as described above, or if the 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 content of electronic communications sent or received by the user.

 

A user’s direction through an online tool or in a document (e.g. will, trust, power of attorney, or other record) overrides a contrary provision in terms of a service agreement that does not require the user to act affirmatively and distinctly from the user’s assent to the terms of service.

 

The Act does not change or impair a right of a custodian or a user under terms of a service agreement to access and use digital assets of the user.  Also, it does not give a fiduciary or designated recipient any new or expanded rights other than those held by the user for whom, or for whose estate, the fiduciary or designated recipient acts or represents.  A fiduciary’s or designated recipient’s access to digital assets may be modified or eliminated by a user, by federal law or by terms of a service agreement if the user has not provided direction as described above (through an online tool or in a document).

 

When disclosing digital assets of a user, the custodian may, in its sole discretion, provide a fiduciary or designated recipient with any of the following:

  • Full access to the user’s account;
  • Partial access to the user’s account sufficient to perform the tasks with which the fiduciary or designated recipient is charged; or
  • A copy in a record of any digital asset that the user could have accessed if the user were alive, had full capacity, and had full access to the account on the date on which the custodian received the request for disclosure.

Additionally, the custodian:

  • May assess a reasonable administrative charge for the cost of disclosing digital assets;
  • Need not disclose a digital asset deleted by a user;
  • Is not required to disclose, if a user directs or a fiduciary requests, a custodian to disclose some, but not all, of the user’s digital property, and segregation of the assets would impose an undue burden on the custodian; and
  • May seek an order from the court with regard to disclosure if the custodian believes the direction or request imposes an undue burden.

 

If a deceased user consented or a court directs disclosure of the contents of electronic communications of the user, the custodian must disclose to a personal representative of the user’s estate the content of an electronic communication sent or received by the user if the representative gives the custodian all of the following:

  • Written request in physical or electronic form;
  • Certified copy of the death certificate of user;
  • Certified copy of the letter of appointment of the representative, a small-estate affidavit or a court order;
  • Unless the user provided direction using an online tool, a copy of the user’s will, trust, power of attorney or other record evidencing the user’s consent to disclosure of the content of electronic communications; and
  • If requested by the custodian, any of the following:

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

o   Evidence linking the account to the user; or

o   A finding by the Court of one or more of the following:

§  The user had a specific account with the custodian, identifiable by number, username, address, or other unique identifier;

§  Disclosure of the content of electronic communications of the user would not violate federal or any other applicable law;

§  Unless the user provided direction using an online tool, the user consented to disclosure of the content of electronic communications; or

§  Disclosure of the content of electronic communications of the user is reasonably necessary for administration of the estate.

 

Unless the user prohibited disclosure of digital assets or the court directs otherwise, a custodian must disclose to the personal representative of the estate of a deceased user a catalogue of electronic communications sent or received by the user and digital assets, other than the content of electronic communications, of the user, if the representative gives the custodian all of the following:

  • Written request in physical or electronic form;
  • Certified copy of the death certificate of user;
  • Certified copy of the letters testamentary, a small-estate affidavit or a court order; and
  • If requested by the custodian, any of the following:

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

o   Evidence linking the account to the user;

o   Affidavit stating that disclosure of the user’s digital assets is reasonably necessary for administration of the estate;

o   A finding by the Court of either of the following:

§  The user had a specific account with the custodian, identifiable by number, username, address, or other unique identifier; or

§  Disclosure of the user’s digital assets is reasonably necessary for administration of the estate.

 

The Act sets forth the requirements for a custodian’s disclosure of electronic communications or digital assets when:

  • The principal has given authority to an agent through a power of attorney;
  • The digital assets are held in trust where the trustee is the original user;
  • The digital assets are held in trust where the trustee is not the original user; or
  • A court, after opportunity for hearing, has granted a conservator access to the digital assets of a protected person.

 

The Act specifies that the legal duties imposed on a fiduciary charged with managing tangible property apply to a fiduciary’s management of digital assets, including the duties of care, loyalty and confidentiality.

 

The Act sets forth the timing and components of custodian compliance with a request or a court order.   A custodian and its officers, employees, and agents are immune from liability for an act or omission done in good faith in compliance with the Act.