BILL ANALYSIS Ó AB 691 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 691 (Calderon) As Amended June 14, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: | |(May 11, 2015) |SENATE: |36-1 |(August 1, 2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- (vote not relevant) ---------------------------------------------------------------------- | | | | | | | | | | | | |COMMITTEE VOTE: | |(August 23, |RECOMMENDATION: |concur | | |10-0 |2016) | | | | | | | | | | | | | | | | | | | | | | | | | | | ---------------------------------------------------------------------- (Jud.) Original Committee Reference: JUD. SUMMARY: Establishes the Revised Uniform Fiduciary Access to Digital Access Act (RUFADAA) to specify rules for the disclosure of electronic information from a custodian of a person's digital assets (custodian) to the personal representative of the estate of a deceased user (representative) or trustee of the deceased AB 691 Page 2 user's trust (trustee) for the purpose of administering the estate or trust. The Senate amendments delete the Assembly version of this bill, and instead: 1)Establish the RUFADAA and authorizes a decedent's personal representative or trustee (fiduciary) to access and manage digital assets and electronic communications, as specified. 2)Authorize a person to use an online tool to give directions to the custodian of his/her digital assets regarding the disclosure of those assets. 3)Specify that, if a person has not used an online tool to give that direction, he or she may give direction regarding the disclosure of digital assets in a will, trust, power of attorney, or other record. 4)Require a custodian, as specified, of the digital assets to comply with a fiduciary's request for disclosure of digital assets to terminate an account, except under certain circumstances, including when the decedent has prohibited this disclosure using the online tool. 5)Specify that a user's direction through the online tool or testamentary document would override a contrary provision in a terms-of-service agreement. 6)Provide that a fiduciary's or designated recipient's access to digital assets may be modified or eliminated by a user, by federal law, or by a terms-of-service agreement when the user has not provided any direction as specified by this bill. AB 691 Page 3 7)Authorize the custodian, in its sole discretion, to do any of the following when disclosing the digital assets of a user: a) Grant the fiduciary or designated recipient full access to the user's account; b) Grant the fiduciary or designated recipient partial access to the user's account sufficient to perform the tasks with which the fiduciary or designated recipient is charged; and c) Provide the fiduciary or designated recipient with a copy in a record of any digital asset that, on the date the custodian received the request for disclosure, the user could have accessed if the user were alive and had full capacity and access to the account. 8)Authorize a custodian to assess a reasonable administrative charge for the cost of disclosing digital assets and would not require a custodian to disclose a digital asset deleted by a user. 9)Provide that if a user directs or a fiduciary or designated recipient requests a custodian to disclose some, but not all, of the user's digital assets, the custodian need not disclose the assets if segregation of the assets would impose an undue burden on the custodian. 10)Authorize the custodian, fiduciary, or designated recipient to petition the court for an order, as specified, if the custodian believes the direction or request imposes an undue burden. 11)With respect to the content of electronic communications of the user: AB 691 Page 4 a) Provide that, if a deceased user consented to or a court directs disclosure of the content of electronic communications of the user, the custodian must disclose to the personal representative of the estate of the user the content of an electronic communication sent or received by the user if the personal representative gives to the custodian specified forms of documentation, including, among other things: i) a written request for disclosure; ii) a certified copy of the user's death certificate; iii) a certified copy of the letter of appointment of the representative; and iv) a copy of the user's will, trust, or other record evidencing the user's consent to disclosure, unless the user provided direction using an online tool. b) Provide that, unless otherwise ordered by the court, directed by the user, or provided in a trust, the custodian must disclose to a trustee that is not an original user of an account the content of an electronic communication sent or received by an original or successor user and carried, maintained, processed, received, or stored by the custodian in the account of the trust if the trustee gives to the custodian specified forms of documentation. 12)With respect to the catalogue of electronic communication sent or received by the user, and digital assets, other than the content of electronic communications, of the user: a) Provide that, unless the user prohibited disclosure of digital assets or the court directs otherwise, the 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 personal representative gives to the custodian specified documentation, including, among other things: i) a written request for disclosure; AB 691 Page 5 ii) a certified copy of the user's death certificate; and iii) a certified copy of the letter of appointment of the representative. b) Provide that, unless otherwise ordered by the court, directed by the user, or provided in a trust, a custodian must disclose, to a trustee that is not an original user of an account, the catalogue of electronic communications sent or received by an original or successor user and stored, carried, or maintained by the custodian in an account of the trust and any digital assets, other than the content of electronic communications, in which the trust has a right or interest if the settlor of the trust is deceased and the trustee gives to the custodian specified documentation. 13)Provide that the legal duties imposed on a fiduciary charged with managing tangible property apply to the management of digital assets, including all of the following: a) the duty of care; b) the duty of loyalty; and c) the duty of confidentiality. 14)Provide that a fiduciary with authority over the property of a decedent or settlor has the right of access to any digital asset in which the decedent or settlor had a right or interest, as specified. 15)Require a custodian, not later than 60 days after receipt of the information required, as specified, to comply with a request from a fiduciary or designated recipient to disclose digital assets or terminate an account. Further provides that if the custodian fails to comply with a request, the fiduciary or designated recipient may apply to the court for an order directing compliance. 16)Make disclosure of the contents of the deceased user's or settlor's account to a fiduciary of the deceased user or settlor subject to the same license, restrictions, terms of AB 691 Page 6 service, and legal obligations, including copyright law, that applied to the deceased user or settlor. FISCAL EFFECT: None COMMENTS: In July 2014, the National Conference of Commissioners on Uniform State Laws (NCCUSL) approved the Uniform Fiduciary Access to Digital Assets Act (UFADAA), which was recommended for enactment in all states "to vest fiduciaries with the authority to access, control, or copy digital assets and accounts[,] ... remove barriers to a fiduciary's access to electronic records[,] and to leave unaffected other law, such as fiduciary, probate, trust, banking, investment, securities, and agency law." UFADAA was recently revised to clarify the application of federal privacy laws and give legal effect to an account holder's instructions for the disposition of digital assets. According to NCCUSL, the 2014 UFADAA provided fiduciaries with default access to all digital information, but the Revised UFADAA protects the contents of electronic communications from disclosure without the user's consent, and fiduciaries can still access other digital assets unless prohibited by the user. Prior versions of this bill would have enacted the Privacy Expectation Afterlife and Choices Act, which is an alternative approach to disclosure of a decedent's electronic information. As amended in the Senate, this bill adopts a modified version of the RUFADAA and attempts to provide a clear legal framework to help probate courts resolve questions about how to balance competing privacy and estate administration concerns when a decedent's estate representative, for the purpose of settling the estate, seeks information, records, digital assets, or electronic communications, from, typically, the email or social media account of the deceased user. NCCUSL states that the RUFADAA was recently approved and represents a consensus reached among stakeholders, including technology firms, privacy advocates, bankers, and the trust and AB 691 Page 7 estate bar. NCCUSL asserts that the "consensus was the result of a concerted effort by all parties over the last few months to agree on a reasonable regulatory framework that will balance the privacy interests of internet users with the need for fiduciaries to perform their tasks and ensure the orderly transfer of a decedent's assets to heirs. It gives legal effect to an internet user's wishes when they are known, and provides reasonable default rules that apply if the user has not expressed a contrary intent. The act represents the best opportunity to enact uniform legislation for an industry that operates in every state." To date, 10 states (Colorado, Florida, Idaho, Indiana, Michigan, Oregon, Tennessee, Washington, Wisconsin, and Wyoming) have enacted RUFADAA, and at least 18 other states have introduced RUFADAA legislation this year. Scope of the bill. Unlike the broader approach of the RUFADAA model act adopted by the NCCUSL, the scope of this bill does not include powers of attorney, trusts, and conservatorships where the principal, trustor, and conservatee, respectively, are still alive. Instead, this bill has a more limited scope that applies only to situations where a person has died, and electronic information is being requested from the custodian by a decedent's personal representative, administrator, executor, or trustee for the purpose of ascertaining the decedent's assets and liabilities. Disclosure of electronic communications. This bill provides protections for a deceased user's private electronic communications by establishing the circumstances under which the custodian of the electronic communications could disclose those communications. This bill establishes a three-tier priority system for determining the user's intent for disclosure of his or her electronic communications. First in priority, this bill authorizes disclosure pursuant to the user's designation through an online tool. This tool provides the most current reflection of the user's intent for disclosure to another person. Second, the user can provide AB 691 Page 8 directions in an estate plan for the disposition of the user's digital assets. The custodian would then be able to rely on the testamentary document containing these disclosure instructions, which would then have legal effect pursuant to this bill. Finally, if the user did not provide any direction regarding disclosure of digital assets, the terms-of-service governing the account would apply. If the terms-of-service do not address fiduciary access to digital assets, the default rules provided in this bill would apply. Opponents assert that, contrary to what the bill provides, an online tool should take precedence over a user's testamentary will only if the online tool is used later in time after the will is executed. Documentation needed for disclosure once authorization established. Authorization of disclosure is not alone sufficient to compel disclosure under this bill; additional documentation must be provided to the custodian by the representative of the decedent's estate. With respect to the content of electronic communications sent or received by the user, the bill provides that if a deceased user consented to or a court directs disclosure of such content, the custodian make such disclosure to the personal representative of the estate of the user if the personal representative gives to the custodian all of the following: 1) a written request for disclosure in physical or electronic form; 2) a certified copy of the death certificate of the user; 3) a certified copy of the letter of appointment of the representative, a small-estate affidavit, or court order; and 4) 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, unless the user provided direction using an online tool (in which case the online tool evidences the user's content, making this documentation unnecessary). With respect to the catalogue of electronic communications sent or received by the user and digital assets other than the content of electronic communications, the bill requires the custodian to make such disclosure to the personal representative unless the user prohibited disclosure of digital assets or the court directs otherwise. More specifically, if the user did not AB 691 Page 9 prohibit such disclosure and there is no contrary direction from the court, then under this bill the custodian shall make the disclosure if the personal representative has given the custodian all of the following: 1) a written request for disclosure in physical or electronic form; 2) a certified copy of the death certificate of the user; and 3) a certified copy of the letter of appointment of the representative, a small-estate affidavit, or court order. The bill specifies similar documentation relevant to trusts to be provided to the custodian by a trustee seeking disclosure of either the catalogue or content of electronic communications. For both the content and catalogue of electronic communications, the bill also requires the personal representative to provide any of the following additional documentation, if requested by the custodian: 1) a number, user name, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user's account; 2) evidence linking the account to the user; 3) an affidavit stating that disclosure of the user's digital assets is reasonably necessary for estate administration; and 4) an order of the court making certain findings, as specified. Opponents of the bill assert that some of these items of information - particularly the unique subscriber information or other evidence linking the account to the decedent for which records are being requested - should be required to be provided in all cases rather than provided only if requested by the custodian. They also recommend that the bill should require the fiduciary to show that the information contained in the account is necessary for the administration of the estate, and not just in cases where the custodian has requested production of a court order making such a finding. Terms-of-service agreements. As discussed above, if the user did not provide any direction regarding disclosure of digital assets through an online tool or testamentary document (e.g. a will), then under the third-tier of the rule, the terms-of-service agreement governing the account would apply. This bill does not change or impair a right of a custodian or a user under a terms-of-service agreement to access and use digital assets of a user, and does not give a fiduciary or AB 691 Page 10 designated recipient any new or expanded rights other than those held by the user for whom, or for whose estate or trust, the fiduciary or designated recipient acts or represents. This bill provides that a fiduciary's or designated recipient's access to digital assets may be modified or eliminated by a user, by federal law, or by a terms-of-service agreement when the user has not provided any direction, as specified. Opponents, contend that the bill will ultimately allow custodians to freely control the release and retention of digital assets under the terms of service, because most users will not have a will or make use of an online tool. Author's intent to narrow grant of immunity from liability provided to custodians for compliance with this bill. As currently in print, this bill simply provides that "a custodian and its officers, employees, and agents are immune from liability for an act or omission done in good faith in compliance with this part [i.e. the entirety of RUFADAA]." Probate Code Section 881(f), as proposed by this bill, would grant custodians broad immunity from liability as long as they act in good faith in complying with the Act-with no exception even for conduct amounting to gross negligence or willful or wanton misconduct. Opponents of the bill contend that the broad grant of immunity in this bill gives custodians no incentive to act responsibly, and increases the probability that cases of privacy invasion will occur since there will be little consequence for careless behavior, or even gross negligence. While the NCCUSL's intent may have been to protect the custodian from liability for disclosure of a digital asset as long as the custodian was acting in good-faith compliance, the Judiciary Committee has a long history of ensuring that legislation it approves does not provide blanket immunity from liability for acts rising to the level of gross negligence or willful or wanton misconduct, even when done "in good faith." (See, e.g. AB 83 (Feuer), Chapter 77, Statutes of 2009, amending the California "Good Samaritan" statute to grant qualified immunity to any person who renders medical or non-medical aid in an emergency, so long as that person acts in good faith and not for compensation, but specifically exempting gross negligence and AB 691 Page 11 willful or wanton misconduct.) In order to ensure that this Act, should it become law, does not immunize disclosure of information that amounts to gross negligence or willful or wanton misconduct, the author has agreed to take steps to revise the immunity provisions proposed by this bill in Probate Code Section 881(f). Because this bill cannot be amended in this House to address this concern, the author instead proposes that another bill, SB 873 (Beall) of the current legislative session, be amended to accomplish this purpose. Specifically, it is the author's intent that SB 873 (of which he is a principal co-author) shall be enacted subsequent, and as a companion, to this bill so that if this bill, is chaptered, then SB 873 shall also be chaptered to replace the version of Section 881 of the Probate Code in this bill. In other words, it is the author's intent that SB 873 enacts the ultimate language of Section 881, namely, to exempt gross negligence and willful or wanton misconduct from any immunity from liability for custodians provided by this Act. Analysis Prepared by: Anthony Lew / JUD. / (916) 319-2334 FN: 0004832