Property Rights in Digital Assets: More Than Just Ones and Zeros

In Indiana, digital assets are subject to property laws, much like traditional forms of personal property. Digital assets are a wide range of items that exist electronically. These can include cryptocurrencies (such as bitcoin), social media accounts, email accounts, photos stored in the cloud, digital music libraries, online video game libraries, domain names, or even items in the metaverse. Essentially, any content or resource that is stored electronically and can be owned, transferred, or controlled qualifies as a digital asset. Unlike physical property, digital assets don’t have a tangible presence, but they hold significant value and utility, making them just as important.

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) is the key legislation governing the management of digital assets. This landmark act outlines the rights and responsibilities of fiduciaries, including personal representatives, guardians, and trustees, in handling digital assets.

For example, if someone passes away, the personal representative of their estate has the legal right to access the decedent’s digital assets. However, they must follow specific statutory procedures, such as providing a certified death certificate and documentation of the person’s appointment as a personal representative, to gain this access. Similarly, a guardian may access the digital assets of a protected person, but only if the court authorizes it and within the limits set by the court. Trustees also have the right to access digital assets held in trust, provided they adhere to the terms of the trust and other relevant laws.

The duties that apply to fiduciaries managing tangible property—such as the duty of care, loyalty, and confidentiality—also extend to digital assets. Fiduciaries must manage these assets with the same level of responsibility they would apply to physical assets. Additionally, managers of digital assets, such as online service providers, are required to comply with fiduciary requests for disclosure as long as these requests meet statutory requirements.

The ramifications of mishandling digital assets can be significant. For fiduciaries, failing to properly manage or protect digital assets could result in legal consequences, including potential liability for breach of duty. For the owners of these “e-assets”, improper management could lead to the loss of valuable or irreplaceable digital property, disruption of ongoing business operations, or even financial loss. Therefore, understanding the laws surrounding digital assets is essential not only for fiduciaries but also for anyone who owns or manages digital content, ensuring that these assets are preserved and protected according to the law.

In summary, Indiana law treats digital assets as personal property, ensuring that they are managed and protected with the same diligence as physical assets. This legal framework provides clarity and guidance for fiduciaries in managing and accessing digital assets, ensuring they are handled responsibly and in accordance with the law.

If you have any legal questions or concerns about your digital property or digital property rights, please contact our property experts at McNeely Law, LLP.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.