When the ULC adopted RUFADAA, the act included Section 16(f), which states 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 this act.” The accompanying legislative commentary clarifies that the intent of this section is to provide immunity for any and all indirect liability that could arise from a custodian giving someone access to digital assets under the act. Other than the requirement to act in good faith, the only other exception contemplated is direct liability for contempt for failing to comply with a court order.
Some estate planning and probate professionals have expressed concern that RUFADAA offers more protection to technology companies and digital asset providers than to advisors and fiduciaries. However, RUFADAA defines a custodian as “a person that carries, maintains, processes, receives, or stores a digital asset of a user” and explicitly includes individuals, estates, and businesses in the definition of person. Certainly, all technology companies that provide digital assets fall under this umbrella. However, a plain reading of the language suggests that advisors can also qualify as custodians under certain circumstances.
Whether or not an advisor qualifies as a custodian under RUFADAA, the act does not seem to immunize advisors with respect to preparing estate plan documentation, settling or litigating an estate, trust services, or other advisory services involving digital assets. Notably, the immunity also does not extend to advisors that access a user’s digital assets, and it does not exempt advisors from their other legal, regulatory, professional, fiduciary, or ethical obligations. However, because RUFADAA allows custodians to provide users with an online tool that “overrides a contrary direction by the user in a will, trust, power of attorney, or other record,” the Section 16(f) immunity necessarily extends to a custodian’s development and use of online tools. Advisors can take advantage of this by developing their own tools or adopting third party tools that comply with RUFADAA and their other obligations. These sophisticated advisors can be rewarded two-fold: first, with the ability to incorporate digital assets in more comprehensive estate planning and estate settlement for their clients, and second, with the additional liability protection afforded under RUFADAA.