They already ask about retirement accounts, but advisors might want to ask their clients about their social media accounts as well.

With the signing of the Uniform Fiduciary Access to Digital Assets Act on Wednesday, New Jersey became the 24th state to enact laws guiding control of a person’s digital assets, like social media accounts, after their death.

Under New Jersey’s law, fiduciaries, including executors or administrators of estates, court-appointed guardians, trustees and agents with powers of attorney have the same powers to manage digital or virtual property on behalf of a client as they do tangible assets.

“This law puts forth a hierarchy in terms of what happens when a person becomes incapacitated or passes away,” says Matt Sommer, vice president of Janus Henderson’s retirement strategy group. “Step one is whether the online asset provider offers some sort of mechanism whereby a user can appoint an individual to have access to their account in event of death or incapacity.”

The second level of the hierarchy is an account-holder’s will or trust, says Sommer. If a person isn’t able to or neglects to make an election with an online provider, then he or she can still address the disposition of digital assets via a will.

The final level of the hierarchy is the terms of service agreement signed by users when opening a digital account.

“Nobody reads these things, they just click ‘accept,’ but there may be verbiage in a provider’s terms of service agreement that dictate what happens to their account under certain conditions,” says Sommer. “Regardless, wills and trusts kind of become the ultimate backstop for how digital assets will be addressed in most cases.”

Digital assets typically refer to online accounts protected by log-in identification and passwords, such as e-mail, social media and message board accounts. Computer files, drop boxes and web domains are also considered digital assets.

While the law doesn’t directly require that financial advisors handle their clients’ digital assets, it may impact some accounts and assets that fall under an advisor’s purview. In some cases, online bank accounts and virtual currency accounts fall under the definition of digital assets.

Definition Of Digital Assets

Bryan Kirk, managing director and trust counsel at New York-based Fiduciary Trust Company International, notes that the definition of digital assets can expand to encompass mobile phone log-ins, online photos, digitally recorded music or in-process writings such as books, even if we might tend to think of it as merely encompassing e-mail and social media accounts.

“Digital assets can be easy to miss, and there’s a lot of them,” says Kirk. “Finding them takes a bit of a needle-in-a-haystack approach, because some of the key things for a person’s trustee or executor may be buried in a lifetime’s worth of e-mail, or thousands of files on a hard drive. Identifying what’s important and what has value to the client is something that financial advisors can do to help make sure there’s proper planning around those assets as well.”

In New Jersey, fiduciaries will not be able to access online communications accounts, including e-mail and social media accounts, unless the original user consents via a will, trust or power of attorney.

Under the law, fiduciaries will be able to access other digital assets by filing requests with the custodians of those assets and proving their fiduciary relationship to the original asset holder.

“It’s such a new law that the practicalities of that process, how it works, how requests are communicated, how promptly folks respond—that all needs to be sorted out,” says Kirk. “From a fiduciary standpoint, there’s still a question of how deep do I go into the digital assets, and how deep do I have to go. If there’s something in my decedent’s estate only available via e-mail, or buried on a hard drive, am I on the hook if I don’t dig deep and find it?”

The movement toward protecting digital assets started in the last decade but did not gain traction until recently, says Anthony Stich, director of global marketing at Milwaukee-based Advicent solutions.

A Movement

“The first law was very early, right around 2005, but it became a movement in 2013 and 2014,” says Stich. “These laws place the onus on the estate, or the person designated in the will. We think there will still be a technological solution, where technology will prompt a user to check a box that will allow a designated third party to access and distribute their electronic data.”

Stich says that such technology is already being used in the medical field, where privacy regulations require providers to restrict access to patients’ medical records. Among social media providers, Facebook has a “legacy” function allowing users to designate parties responsible for their accounts in case the users die or become incapacitated.

Most of the 24 states with laws concerning the handling of digital assets have adopted the uniform act, draft legislation from the National Conference of Commissioners on Uniform State Laws, with very little variance from state to state.

Another 18 states are in the process of enacting the law, according to the conference.

Stich says that in response to the movement to delineate the disposition of digital assets, a federal law may eventually supersede the states’ efforts.

New Jersey’s law includes digital currency accounts in its definition of digital assets, a wrinkle that might also require a financial advisor’s awareness, says Stich. “It’s tough to understand where crypto-currencies fall. They’re categorized as a form of currency. It’s part of the estate. It has monetary value. We’re going to have to wait for more clarity to see how this takes shape.”

While it’s still unclear whether advisors could bear ultimate responsibility for their deceased clients’ digital currency and online bank accounts, Stich argues that the discussion about the disposition of digital assets presents an opportunity for the advisors give themselves extra value for clients.

“Now is a great time to broach the subject,” he says. “There are so many advocates for these laws, not just among attorneys or in the AARP, but large institutions are also suggesting that this should be done. It’s a nice, simple way to help clients and show that advisors can help clients pre-retirement, during retirement and beyond retirement.”

Kirk notes that holistic financial planning’s focus on client relationships makes advisors well suited to discuss the disposition of digital assets.

“People live different lives on the internet than they do in real life, and they might not want those things to come together,” says Kirk. “They might not want someone reading their e-mail or accessing their Facebook account. They might have things they’ve done creatively that they don’t want to be published or exposed after their death. It’s a very personal subject.”