May 21, 2012
If a Business Owner Dies, Who Can Access the Web?
By MOLLY WILLIAMS
As small businesses move more operations online, there's an unpleasant question they need to ask: What happens if the one person who has access to the online accounts dies?
It's an all-too-common situation at small companies. With resources scarce, the firms leave the job of managing online accounts to one person—and just as often, nobody else knows the passwords or other information for those accounts. That can be a recipe for disaster if the account holder passes away, since privacy laws and user agreements make it tough for anybody else to get access, even the next of kin or a business partner.
In Whose Name?
Consider Laura Pochop, who owns Mulberry's Market, a specialty store in Piedmont, Calif., with her husband, Chad Olcott. She promotes the store on Facebook, uses cloud-based payroll software, taps into bank accounts over the Web and makes online purchases from suppliers.
But Ms. Pochop is the only one who has access to the accounts. If something happened to her, no one else could cut checks, stay in touch with customers on Facebook or check bank balances. "Our head is in the sand about this," Ms. Pochop admits. "I've never trained anyone else."
It's "something not a lot of businesses think about," says Andrea Matwyshyn, assistant professor of legal studies and business ethics at the University of Pennsylvania's Wharton School. When it comes to doing business in the cloud, "there's almost a false sense of security."
When thinking about the best way to protect your business, there are a couple of issues to consider.
First off, whose name are the accounts in? If they're in the business's name, you're in good shape. Simply make sure more than one person knows the current passwords, or write up a list and stick it in the safe. Some software products and services offer to manage the process.
If the accounts are in an individual's name, things get a lot trickier because of strict privacy laws and policies at cloud companies and social networks.
For instance, Yahoo Inc.'s terms-of-service agreement says that ownership ends if the account holder dies—nobody else can get in. Likewise, PayPal Inc. won't provide access to another party, according to the company's website. (It does, however, have a process to close out somebody else's account, and business accounts can have multiple authorized users.) Google Inc. outlines a process on its site that includes providing a death certificate before it will consider providing access, and it may require a court order.
In these cases, even if somebody else has the passwords for the accounts, that person could technically be in violation of privacy laws and terms-of-service agreements for accessing somebody else's accounts. And that could result in criminal or civil charges, lawyers say.
Jim Lamm, an estate lawyer in Minneapolis, advises clients not to access the accounts even if they have the passwords but rather to request the contents of the accounts through the proper legal channel—usually just a letter to the service provider—to avoid any possible violations. Of course, given Web companies' policies, this strategy may not work, he says, but it's better to be safe than to put yourself at risk of legal action.
Take No Chances
Some experts advise putting account information in a will or trust as part of the company's assets—a move that may afford legal protection in some states. Oklahoma and Idaho, for instance, have passed laws that allow an estate to access social media, blogging and email sites cited in a will. Other states, including Nebraska and Oregon, are working on similar bills. And the Uniform Law Commission, a group of state-appointed legal experts that seeks to create model legislation for states, says it's currently studying this issue.
Still, some caution is called for. Jean Gordon Carter, an estate attorney and partner at Hunton & Williams LLP in Raleigh, N.C., thinks it's a bad idea to put account numbers and passwords directly in a will or trust because that can become a public document.
Instead, she advises putting an inventory of digital assets into a side document within the will or trust. Some software products promise to help with these issues.
More broadly, she warns that it's not clear if state law would take precedence over an online company's terms of service in a legal fight.
"It depends on so many specifics that it's hard to say what would apply," she says.
Ms. Williams is a writer in San Francisco. She can be reached at email@example.com.