BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 873|
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                                UNFINISHED BUSINESS 


          Bill No:  SB 873
          Author:   Beall (D), et al.
          Amended:  8/25/16  
          Vote:     21 

           PRIOR VOTES NOT RELEVANT

           ASSEMBLY FLOOR:  79-0, 8/30/16 - See last page for vote

           SUBJECT:   Revised Uniform Fiduciary Access to Digital Assets  
                     Act


          SOURCE:    Author


          DIGEST:  This bill is a companion bill to AB 691 (Calderon,  
          2016), the Revised Uniform Fiduciary Access to Digital Assets  
          Act (RUFADAA), which establishes a modified version of the  
          RUFADAA and establishes procedures for a decedent's personal  
          representative or trustee to obtain digital assets and  
          electronic information from the custodian of those assets and  
          information.  Relevant to this bill, AB 691 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 the RUFADAA.  This bill limits the immunity  
          provision in AB 691 if that bill is enacted and instead provides  
          that the immunity provision "shall not apply in a case of gross  
          negligence or willful or wanton misconduct of the custodian or  
          its officers, employees, or agents."  


          Assembly Amendments (1) gut the contents of SB 873; (2) declare  
          the intent of the Legislature that Section 881 of the Probate  
          Code as reflected in this bill shall replace the same section  








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          that is reflected in AB 691; (3) provide that provisions of this  
          bill only become operative if AB 691 is enacted prior to this  
          bill; and (4) provide that a custodian and its officers,  
          employees, and agents are immune from liability for an act or  
          omission done in good faith and in compliance with the RUFADAA,  
          however, the immunity shall not apply in a case of gross  
          negligence or willful or wanton misconduct of the custodian or  
          its officers, employees, or agents.


          ANALYSIS:   


          Existing law:


           1) Authorizes a decedent's personal representative or the  
             public administrator to take possession or control of all of  
             the decedent's property to be administered in the decedent's  
             estate, and requires the personal representative to take all  
             steps reasonably necessary for the management, protection,  
             and preservation of, the estate in his/her possession.


           2) Provides that the personal representative has the management  
             and control of the estate and prescribes fiduciary duties to  
             the personal representative.


           3) Requires the personal representative to file with the court  
             clerk an inventory of property to be administered in the  
             decedent's estate together with an appraisal.


           4) Requires the account to include both a financial statement  
             and a report of administration, as specified, and requires  
             the statement of liabilities in the report of administration  
             to include information as to whether notice to creditors was  
             given, as specified, creditor claims were filed, as  
             specified, creditor claims were not paid, satisfied, or  
             adequately provided for, and whether any real or personal  
             property is security for a claim, whether by mortgage, deed  








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             of trust, lien, or other encumbrance.


           5) Requires the personal representative to either petition for  
             an order for final distribution of the estate or make a  
             report of status of administration within one year after the  
             date of issuance of letters in an estate for which a federal  
             estate tax return is not required, and within 18 months after  
             the date of issuance of letters in an estate for which a  
             federal estate tax return is required. 


           6) Provides that if a report of status of administration is  
             made, the report must show the condition of the estate, the  
             reasons why the estate cannot be distributed and closed, and  
             an estimate of the time needed to close administration of the  
             estate, and authorizes the court to require the personal  
             representative to appear before the court to show the  
             condition of the estate and the reasons why the estate cannot  
             be distributed and closed.


           7) Establishes, under the Electronic Discovery Act, procedures,  
             evidentiary privileges, and judicial review for the request  
             and production of electronically stored information, as  
             defined.


           8) Limits, under the Electronic Communications Privacy Act  
             (ECPA), the disclosure by an electronic communication service  
             or remote computing service of electronic communication of a  
             user, and provides definitions for "electronic  
             communication," "user," electronic communications system,"  
             and "electronic communication service."


           9) Prohibits a person or entity providing an electronic  
             communication service to the public from knowingly divulging  
             to any person or entity the contents of a communication while  
             in electronic storage by that service, and prohibits a person  
             or entity providing remote computing service to the public  
             from knowingly divulging to any person or entity the contents  








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             of any communication which is carried or maintained on that  
             service:


                   On behalf of, and received by means of electronic  
                transmission from (or created by means of computer  
                processing of communications received by means of  
                electronic transmission from), a subscriber or customer of  
                such service; and


                   Solely for the purpose of providing storage or  
                computer processing services to such subscriber or  
                customer, if the provider is not authorized to access the  
                contents of any such communications for purposes of  
                providing any services other than storage or computer  
                processing.


           1) Authorizes disclosure of the content of electronic  
             communications with the lawful consent of the originator or  
             an addressee or intended recipient of such communication, or  
             the subscriber in the case of remote computing service.


           2) Authorizes disclosure of a record or other information  
             pertaining to a subscriber or customer of an electronic  
             communication service or remote computing service (not  
             including the contents of communications), including to any  
             person other than a governmental entity.


          AB 691 (Calderon, 2016), the companion measure to this bill:


           1) Establishes the RUFADAA and authorizes a decedent's personal  
             representative or trustee (fiduciary) to access and manage  
             digital assets and electronic communications, as specified.  


           2) Authorizes a person to use an online tool to give directions  
             to the custodian of his/her digital assets regarding the  








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             disclosure of those assets. 


           3) Specifies 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) Requires 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) Specifies that a user's direction through the online tool or  
             testamentary document would override a contrary provision in  
             a terms-of-service agreement.


           6) 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 unless the  
             terms of service agreement is contrary to the user's  
             direction in an online tool or the user's direction in a  
             testamentary device;.


           7) Authorizes the custodian, in its sole discretion, only if  
             consistent with the user's designation in the online tool or  
             in the user's testamentary document, to do any of the  
             following when disclosing the digital assets of a user:


                   Grant the fiduciary or designated recipient full  
                access to the user's account;


                   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  








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                charged; and


                   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.


           1) Authorizes 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.


           2) Provides 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. 


           3) Authorizes 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.


           4) Provides 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.


           5) Provides 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.










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           6) Makes 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  
             service, and legal obligations, including copyright law, that  
             applied to the deceased user or settlor.


           7) 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 the RUFADAA.


          This bill:


           1) Replaces Section 881 of the Probate Code as added by AB 691  
             in order to limit the immunity provided in AB 691.


           2) Provides that it is the intent of the Legislature that SB  
             873 be enacted subsequent, and as a companion, to AB 691 so  
             that if AB 691 is chaptered, the version of Section 881 of  
             the Probate Code contained in SB 873 shall replace the  
             version of that same section provided in AB 691.


           3) Provides that a custodian and its officers, employees, and  
             agents are immune from liability for an act or omission done  
             in good faith and in compliance with the RUFADAA.


           4) Provides that the immunity shall not apply in a case of  
             gross negligence or willful or wanton misconduct of the  
             custodian or its officers, employees, or agents.


           5) Provides that SB 873 shall become operative only if AB 691  
             is also enacted and SB 873 is enacted after AB 691.


          Background









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          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."  (NCCUSL, Uniform Fiduciary Access to Digital Assets Act  
          (Apr. 2, 2015)  
                                                                    Page  9



          omission done in good faith in compliance with" the RUFADAA.   
          This bill, SB 873 (Beall) would limit the immunity provided in  
          AB 691 and instead provide that a "custodian and its officers,  
          employees, and agents are immune from liability for an act or  
          omission done in good faith and in compliance with" the RUFADAA,  
          however, the immunity provision "shall not apply in a case of  
          gross negligence or willful or wanton misconduct of the  
          custodian or its officers, employees, or agents."


          After AB 691 left the Senate, the author agreed to limit the  
          immunity provision in new Probate Code Section 881.  Because AB  
          691 was already in the Assembly for a concurrence vote, it was  
          necessary to use another legislative vehicle to narrow the  
          limitation on immunity.  This bill, SB 873, was amended to  
          become companion legislation to AB 691 and will not become  
          operative unless AB 691 is enacted first.    


          Comments


          The author writes:


             AB 691 would provide that a custodian of digital assets is  
             immune from liability for an act or omission done in good  
             faith and in compliance with the act.  The companion bill, SB  
             873, further clarifies the intent by specifying immunity does  
             not apply in a case of gross negligence or willful or wanton  
             misconduct.  It is important for custodians to feel confident  
             that disclosing certain information to fiduciaries to help  
             administer an estate will be protected from litigation if  
             they acted in good faith, but not extend the immunity  
             protections included in the bill to those who clearly diverge  
             away from the guidance AB 691 provides.


          FISCAL EFFECT:   Appropriation:    No         Fiscal  
          Com.:NoLocal:    No










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          SUPPORT:   (Verified8/27/16)


          None received


          OPPOSITION:   (Verified8/27/16)


          None received

           ASSEMBLY FLOOR:  79-0, 8/30/16
           AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth  
            Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,  
            Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,  
            Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,  
            Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,  
            Mayes, McCarty, Medina, Melendez, Mullin, Obernolte,  
            O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
           NO VOTE RECORDED: Nazarian
           


          Prepared by:Margie Estrada / JUD. / (916) 651-4113
          8/30/16 21:19:32


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