Legislature(2017 - 2018)BARNES 124

03/08/2017 03:15 PM House LABOR & COMMERCE

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03:18:11 PM Start
03:18:29 PM HB108
03:53:08 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Bill Hearing Canceled>
-- Public Testimony --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
           HB 108-FIDUCIARY ACCESS TO DIGITAL ASSETS                                                                        
3:18:29 PM                                                                                                                    
CHAIR KITO  announced that  the only order  of business  would be                                                               
HOUSE BILL NO. 108, "An Act  adopting and relating to the Revised                                                               
Uniform Fiduciary Access to Digital Assets Act."                                                                                
3:19:12 PM                                                                                                                    
REPRESENTATIVE  MATT CLAMAN,  Alaska  State Legislature,  advised                                                               
that  in  2015, 74,000  Alaskans,  approximately  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.   He noted that  HB 108  is based                                                               
upon the  Uniform Law Commission's  recommendations to  states in                                                               
terms of how to address the issue of access to digital assets.                                                                  
3:20:42 PM                                                                                                                    
DEBORAH   E.   BEHR,   Commissioner,   National   Conference   of                                                               
Commissioners on  Uniform State Laws  (NCCUSL), advised she  is a                                                               
Uniform Law Delegation  Member from the State of  Alaska.  Alaska                                                               
has  been   a  member  of   the  Uniform  Law   Commission  since                                                               
approximately 1914,  and advised she  considers it to be  a state                                                               
right's  organization  because  all  states meet  annually  in  a                                                               
public meeting setting  to come up with  solutions for interstate                                                               
pressing  problems that  work for  all states.   The  Uniform Law                                                               
Commission  supports  HB  108,  and she  pointed  out  there  are                                                               
letters of  support from  various entities.   The Act  itself was                                                               
the result  of senior advocate  groups coming to the  Uniform Law                                                               
Commission due  to difficulties  with fiduciaries,  wills, powers                                                               
of  attorney, trusts,  guardianship,  and  conservatorship.   She                                                               
explained that  when a person  dies, the executor for  the estate                                                               
is  the  fiduciary who  gathers  all  assets and  disperses  them                                                               
according to the wishes expressed  in the deceased person's will.                                                               
Currently,  the nation-wide  problem  is, "what  do  you do  with                                                               
digital   assets"   because   digital   assets   are   encrypted,                                                               
downloaded,  password protected,  and  this  bill addresses  that                                                               
issue.     Google,  Facebook,  or  whatever   provider,  are  the                                                               
custodians with  a private  service agreement  with the  user for                                                               
their service  and, generally,  a term of  the agreement  is that                                                               
the  provider  will  keep  it confidential.    Her  husband,  she                                                               
related, has  a third-party  contract with  "a server  person" to                                                               
store their pictures, and the  picture will be kept confidential.                                                               
In the event  her husband passes, and she attempts  to obtain his                                                               
pictures  from Google,  she will  be told  the agreement  was not                                                               
with her, she  could not have the pictures, and  she will need to                                                               
obtain a  court order, she  said.  This  bill is not  unique, she                                                               
described, it is  the law in 23 states, and  is presently pending                                                               
before 17 states.                                                                                                               
3:25:56 PM                                                                                                                    
COMMISSION BEHR explained  that a concept of the bill  is an opt-                                                               
in system.   For  example, if  her husband  chose to  do nothing,                                                               
this bill would  not change his relationship with  the assets and                                                               
she would still have  to go to court to receive  the assets.  The                                                               
compromise  the  Uniform  Law  Commission  worked  out  with  the                                                               
industry, the  senior groups and  the public generally,  was that                                                               
the online  providers, such as  Google and Facebook,  would adopt                                                               
an "online  tool."   Wherein, she explained,  when opening  a new                                                               
account with Google,  for example, it will have a  page "And if I                                                               
pass away  or I get incapacitated  this is what I  want done with                                                               
these assets."   Importantly, she  offered, "you may say  no, and                                                               
if you say no,  that means no one gets it,"  no one would receive                                                               
the  family photos,  email communications,  and  such, and  noted                                                               
that each  service provider has  its own  model of the  form, she                                                               
3:27:26 PM                                                                                                                    
COMMISSIONER BEHR pointed out that commerce is moving to paper-                                                                 
less, and  the difficulties arise when  no one has access  to the                                                               
deceased person's  passwords and  business documents.   This bill                                                               
sets  up three  priorities,  as follows:  the  online tool;  your                                                               
legally enforceable  directions in your will,  power of attorney,                                                               
or trust;  and, when a  person does not  have an online  tool for                                                               
whatever reason  and the will simply  read, "All my assets  to my                                                               
wife," except that direction is  not enough under federal digital                                                               
law to  release the digital  assets.   In the event  the deceased                                                               
had not provided any direction,  the "Terms of Service Agreement"                                                               
between  the  deceased  and the  provider  control,  meaning  she                                                               
probably will not easily receive  the family photograph album and                                                               
will  have to  go  to court.    She pointed  out  that there  are                                                               
special  rules in  HB 108  requiring  a person  to give  "express                                                               
consent or  court order"  for email  content.   In the  event the                                                               
deceased did  not provide  express consent,  and no  court order,                                                               
the  best the  fiduciary  receives  in this  bill  is called  the                                                               
"Catalog of  Electronic Communications."  She  explained that the                                                               
catalog contains the "To, From,  Date" lines, but not the subject                                                               
line or the  contents of the email.  Fiduciaries  have found that                                                               
limited amount of information useful  because it may offer a road                                                               
to follow, she said.                                                                                                            
3:32:40 PM                                                                                                                    
COMMISSIONER BEHR advised that this  bill would resolve a problem                                                               
for  mentally  handicapped  or disabled  individuals  who  become                                                               
incapacitated, cannot  monitor their  financial account,  and the                                                               
guardian  wishes  to  close  that   account.    This  legislation                                                               
provides a court  hearing process for the individual  to tell the                                                               
judge whether  they are,  or are not,  capable of  handling their                                                               
account.   She explained that  as the fiduciary of  her husband's                                                               
estate,   and   moving   through   the   process   of   providing                                                               
documentation and  such for Google, Google  will receive immunity                                                               
if  it disperses  the digital  assets according  to the  bill, in                                                               
good faith  compliance, within 60  days.  Commissioner  Behr then                                                               
related two "war stories."                                                                                                      
3:35:07 PM                                                                                                                    
REPRESENTATIVE  BIRCH asked  whether sharing  information with  a                                                               
person's  spouse,  such  as  user name,  password,  and  name  on                                                               
account, in detail, is sufficient for legal access.                                                                             
COMMISSIONER  BEHR  answered  yes,  and she  said  this  bill  is                                                               
necessary  due to  a  federal  law in  the  area  of hacking  and                                                               
wiretapping.    This  bill  allows  her  access  to  all  of  the                                                               
documents,  to change  passwords,  but in  general,  the bill  is                                                               
necessary because even though the  spouse may have the passwords,                                                               
the company is  under no obligation to deal with  the spouse, she                                                               
REPRESENTATIVE  BIRCH  related  that   the  bill  appears  to  be                                                               
reasonable and make sense, and  he was curious about the legality                                                               
of having access to the deceased's information and accounts.                                                                    
CHAIR KITO commented  that another aspect is that  the spouse may                                                               
have access  but not  the authority, and  this bill  provides the                                                               
3:37:26 PM                                                                                                                    
REPRESENTATIVE   KNOPP  offered   a  scenario   of  an   executor                                                               
overseeing his will in the event  he and his wife are deceased at                                                               
the same  time, and  asked whether  the court  determines whether                                                               
the person is actually the fiduciary at that point.                                                                             
COMMISSIONER  BEHR  responded  that  her  husband  appointed  her                                                               
executor and in order for anyone  to legally deal with her as the                                                               
executor,  she  has to  go  to  court  and  receive a  Letter  of                                                               
Appointment.   The  online tool  information is  completed before                                                               
the person  is deceased.   For  example, if  her husband  did not                                                               
sign the  online tool  before passing,  she could  not go  in and                                                               
make  changes.   She  opined  that  the American  Association  of                                                               
Retired Persons  (AARP) intends to offer  educational programs in                                                               
this area, and  she said she imagines the  Alaska Bar Association                                                               
will provide CLE  education.  She expressed that this  is an area                                                               
where people  must be "more  savvy" when moving into  the digital                                                               
age,  and  she  suggested  keeping a  digit  roadmap  of  assets,                                                               
keeping important  things on  a flash  drive, signing  the online                                                               
tool, and preparing estate planning.                                                                                            
3:40:58 PM                                                                                                                  
REPRESENTATIVE KNOPP  asked whether  this opens  the door  for "a                                                               
lot of corruption, fraud, embezzlement."                                                                                        
COMMISSIONER  BEHR replied  that new  security devices  are being                                                               
developed to  resist hacking, but  it is probably  not impossible                                                               
to hack the information.   The key is that the  online tool has a                                                               
trigger, and her husband's death  certificate and other documents                                                               
must first be provided.                                                                                                         
3:42:29 PM                                                                                                                    
REPRESENTATIVE WOOL offered a scenario  of someone leaving all of                                                               
their  assets  to  their  spouse and  permitting  access  to  the                                                               
deceased person's  email and Facebook account,  and surmised that                                                               
Commissioner Behr was saying, for  example, Google will not break                                                               
the contract.  Except, in  other circumstances the contract would                                                               
be broken through  a will, such that if someone  wills a spouse a                                                               
house or  piece of  property and unbeknownst  to the  spouse, the                                                               
deceased had  a vacation house  somewhere.  In that  scenario, he                                                               
said, even though the spouse had  no part in the contract for the                                                               
vacation  house,   the  spouse  still  takes   ownership  of  the                                                               
property.  He asked whether this is different.                                                                                  
COMMISSIONER  BEHR  noted that  this  is  different, and  because                                                               
society is  in the electronic age  it will take time  for the law                                                               
to develop and resolve issues.   The phrase "all my property real                                                               
and  tangible"  includes  houses,  pieces  of  property,  various                                                               
investments, and  it is the  job of  the fiduciary to  find those                                                               
assets and pull  them together.  She pointed  to the frustrations                                                               
of trust companies that have a  duty to locate assets, and one of                                                               
those  assets might  be important  business records  in order  to                                                               
locate  stocks, for  example, yet  the trust  company cannot  get                                                               
access and  does not even know  the stocks exist.   She described                                                               
that this bill is  not an overlay statute, it does  not go in and                                                               
change how a  person bequests property or stocks  and bonds, that                                                               
is all under other law.                                                                                                         
3:44:48 PM                                                                                                                  
REPRESENTATIVE STUTES  commented that her  mother is 93,  and she                                                               
requested  and  received  a  laptop  computer.    Her  mother  is                                                               
private, she described,  and no one knows her  passwords, so this                                                               
bill would be instrumental if her mother passed immediately.                                                                    
3:45:38 PM                                                                                                                    
CHAIR KITO recalled a previous  comment that the post office gets                                                               
less business  due to  the popularity of  email, and  opined that                                                               
the  post  office stays  in  business  via  the internet  due  to                                                               
commerce.    He  requested  clarification as  to  the  difference                                                               
between  a   fiduciary  and  beneficiary  with   regard  to  this                                                               
COMMISSIONER BEHR  answered that  a fiduciary,  an executor  in a                                                               
will, for  example, has a  business and  family duty to  find and                                                               
protect all assets, invest the  assets, and fulfill the intent of                                                               
the deceased.  A beneficiary  is the person who actually receives                                                               
those  assets,  such  as leaving  assets  to  the  grandchildren,                                                               
whereby  the  grandchildren  are the  beneficiaries  and  receive                                                               
whatever the deceased intended.                                                                                                 
3:47:06 PM                                                                                                                    
CHAIR KITO commented that this  legislation is timely in his case                                                               
because,  as   a  single  parent   and  transitioning   into  the                                                               
electronic  age,  he  is  considering what  would  happen  if  he                                                               
passed,  and how  would his  daughter  have the  ability to  gain                                                               
access  to those  financial resources,  especially if  his access                                                               
had all  been online.   His question  is whether he  should write                                                               
down all  of the  passwords and  make sure  his executor  has the                                                               
ability to  get the passwords,  while understanding  the executor                                                               
does not  have the legal  authority.  Possibly, he  opined, there                                                               
is a window in  time where there is "almost like  a little no one                                                               
is looking  grace period" to go  in and take care  of the assets.                                                               
He surmised  that a  person would have  to obtain  the electronic                                                               
opt-in in  advance of identifying the  fiduciary's responsibility                                                               
in a  will.   He then referred  to Commissioner  Behr's testimony                                                               
that  many companies  have been  around for  10 years,  and asked                                                               
that  once this  bill passes  in Alaska  whether these  companies                                                               
will be  required to allow  that opt-in for Alaskans,  or whether                                                               
many companies currently allow for the electronic opt-in.                                                                       
COMMISSIONER BEHR responded that the  big providers in this area,                                                               
Facebook  and  Google,  currently  have tools  online  wherein  a                                                               
person can designate, and it  is expected that other corporations                                                               
will  come  online  as  this  is  motivation  for  them  as  good                                                               
corporate citizens.  She pointed to  a provision in the bill, "if                                                               
it's not there  for you to use  then they -- we will  look to the                                                               
3:49:35 PM                                                                                                                  
CHAIR KITO opened public testimony on HB 108                                                                                    
3:49:52 PM                                                                                                                    
KEN HELANDER, Advocacy Director,  American Association of Retired                                                               
Persons (AARP), offered support for  the legislation on behalf of                                                               
the American  Association of Retired  Persons (AARP)  with 85,000                                                               
members  in  Alaska.     Enacting  this  law  is   timely  and  a                                                               
consequence  of  society's  digital   age,  similar  to  advanced                                                               
planning with  powers of  attorney for  finances and  health care                                                               
decisions.   This  legislation allows  that citizens  approaching                                                               
their  later  years  in  life,   or  the  possibility  of  sudden                                                               
incapacity,  to have  a sense  of self-determination  rather than                                                               
leaving it to  chance or letting the burden fall  on other family                                                               
members who  may have to  step in on  the deceased's behalf.   He                                                               
noted that the  AARP Public Policy Institute  and AARP's national                                                               
office in Washington  D.C., produced a publication  and survey of                                                               
adults in the  United States, the survey included  how adults use                                                               
the  internet, what  they know  about a  digital legacy,  and how                                                               
many  adults have  addressed  this issue  with  members of  their                                                               
family, or  thought about  it for  themselves.   Surprisingly, he                                                               
related, a  majority of people  said they were not  interested in                                                               
it, but  at the same  time they all  valued that the  [assets] be                                                               
protected. Education must be provided  because it is new and will                                                               
take time  for adults and service  providers to come of  age with                                                               
this technology,  how it  is being  used, and how  we want  it to                                                               
benefit us in the future, he offered.                                                                                           
[HB 108 was held over.]                                                                                                         

Document Name Date/Time Subjects
HB108 Sponsor Statement 2.27.2017.pdf HL&C 3/8/2017 3:15:00 PM
HB 108
HB108 Sectional Analysis 2.27.17.pdf HL&C 3/8/2017 3:15:00 PM
HB 108
HB108 Fiscal Note-LAW-CIV 3.3.17.pdf HL&C 3/8/2017 3:15:00 PM
HB 108
HB108 Supporting Documents-ULC Fact Sheets 2.27.17.pdf HL&C 3/8/2017 3:15:00 PM
HB 108
HB108 Supporting Documents-ULC Summary 2.27.17.pdf HL&C 3/8/2017 3:15:00 PM
HB 108
HB108 Supporting Documents-ULC Why Adopt 2.27.17.pdf HL&C 3/8/2017 3:15:00 PM
HB 108