Pennsylvania Legislature Modernizes Digital Assets and Digital Disclosure Laws

            On July 23, 2020, Pennsylvania Governor Tom Wolf signed into law Act 72 of 2020, known as the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”), 20 Pa. C. S. § 3901 et seq.  RUFADAA will become effective on January 19, 2021.

            Prior to RUFADAA, Pennsylvania was one of only a handful of states that did not have any comprehensive legislation in place regulating the ability of a fiduciary to access and manage digital assets.  Social media accounts such as Facebook, Instagram and Twitter, email-accounts, digital photos, financial assets reflected on electronic account statements and online financial service accounts such as PayPal, are all examples of digital assets under RUFADAA.  Many fiduciaries, such as agents under powers of attorney, trustees under trust agreements and personal representatives of estates, have struggled to identify, manage and administer electronic assets.  As one could imagine, this lack of guidance was problematic given the extent of digital assets that the average person possesses in this computerized age.

  The proliferation of digital asset ownership prompted the National Conference of Commissioners on Uniform State Laws (“NCC”) to draft a legislative model to address the difficulties encountered by fiduciaries when dealing with digital assets. The NCC stated the purpose of RUFADAA as follows: “First, it gives fiduciaries the legal authority to manage digital assets and electronic communications in the same way they manage tangible assets and financial accounts, to the extent possible. Second, it gives custodians of digital assets and electronic communications legal authority to deal with the fiduciaries of their users, while respecting the user’s reasonable expectation of privacy for personal communications.”  The Pennsylvania legislature has attempted to balance those needs, duties, and interests by passing and codifying its own version modeled after the NCC’s uniform act. RUFADAA applies specifically to certain fiduciary relationships, such as when an executor or administrator is acting under a will, an agent is acting under a power of attorney, or a trustee is acting under a trust.  

While RUFADAA addresses a wide range of fiduciary relationships, there are certain aspects of it which impose additional requirements regarding power of attorney documents. RUFADAA grants agents under a power of attorney the ability to access and manage the digital assets of their principals; however, this power must be expressly granted to the agent under the power of attorney document.  While a general grant of authority from a principal to an agent contained in a power of attorney document is sufficient to invoke this power, any powers of attorney executed after the effective date of RUFADAA (January 19, 2021) will need to expressly grant the agent the power to access and manage the principal’s digital assets. After RUFADAA takes effect, an agent under a power of attorney can compel the digital asset custodian (the “person” that carries, maintains, processes, receives or stores a digital asset of a user, such as Facebook, Google, PayPal, etc.) to release electronic communications and other digital assets of the principal. This can be accomplished by submitting the following items to the digital asset custodian: a written request; an original or copy of the power of attorney expressly granting the agent authority over the electronic communications or other digital assets; and a certificate by the agent that the power of attorney is in effect.  The digital asset custodian may also request some additional items from the agent such as the unique account identifier assigned by the digital asset custodian or evidence linking the account to the principal.

            As ownership of digital assets becomes more prevalent, RUFADAA provides much needed guidance and a standardized set of rules regarding access to digital assets, thereby improving the management and administration of digital assets in Pennsylvania.  It is worth noting, however, that while RUFADAA stipulates that power of attorney documents executed prior to January 21, 2021 need not contain an express power granting the agent authority over the principal’s digital assets, from a practical standpoint, it is possible that digital asset custodians may mistakenly deny requests from an agent to release electronic communications and other digital assets if such power is not expressly stated in the respective power of attorney document.  Thus, individuals may want to consider updating their power of attorney documents to avoid any potential confusion or misunderstanding with digital asset custodians if and when their agent attempts to exercise authority over certain digital assets.

This article does not offer specific legal advice, nor should it be construed as legal advice or opinion on specific facts.  The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.  If you have any questions, please contact Raymond Durkin or any other attorney at Appel, Yost & Zee LLP.