Electronic Will Legislation – Support Uniform Statute

Background
Electronically executed wills, codicils and testamentary trusts are excluded from UETA and do not have protection under most state laws. In 2017, several bills were introduced in state legislatures to support electronic execution and witnessing of testamentary documents. ESRA Public Policy Committee members have reviewed model legislation and have indicated support for those that are consistent with ESRA policy principles.

Outcome
Enactment of legislation enabling the electronic execution of wills, to the extent such legislation is consistent with ESRA principles.

IRS e-Signature Policy – Ensure Reasonable Standards

Background
In December 2016 the IRS Chief Counsel released Advice 201650019, which ruled on the issue of whether electronic signatures could be used on Form 2878 – Power of Attorney. In recommending that electronic signatures should not be accepted on the form, the chief counsel further recommended that “an electronic signature should only be accepted by the Service when there are published guidance or IRM provisions that specifically authorize use of an electronic signature for the specific form involved.” While the advice states that it remains a business decision whether to accept use of electronic signatures on any specific form,” it recommends that “in those cases dealing with high-risk documents, taxpayers should either be required to sign by non-electronic means or the Service should institute heightened authentication, security procedures, and electronic signing processes to protect the Service against the risk of disavowal by the taxpayer.” In the meantime, work on Revenue Procedure governing electronic signatures has been underway for some time, but the subject matter now falls under Identity Assurance, a directorship that was formed in response to a GAO directive last year. While the draft Rev. Proc. has not been released for public comment, there is a high likelihood that it will call for 100% IRS oversight of electronic signatures on all forms, possibly threatening transaction workflows that do not currently include the IRS as a direct participant.

Internal Revenue Bulletin 2017-5 summarized temporary regulations and stated that the Treasury Department and the IRS have determined that valid electronically signed withholding certificates may be accepted by a withholding agent if the withholding certificates reasonably demonstrate to the withholding agent that they have been electronically signed by the recipient identified on the form or a person authorized by the recipient to sign the form (by, for example, a signature block that includes a time and date stamp and a statement that the certificate has been electronically signed and the name of the person authorized to sign the form). If the withholding certificate contains only a typed name in the signature line and no other information regarding the method of signature, a withholding agent cannot treat the withholding certificate as validly signed. There is much confusion about what is meant by “signature block”, and whether and how indicia of electronic signing are to be implemented in compliance with the temporary regulation.

Outcome
Inform key influencers of the existence and value of 3rd party-initiated electronic signatures and records. Seek broader allowance for electronic means of signing and storing forms, short of specifying procedures for every form individually.

Federal Home Loan Banks: Accept E-Signed Loans As Collateral

Background
FHLBank currently requires ALL original documents related to the note to be retained and to contain a “wet” signature. We understand that many members are using or exploring the use of digital record retention systems and electronic signatures to execute loan documents, and we agree the practices are generally accepted as legally binding. However, our concern relates to the transferability of the loan, specifically our ability to liquidate the asset, if needed, and the marketability of the loan to prospective buyers. Education, outreach and “moral-suasion” to move the FHLBs toward ultimately releasing a policy of eSignature acceptance.

Outcome
Phase 1: FHLB influencers and decision makers understand the value of eSignatures and express their support for developing a new policy to define their for support and acceptance. Phase 2: FHLBs actually develop and release said policy.

Federal Reserve Banks: Accept Of E-Signed Commercial Loans As Collateral

Background
The 12 Federal Reserve banks lend to other banks by taking loans as collateral. Some FRBs will not accept electronically executed loans as collateral; others will only accept consumer loans, taking the position that commercial loans carry additional risk under UCC. In the past year, counsel for some of the FRBs have developed their own questionnaires to determine whether an electronic loan can be collateralized. Lack of clarity in the FRBs’ policies toward electronic chattel paper means smaller lenders are less likely to adopt electronic processes for these kinds of transactions.

Outcome
Drive a single, clear policy across all 12 Federal Reserve Banks, accepting pledges of electronically signed credit agreements under conditions that are transparent and reasonable.

Perhaps help draft a standard questionnaire or other assessment tool that could be used by all FRBs.

Potential to set up a campaign of affected parties to send clear message of the harm currently being caused.