Two People Writing at Conference Table


Charles Kennedy June 16, 2017



   The revised Texas statute is the first Texas Statute to be passed and signed into law on this issue.  The American Law Institute creates uniform statutes for use in the various States.  It has been creating uniform statutes since the 1920s.  This Uniform Act was revised in 2015.  Over forty states have passed a version of the statute or have one pending in their legislature.  Because of the near universal passage large corporations are going to be more aware of their responsibilities and rights under the statute.  This is very much an area of law that is a work in process.    If your Will or Statutory Durable Power of Attorney does not specifically give your executor and/or agent the power to access your digital data you need to consider whether the documents need to be updated.  I still have clients who do not use the internet for financial transactions.  The number of people who do not use the internet for financial or other personal business purposes are very few.    Medical powers of attorney are specifically excluded from consideration in this statute.    All in all, this statute appears to be a needed, useful improvement of the law for Texas consumers.    Texas consumers now have a method to change, in a limited fashion, terms of the ubiquitous “terms-of-service-agreements” we “agree to” for gaining access to the myriad websites on the internet.  In most internet contracts the “carriers” or custodians have refused to allow anyone but the actual customer make use of the digital accounts under the terms of the agreement.  That has not stopped most of us from letting our children, spouses, etc. from using our Ids and passwords to look at financial records and even perform transactions.  Nevertheless, such transactions have been against the terms-of-service agreements we signed.    The statute defines many terms.  A few words you need to understand are:    Fiduciary: A person who acts for another under the highest legal duty (often called a principal regarding a Power of Attorney, Testator (a Will signer), Grantor (person who funds a Trust)).  The statute uses the following definition, but it incorporates other definitions to accomplish the meaning above:  "Fiduciary" means an original, additional, or successor personal representative, guardian, agent, or trustee.    In Texas a person appointed to represent an estate is called a personal representative; an executor is a person appointed under a Will and is therefore a personal representative.    Custodian:  means a person that carries, maintains, processes, receives, or stores a digital asset of a user.    Our new statute sets out three ways for a consumer to control access to digital assets.1)    If the custodian provides an online tool to direct disclosure or non-disclosure to a designated recipient of some or all of the user’s digital assets this method overrides a contrary provision in a Will, Trust or Power of Attorney.  Section 2001.051 (a).2)    (b)  If a user has not used an online tool to give direction under Subsection (a) or if the custodian has not provided an online tool, the user may allow or prohibit disclosure to a fiduciary of some or all of the user's digital assets, including the content of an electronic communication sent or received by the user, in a will, trust, power of attorney, or other record.3)    (c)  A user's direction under Subsection (a) or (b) overrides a contrary provision in a terms-of-service agreement that does not require the user to act affirmatively and distinctly from the user's assent to the terms of service.Section 2001.053 limits what a custodian must provide to a fiduciary.   Sec. 2001.053.  PROCEDURE FOR DISCLOSING DIGITAL ASSETS.  (a)  When disclosing digital assets of a user under this chapter, the custodian may, at the custodian's sole discretion:(1)  grant a fiduciary or designated recipient full access to the user's account;(2)  grant a 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; or(3)  provide a fiduciary or designated recipient 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.A custodian may charge a fee for disclosing digital assets.A custodian is not required to disclose material deleted by the principal.  For purposes of the Act the initial client is a “user” The user is called a principal under the law of agency.Section 2001.053 provides that if a user or fiduciary requests a custodian to disclose some of the information (digital assets), but not all of the information the custodian may refuse to do so if it would impose an undue burden.  Either the custodian or fiduciary may seek a court order to determine if a limited subset of the information must be disclosed.

More to come...soon.