HB 108-FIDUCIARY ACCESS TO DIGITAL ASSETS  1:13:32 PM CHAIR CLAMAN announced that the next order of business would be HOUSE BILL NO. 108, "An Act adopting and relating to the Revised Uniform Fiduciary Access to Digital Assets Act." [Chair Claman passed the gavel to Vice Chair Fansler.] 1:14:12 PM CHAIR CLAMAN moved to adopt CSHB 108, Version 30-LS0210\U as the working document. There being no objection, Version U was before the committee. 1:14:50 PM CHAIR CLAMAN, in presenting CSHB 108, Version U, advised that in 2015, 74,000 Alaskans, 9.9 percent of Alaska's population, were over the age of 65. Due to the increasingly computer savvy senior population, fiduciary access to digital assets is more important than ever. He explained that this legislation provides fiduciaries the legal authority to manage assets, such as computer files, digital photographs, and electronic communications. 1:15:46 PM DEBORAH BEHR, Commissioner, Uniform Law Commission, Alaska Uniform Law Delegation, presented her testimony as follows: Good afternoon. I'm Deborah Behr and I'm a Uniform Law Delegation member from the State of Alaska. Alaska has been a member of the Uniform Law Delegation since about 1914. And, Uniform Law Commission is a -- what I consider to be a state right's organization. Each state sends their representative to meet annually to deal with problems that cross state lines, like commerce, like digital assets. And, we come up with a solution after great negotiations that works for all of the states. And this bill is the result of that in terms of digital assets. Twenty -- twenty-four states have already enacted it, it is the law in 24 states. And it is presently pending on 18 states, of which of those 18 states - 2 are sitting on governors' desks. So this is a -- an actively moving bill and it has been generally accepted in other states. And, the Uniform Law Commissioners have reviewed the -- the Alaska delegation have reviewed the CS and we do support the CS and the changes to it. What I thought I'd do is give an overview of the bill and then ask if you folks have any questions. The Act itself was the result of senior groups coming to the Uniform Law Commission and saying that they had difficulties when a family -- when a family member died and the fiduciary -- in typical cases a husband and wife, the wife is the fiduciary, she's the one that the husband trusted to deal with her -- his assets when he passed on. And, there's a problem in digital assets right now. The law has not kept pace with digital assets, such that in a typical case, the husband -- and the example of digital assets is like the family photo album. In my house, my husband takes all the family photos, puts them on some cloud or some -- some server that I don't quite understand, and has a -- they're password protected or encrypted so that the average person can't get to his photos. He has also signed a contract with the custodian of those photos and in that contract they agree to keep them confidential, people can't generally have access to it. And, that's generally where the problem is with digital assets and why they're different than your -- your deed, your house, your car, whatever will transfer at your death. Because they are password protected and there's also been a contract promise between -- in my case, it would be my husband that passed away, there would be a contract promise between the custodian Google, Facebook, whatever, to keep my husband's documents on file with them confidential. 1:18:27 PM So, we -- we reported -- we received cases from all over the United States about people wanting to get even the most basic thing like the family photo album. And when they would go to Google or Facebook for it, and they'd say, "Geez, we'd really like to help you but your husband, the decedent - the user, when he signed the Terms of Service Agreement with Google or Facebook, he asked for us to keep it confidential. That's our standard form and we're stuck with that. Please get a court order." Court orders are expensive to get and there's a delay in getting them, and it's also at a time for families when it's very stressful for them, there's been a death in the family, there's been a disability in the family, and it just takes time. And, in some cases that time has actual money costs of family. One example that someone gave me was where someone had -- became disabled and he was a sole proprietor of a business. He has all his business records in the cloud, paperless in his office and somebody had to come and run his business while he recuperated. Well, the problem is, the husband at that point did not have capacity to say what his passwords were or even where they were -- where the digit assets were located. So, it ended up being a big mess for the family. The family defaulted on loans, they had to pay extra interest that they wouldn't have to deal with. And so, that's -- those are the kinds of problems that came to the Uniform Law Commission. 1:19:58 PM Why we thought a uniform law was important across state lines, because first of all, digital commerce goes across states lines. We don't have any choice in that. And also, residents of Alaska travel a lot. And so you want to make sure that their expectations are followed and then the bill basically says that you look at the residency of where the user, in this case my deceased husband, would be -- what kind of law would apply. So, in this case it would be Alaska law applied. So, what is the solution that the Uniform Law Commissioners came up with? And, this -- this is a result of a two-year public process, its open public, anybody can come to our meetings. Google, Facebook, the industry was there, senior groups were there, and just anybody who cared to. And, after the end of a two-year process it came up with what I call and "opt in" system. So that the decedent, the person when they're alive has to say to Google or Facebook, this is how I would like my digital assets handled. And, it's called an "online tool," that's the buzz word for it. So, Google or Facebook will have an online tool so that when you open the account, it will come up as a separate electronic document that you will decide whether you want to use it or not. You don't have to, there's no requirement that you do. And, if you do use it, then that sets the clear path for the family photos to go to whoever the decedent had wanted at the time that he opened the account with Google or Facebook. And, you can change it readily, and the nice thing about it, people have asked me about it, you don't need a lawyer to do the online tool. You can have a different person who has access to your family photos, or your music, whatever makes sense. Like in your financial records, you may not want your children to have access to them, you may want your brother who's a CPA to do them if you pass away. But, your music or the family photos can have children, something like that might be just fine. So, it's an opt in system, person does nothing, they don't -- can't take the benefits of the online tool, but the online tool is available for them. 1:22:10 PM Okay, what happens if there is no online tool, or the person just decides not to use it, or in the case of probably all of us in this room, we have open digital accounts years ago and this tool wasn't available. Okay, so the tool isn't available, you go onto, what is called the -- you look at the person's will and this bill also covers trusts, powers of attorneys, guardianship and conservatorship. But, I'm going to focus on wills because it is easier to understand. If it is very clear in the will who you want your digital assets to go to, then that -- the bill sets a priority system for that. The issue that came up in, when we were dealing with this, is most wills are the typical, I give all my assets to my wife, or I give all my assets to my husband. And, that generally will -- causes a problem because you don't know whether it's digital assets and you also have this contract that your husband signed, or your wife signs saying that they would like to have this doc -- digital assets treated in a confidential manner. So, if it's clear enough in the will that you can see it, the digital assets were intended and there is expressed consent in there "I want my fiduciary, my wife, or whoever, to get access to them." Then that's the trigger, that's the second level of the online system. The third level of -- supposing you have no online tool, wasn't available or you just didn't cho -- you were in a hurry and buzzed through that screen on it. Your will is a general will or a lot of Alaskans have no wills. So, you have no will, what happens next? It's the Terms of Service Agreement applied. And, that's the Terms of Service Agreement that my husband signed with Google or Facebook. They are generally going to mean you've got a court case out of it because of -- in the Terms of Service Agreement there generally, you are going to keep this confidential and so you are basically stuck with a court case on it. So, but if somebody chooses to do nothing, the -- and doesn't do an online tool, their will doesn't address it, then you will look at the Terms of Service Agreement. 1:24:26 PM This system has been supported by industry, Google, Facebook, have -- and technical groups have supported it, senior groups nationwide, our National Academy of Elder Attorneys have supported it. In Alaska we're very pleased that the Alaska AARP has supported it, a major trust company in Alaska have said "Yes, this is a problem in Alaska" and they support it, and Alaska Commission on Aging. You will see those endorsement letters in this file. The other interplay with digital assets is, there is a federal law on this issue dealing with electronic communications and how you store them, but they have to be confidential. So, the bill sets up a system for a special treatment for email, because I think everybody in this room, when you write an email, you don't think people are going to be reading over your shoulder and looking at how you're doing it and all that. So, how the bill sets up a structure for email is, if you give consent, express consent - my fiduciary, my wife can have access to the email, no question, you can get it onto the bill. The other option is a court order because courts right now can monitor that when it's appropriate. If the person has not done an express consent, and there's no court order, then the best that the fiduciary gets is -- in this bill - is what is called the "Catalog of Electronic Communications." And, what that sets up is just the "to, from, and the date and the addresses on it." Not the subject line, not the body of it. Because the person did not express, during his life -- his or her lifetime, that they would want their electronic communications viewed by a third party, even a spouse. And, that's absolutely appropriate. The fiduciaries in this area have said they can do a lot with the name and the email address. They can go and -- if you see 10 emails from Wells Fargo and the banks, they pretty much have a good idea you have some financial relationship with Wells Fargo and they can go forward and deal with them. And, a big issue that I've done some research recently on is, closing accounts. There's a whole lot of fraud in this area when somebody leaves a digital account open after someone dies. People will go in and open credit cards on it, they will send out flyers saying "I'm ill and I need contributions for my medical care." You really need to close these accounts and this will allow you to identify the accounts and go forward with it. 1:27:16 PM REPRESENTATIVE LEDOUX noted that Ms. Behr referred to pictures and Facebook, and asked whether this would let someone into a regular Facebook account. MS. BEHR responded that, currently, Facebook has what is called a "Legacy Form," so if a person opens a Facebook account today, her understanding is that the person can say "If I pass away, this is -- the person can have access to my private part of Facebook." She commented that she is not an expert in electronics and can get way ahead of herself easily, but her understanding is that there is a public part of it where anyone can look at it, and then there's a private part where the person has to friend people and people have to come into it, that's the part that this bill deals with. It also deals with email communications. The definition of digital asset is pretty broad, and it can include things that have a value, like domain names, bit coins - electronic currency. So, it's a big issue nationwide and a big issue that affects seniors. 1:29:01 PM REPRESENTATIVE LEDOUX referred to people with prior Facebook accounts, and asked whether Facebook is amenable to sending a notice with a link to the legacy form. MS. BEHR stated that she does not represent Google or Facebook and doesn't want to speak for these businesses. She did acknowledged that [the legacy form] is there and people have been using it. In response to the subset of Representative LeDoux's question, she said that people have asked her about training, and the senior groups advised that they will actively offer education on this topic, and she was advised by the Alaska Bar Association's Committee on Probate that it is interested in making sure everyone is aware of it. Also, when searching [the internet], she found that a tremendous amount of material was out there. She commented that she doesn't believe it has trickled up to Alaska much, but it is an issue because Alaska does have a major trust company that reported it was a real issue for them. 1:30:27 PM MS. BEHR continued her testimony as follows: What happens if I'm a fiduciary and my -- the decedent, my husband whatever, has said "Yes, you may have access." All the duties and responsibilities the fiduciary has such as like, protecting information, checking on copyrights, things like that. They have the same responsibilities that you have for other assets that are in the estate. And, the bill sets up what kinds of things that they have to give to the Google or Facebook to get the information. It's usually things like a certified death certificate, things like that. If -- the bill does provide immunity for Google or Facebook if they do it right, according to the bill, and if they respond appropriately within 60 days. And, that's a big deal because right now, this can languish on for long periods of time while Google is checking with its attorney or you're getting a court order. There's no real parameters of trying to get things out. This puts a limit of 60 days to make sure that things are done appropriately according to the bill. Okay, the bill does not apply to digital assets of employers. So like there's a lot of private employers that pretty much allow people to use the business computer for their own use. It does not -- this bill does not deal with that, that's separate and apart. Sec. 1 of the CS, and how it differs from the base bill, amends the Alaska statutory form of power of attorney bill to allow people, if they use the canned statutory form of power of attorney, that they can specifically give consent for access to electronic documents. And that was sort of brought to my attention when I testified last time, that there was an amendment that needed to be done there, and that's appropriate. 1:32:41 PM CHAIR CLAMAN referred to Ms. Behr's example of photographs and another example of emails, and noted that it sounds like the bill specifically distinguishes those two. For example, a person might be comfortable giving someone complete access to their Facebook account, but wanted to treat emails differently. In that case, the emails may be set up so that the information people would have access to would be the communication, who it was going to, and who it was coming from, only. This bill allows that distinction to be made, he quiered. MS. BEHR answered that one of the concerns of privacy groups was to make sure that the content of the email was confidential. Also, within federal law, the content of an email has special privacy rights, which is why it requires an express consent to get at the content of an email, or a court order, she said. 1:33:52 PM REPRESENTATIVE EASTMAN said he understands that the Uniform Law Commission decided a bill was appropriate in this instance, and asked why this would not be handled simply by encouraging those who write wills and templets for wills to make sure this was addressed in that will somewhere. MS. BEHR explained that there is still the problem with Google or Facebook. For example, in the event her husband was deceased and he signed a contract with a third party to keep his information confidential with a third party, she has no relationship with that third party. That, she explained, is the overlay that makes this different from your house, car, or whatever. Also, her husband's photographs or business records are password protected or encrypted, and just putting it in a will does not deal with this major issue of the spouse not being a party to the contract. She asked, why Google would give her access to an account when Google doesn't know whether the two parties have any relationship with each other even though they are still married. 1:35:31 PM REPRESENTATIVE EASTMAN asked whether the Uniform Law Commission distinguishes between emails and photographs on the one hand, and digital asset passwords on the other hand. In the event his spouse were to die or vice versa, the passwords would be the most sought after for bank accounts, or any number of different reasons. Those passwords would be part of the digital assets but do not necessarily fall in under Facebook or Google, but rather it is electronic information that was saved somewhere, he said. 1:36:16 PM MS. BEHR pointed out that passwords are an interesting and difficult issue because passwords are generally linked with a particular account, such as bank account, Facebook, or whatever, and a person must know the password to have access. The problem with passwords is that they change, people have accounts that they don't necessarily, even for themselves, remember the password. A system must be provided in that situation where, for example a sole proprietor had a stroke and the [fiduciary] didn't know where the accounts or passwords were located. She related that "You have to be able to go directly into the accounts and be able to have a relationship with Google, Facebook, whoever has the electronic assets." She explained that the bill allows several ways to obtain the documents such as, in the case of a guardianship or conservatorship wherein they are limited to financial records. The bill sets up a system to deal with that because passwords change, and also a person doesn't want a booklet sitting around with passwords in it, she said. 1:38:08 PM REPRESENTATIVE REINBOLD asked whether this has any impact on "our legislative Facebook accounts?" She referred to former Representative Gruenberg, and how it would have impacted the situation with Representative Gruenberg. MS. BEHR responded that she was unaware of the situation with former Representative Gruenberg. 1:38:46 PM REPRESENTATIVE REINBOLD asked Chair Claman to discuss the situation in that "they didn't have the ability to access some of his important legislative work and items in his office." 1:39:06 PM CHAIR CLAMAN related that with respect to Representative Gruenberg and Facebook, Representative Gruenberg, for whom this room is named, liked books, papers, and the old style way of doing things and if he had a Facebook account, no one saw it. He opined that there were issues involving his actual papers and who had custody of the papers, and the email communications were probably more undertaken by his staff than Representative Gruenberg. He said was unsure how this would fit into that but in terms of the motivation for the bill, he could assure Representative Reinbold that Representative Gruenberg's recent death had absolutely nothing to do with the bill. The Uniform Law Commission asked him, as the House Judiciary Standing Committee chair, to introduce this bill due to the increasing need, on a national level, to address these issues. He added that as someone fairly familiar with the Uniform Law Commission's process, this legislation seemed like a good bill to bring forward due to the issues it raised. CHAIR CLAMAN opined that in the world of an estate setting, or a severely disable person who can no longer manage their affairs, he believed the courts would view access to financial information from a bank, with that password, would be important information to let the estate know of their assets, how much money there was, and what other assets they have that need to be managed. Whereas, email communications and privacy concerns enters into a different realm in terms of where does privacy come in. He related that his executors would have an interest in knowing where the money was, which is different from emails in the realm of privacy. CHAIR CLAMAN commented that most people do not have a will and the bill makes it easier in the instance of an interesse. It creates ways for family members to figure that in, and it also creates a forum for the contractual relationship between places like Facebook and email carriers to be able to deal with those things without a will setting out what to do. 1:43:40 PM REPRESENTATIVE REINBOLD asked whether this bill would have any impact on a person's work account or a public office and said, for example, she has a "Representative Reinbold" Facebook account. CHAIR CLAMAN opined that the Facebook account reflects a relationship between you and Facebook even though you have that relationship in your representative capacity, and your Facebook account is not formally part of what the Legislative Affairs Agency manages. Therefore, that becomes a relationship between you, the individual who happens to be a representative, and Facebook. Whereas, your email communications in your Representative Lora Reinbold account, managed by Legislative Affairs Agency, gets into the more complicated questions about public officials, public records, and who controls those. 1:45:24 PM REPRESENTATIVE REINBOLD asked Ms. Behr to answer, as the former regulatory review [supervisor]. MS. BEHR advised that she had nothing to follow up with as to Chair Claman's answer. 1:45:58 PM REPRESENTATIVE LEDOUX noted that when the discussion is about digital bank account information, she opined there must be a procedure where the executor goes to the bank after someone dies, and the bank provides the information. The digital account is contained in the app, she said. MS. BEHR said that she noticed that younger attorneys at the Department of Law are moving their private personal financial accounts to be totally paperless. In the situation where a person has a totally paperless account, the concern is the executor locating the account and how they will find the account. In this bill, a person can receive a Catalog of Communications which depicts the following: To, From, Date of emails. For example, her husband recently received something from the bank advising that his tax return form was available and it was around tax time, this information offered a pretty good idea of some financial relationship. Trust companies believe this bill is a good idea because a person has to be able to gather information where the assets are located. The executor still has to go to the bank and fill out its paperwork according to the banking and stock broking laws. She pointed out that this bill helps to locate assets the family or fiduciary didn't know were available. 1:48:27 PM REPRESENTATIVE LEDOUX commented that she likes the idea of this law and she wasn't trying to give Ms. Behr a hard time, but if she was the executor of her brother's estate and didn't know where he banked because everything was totally paperless, if she had any relationship with her brother she would probably know where he worked and where they were depositing his checks. MS. BEHR agreed that that was definitely is a possibility, but there are people without a strong relationship with an employer or they are self-employed. This bill covers a multitude of situations, and it addresses the electronic age and brings the law into conformity with the paperless world, she explained. Therefore, it will become more and more difficult to locate the assets that a fiduciary and executor have a duty to gather, monitor, and pay bills. 1:50:06 PM REPRESENTATIVE EASTMAN asked how the Uniform Law Commission looked upon instances where a third party might have an interest in whether or not certain records are disclosed. For example, a legislator specifies in their will that they want all of their digital assets available to their wife. Although, because they work for the legislature there are confidentiality expectations with regard to communications that might, in all likelihood, be part of those records. Or, someone works for the Army, or whoever, and their employer thinks it has an interest in the spouse not having access to those kinds of records, he offered. 1:50:44 PM MS. BEHR pointed out that this bill does not change other laws. She referred to copyright, and noted that in the event she receives an asset that is copyrighted, she can't blast it all over the newspaper because she has to follow copyright law. In the event she was trying to get a death benefit for her husband's estate, and acquired confidential medical information, she has to treat those records confidentially, just as her husband would. She reiterated that this bill doesn't change other laws, and it doesn't change how she receives military benefits, or goes into someone's bank account because she still has to conform to the law the legislature adopted in banking, stock, military benefits, and such. 1:51:36 PM VICE CHAIR FANSLER referred to industry buy in, and noted Ms. Behr mentioned that Google and Facebook were supportive of this. He asked whether this was a universal buy in, such that Microsoft and Yahoo are buying in, and whether there was 100 percent buy in, or whether some companies are not on board with this. MS. BEHR explained that, first of all, this bill would not have passed in 23 or 24 states, and pending on two governor's desks if people had serious problems with it. She reiterated that it has been an open public process, and she specifically asked at the national office if they had received complaints or any serious opposition, and she was told "No." 1:52:53 PM VICE CHAIR FANSLER inquired as to whether any thought was given, since there was work with the industry, whether the industry was willing to change the user license agreements or terms for their sites. He commented that that might be a way to assure everyone that they have to do this, rather than possibly having to change their will. MS. BEHR answered that Google and Facebook would say, if they were at the witness table, that they are following federal law. Federal law has certain privacy restrictions on electronic communications; therefore, even if the user agreement was changed, there would still be the problem with federal law requiring that it be confidential, and that they have the consent of the person before "you can get into the content of their electronic communications." She offered that the nice thing about the online tool is that it allows industry to develop the kind of online tool they want for their business. She said she would imagine that Facebook has something different than Wells Fargo because the needs are different. She related that she heard Facebook was setting up legacy pages wherein a person can explain that their loved one passed away, the location of the service, and where to send donations. 1:54:43 PM VICE CHAIR FANSLER referred to the industry end and the opt in systems, and asked whether they are general blanket opt in, such that Google has Google G-mail, Google-drive, the calendar and all the different suites. He further asked whether it is opt in by one or a general "you opt in and everything goes over?" MS. BEHR replied that she doesn't have the expertise to answer that question. Although, the bill sets up for them to have an online tool and she was unsure whether Google has one for each. It's possible that they do because maybe the needs are different, but she was unsure, she said. 1:55:42 PM VICE CHAIR FANSLER noted that Facebook is a blending of pictures and media that might be valuable, but a person has Facebook messenger which is similar to an email chat system. He asked whether this bill allows a person to delineate between those two. For instance, say he wanted his future spouse to have access to all of his pictures but not the messenger part of it ... MS. BEHR opined that the protections for the content of electronic communications apply even if it was a blended account, a person still has to show consent because they have to get around federal law that says "consent." She noted that she reviewed some of the standard forms of consent and offered that it's not something someone easily gives, such that it is similar to the consent given to doctors to release medical records. She described that consent as a large couple of sentences so the person knows what they are doing, and what access they are giving up. Although, she explained, a more general consent would be fine for photographs. 1:57:08 PM VICE CHAIR FANSLER surmised that Ms. Behr was saying that Facebook would require the more advanced consent because it has the photographs that need the general consent, but it definitely has the messenger portion to ... MS. BEHR pointed out that she doesn't advise Google or Facebook, but she can tell them they need to look at federal law, and federal law requires a pretty good consent on giving out contents of electronic communications. 1:57:39 PM VICE CHAIR FANSLER opened public testimony on HB 108. 1:57:56 PM KEN HELANDER, Advocacy Director, American Association of Retired Persons (AARP), said it had been interesting listening to the testimony and questions because it underscored that this proposed legislation was the consequence of this digital age and the increasing role it plays in everyday lives. Society has long accepted the legally defined role of conservator, executor, and agent, in carrying out fiduciary duties with respect to tangible assets on behalf of the deceased individual or an incapacitated person unable to make decisions. He commented that the many accounts a person now opens digitally could include, commerce, banking, entertainment, research, and social networking, which are all complex and protected by each account's rules of privacy. He said, "I know we all read the fine print on those terms of service agreements," but nevertheless it can be confusing. Financial digital accounts go beyond banking and into an online brokerage as to how a person pays their bills, virtual property accounts like virtual currencies and bit coins, air miles, and he then listed examples of many more accounts. He explained that each of the different types of service have its own terms of service agreement, which is a contract and companies are reluctant to share information it promised not to share. The importance of being able to close accounts, avoid unnecessary expenses, prevent unauthorized account use, or identity theft, requires new approaches in managing these affairs. He pointed out that the bill gives Alaskans the right to treat their digital assets in the same manner they treat their tangible assets, it allows individuals to effect advanced life planning, and give a trusted family member the ability to settle the loved ones financial and personal affairs. He said AARP Alaska supports the passage of HB 108. 2:01:38 PM VICE CHAIR FANSLER, after ascertaining no one wished to testify, closed public testimony on HB 108. 2:01:59 PM REPRESENTATIVE EASTMAN asked whether there are any deviations between this bill and what the Uniform Law Commission recommended for those other states. CHAIR CLAMAN noted that it is not the Uniform Law Commission's recommendation. He pointed out that during the course of drafting HB 69, they realized that last year the legislature changed the statutory Power of Attorney form. Consequently, he said, a subsection was included into the Power of Attorney form and he advised that Sec. 1, page 3, of the bill is the modification to the statutory Power of Attorney form. 2:02:53 PM MS. BEHR remarked that in the area of uniform law, it is important that this bill be comparable to what other states do, and she ran this base bill through the Chicago office of the Uniform Law Commission who said it was just fine. There are small style changes that are different for Alaska such that Alaska's definitions are at the end of the bill and in the uniform law they are at the beginning, but it substantively doesn't change anything. With regard to the amendment for the Alaska Pacific Power of Attorney form, the Uniform Law Commission would have no comment on that because it is not a uniform form used in other states, she offered. [Vice Chair Fansler returned the gavel to Chair Claman.] 2:03:54 PM [HB 108 was held over.]