Documenting your assets; online or paper?

The single most challenging job for an Executor of a Last Will and Testament is to gather up the estate. The estate is made up of land or buildings, financial accounts and policies, “chattels” (stuff that you own), and now, increasingly online accounts. If the list of assets is not written down or stored anywhere it is an impossible task, and the Executor has no way of knowing when the task is completed. As a result, the BBC reports that there is £15B in dormant bank accounts, The Bank of Canada have posted that they are currently looking after 1.3 Million unclaimed bank accounts waiting for a claim. And in the US, CNN reports that there is $58B in unclaimed assets sitting in State treasuries.

Each jurisdiction has its own way of dealing with these accounts; Canada probably has the most straightforward search through the Bank of Canada, the UK has a service called MyLostAccount set up by the British Bankers Association (but it’s a tedious service to work with) and the US has allowed free enterprise to encourage a variety of different services, headed by the non-profit National Association of Unclaimed Property Administrators, with a service at unclaimed.org which allows you to search through different State treasuries.

Most of these unclaimed accounts are for people who have passed away, when the Executor knew nothing about them. The administration of the estate was completed without knowledge of those accounts, and the assets entered into an eternal limbo until the government claims them as their own. Given how widespread the issue is, and the billions of dollars at stake, what can be done to ensure that all of your assets reach your beneficiaries? There are, at a high level, two options;

Writing everything down on a piece of paper
The first point to note with this option is that under no circumstances should you describe details of all of your accounts in your Will. It would mean having to update your Will every time an asset changes including signing and witnessing the document, but more importantly, once probated, your Will is a public document so everybody will be able to read this detail. There have already been reports of scammers scouring probate records for login credentials written into Wills. What we therefore mean is writing everything down on a piece of paper and storing it with your Will; you can do this either on an ad-hoc basis or through a structured book like My LifeLocker.

The key advantage of this approach is that it is personal and confidential; you are not relying on any third party to store the information, so it is guaranteed to be safe. The disadvantage is that in keeping the document safe, it may never be found. Paper is not particularly durable either, so it may get lost in a house fire, flood or other natural disaster.

Using an online service
The alternative is to use an online service that offers to store your account information and passwords for you, and then release them at the appropriate time. Let me deal with the obvious disadvantages of this method first. You are handing all of your personal and financial details over to a third party. If somebody came to your front door and offered to look after your passwords for you, there is not a chance that you would take them up on the offer, so why would a website be any different? Some of these services are offered through overseas companies and you would quite frankly be insane to trust them. The company also has to last longer than you, which is this rapid world of startup booms and busts is statistically not likely. In our 14 years of operation we have seen companies offering this type of service come and go, and on the Digital Beyond blog they recently wrote about 26 companies that offered to keep your credentials safe for your loved ones (for a monthly fee) that have subsequently disappeared; AssetLock, E-Z-Safe, EstateLogic, Eternity Message, Futuristk, GreatGoodbye, if i die.org, Legacy Organiser, Life Document Storage, LifeStory.com, Lifestrand, Memorial Gardens, MemoValley, MentoMori, My Last Email, My Web Will, and MyInternetData.

But there are advantages to using a service like this. At LegalWills.ca, USLegalWills.com and LegalWills.co.uk we have teamed up with My LifeLocker to guide people through the process of documenting all of their assets including their online accounts, and then have tied this together with our proprietary Keyholder mechanism. You name a trusted keyholder who is given a unique securely generated key. They can then unlock your document at the appropriate time after going through the required security measures. The information is encrypted so it means that the right information gets in the right hands at the right time, and cannot be compromised. It is also easy to update by logging into your own secure account, the same account that you used to prepare your Last Will and Testament, Living Will and Power of Attorney.

So if you are going to use an online service, look firstly for one with longevity. Look for the usual industry seals like Better Business Bureau accreditation or maybe check out Ripoff reports at www.ripoffreport.com. Look for companies that are based in your home country and then check to see the type of security that they have in place. The recent Heartbleed Bug awakened many people to the risks of online accounts (we weren’t affected). Finally look at the actual mechanism for releasing the data; how is it guarded against unauthorized access.

Our Lifelocker service actually has the best of both worlds; you can print it and store the document on your bookshelf, and also have an online version available to your keyholders. Or just choose the one approach that works for your situation.

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Why common-law marriage is a myth

Often times we end up writing articles that try and explain the kind of mess you can get into if you don’t have a Will. So often, the complexities of the law can be avoided completely if you write a Last Will and Testament. Common-law marriage is a case in point.

According to some statistics, about one in six people co-habit without getting married; clearly there are many reasons for this which we won’t get into, but if ever there was a case for preparing a Will, a common-law marriage is it. I will now attempt to distill the vagaries of the law across different jurisdictions.

In the UK, the law is simple and unequivocal;  ‘common law marriage’ has no recognition in law and unless you have both made Wills neither of you will have any automatic rights to inherit from the other. The intestacy rules dictate what happens if you die without a valid Will and they make no provision whatsoever for a ‘partner’; it is only a ‘spouse’ who will automatically inherit. You may have co-habitated for 50 years, but in the eyes of the law, you are complete strangers if one of you dies without a Will (you may be able to make some claim based on a “dependency”, but this would require a challenge to the default distribution of the estate). Incidentally, if you do inherit money or property from an unmarried partner, you are not exempt from paying inheritance tax, as married couples are.

In Canada, it is slightly more complicated. British Columbia, Saskatchewan, Manitoba, and the Territories do recognize common-law relationships, however, Ontario, Alberta, New Brunswick, Nova Scotia, Newfoundland and Labrador, and PEI do not recognize common-law partnerships and surviving partners will face the same challenges as those described for the UK (above).

The US also has very complicated State specific laws which I can’t go into here. I have spent literally hours looking through State laws to find a good explanation that would fit into this blog, but it cannot be done. In summary there is a common misperception that if you live together for a certain length of time (seven years is what many people believe), you are common-law married. This is not true anywhere in the United States. There are 11 states that recognize the existence of a common-law marriage, and this allows the surviving partner to inherit if there is no Will. For the other States there is no protection for surviving common-law partners.

In short, if you are cohabiting, in a “domestic partnership”, living in a putative Marriage (one that is simply implied) or a common-law situation, you absolutely must write your Will to protect the rights of your surviving partner. You should also prepare a Power of Attorney and Living Will because depending on your jurisdiction, your common-law spouse may have no rights if you were ever to be incapacitated.

Fortunately, a Last Will and Testament, Financial Power of Attorney, Healthcare Power of Attorney, Living Will and Advance Directives can all be created through the online tools at www.legalwills.ca , www.uslegalwills.com and www.legalwills.co.uk. The whole process takes no more than a few minutes and can protect the rights of your partner. It is a serious issue that should not be put-off.

New Year’s Resolutions and your Last Will and Testament

January is always our busiest month of the year at LegalWills; it is a time for reflection and also a time for looking to the future. Over the holidays many of us have spent time with relatives and discussed family matters. There may have been a conversation about a family member who passed away in 2011, and the chances are that person made a mess of their estate planning (the vast majority of people don’t even have a Will in place). Maybe around the dinner table on Christmas Day there was a discussion about your own family’s succession and estate planning; who will get the cottage? or maybe Grandad promised you his pocket watch. One important talk that we had was the difficult discussion surrounding the guardianship of our daughter; who would the most appropriate guardian be, and would they be prepared to take on the responsibility?

New Year’s Resolutions are often made in the area of healthcare and financial wellbeing, and these are the very areas addressed in a complete estate plan. Two key healthcare documents are the Living Will and Power of Attorney which allow you to both express your own wishes if you are ever unable to speak for yourself, and also allow you to appoint somebody to make both financial and healthcare decisions on your behalf. Along with eating a healthier diet, and working out, it should be a resolution to get the most important documents in place; life insurance, powers of attorney and a living Will.

Financially there is probably no more important document than a Last Will and Testament, it is part of a sound financial plan and not a document to be written just before you die (chances are, when your death is imminent it will not be a convenient time to write a Will).   The New Year is a great time to either create a Will, or review one that is already in place. It makes sense to; review your choice of personal guardian for your children, make sure that you have chosen the most appropriate person to serve as Executor of your estate, and take another look at your beneficiaries. So you may have a resolution to keep an eye on your spending, save money where possible, try to increase your income. But the most important step in your financial planning is to put your Last Will and Testament together.

It only takes about 30 minutes and is very affordable if you use one of the interactive online services now available like www.legalwills.ca , www.uslegalwills.com and www.legalwills.co.uk. There is no legal requirement to pay for the services of a lawyer or solicitor to create a Will, everybody has a legal right to prepare their own Will.

So why not cross one resolution off today and get your estate planning documents in order?

Same-sex marriage and the Last Will and Testament

Last week, the State of New York passed same-sex marriage legislation; from July 24th 2011, same-sex couples will enjoy the same rights as those in Connecticut, Iowa, Massachusetts, New Hampshire and Vermont. In Canada, all Provinces and Territories recognize same-sex marriage under the 2005 Civil Marriage Act which defines marriage as “”the lawful union of two persons to the exclusion of all others”. In the UK same-sex couples can be joined in a “Civil union” or “registered partnership”.

Why is this of interest to the legalwills blog? well, the most significant implication is for those who choose not to write a Will. There were many cases in the past of a person dying intestate (without a Will) having lived for decades with a life partner. The law used to say that only married partners could have a claim on the estate, and until recently, same-sex couples had no claim (common-law partners still have no claim in most jurisdictions). The “civil union” in the UK and other same-sex marriage legislation gives rights to survivors when no Will has been written. Of course, at LegalWills we would have just advised everybody to write a Will in 30 minutes and save their surviving partner the anguish, but sadly, in many cases people procrastinate when it comes to putting their estate planning affairs in order.

But same-sex marriage legislation also provides some rights for partners who have been left out of a Will. In most jurisdictions it is not possible to completely disinherit one’s spouse, and this now extends to same-sex relationships where applicable.

There are also clear implications for same-sex couples with children. In a Last Will and Testament a guardian for the care of minor children is named, but this only comes into effect when both parents are unable to provide care. With same-sex marriage the parental rights can now extend to both parents.

The recognition of civil unions also has implications for Powers of Attorney and Living Will forms – if you are ever unable to speak for yourself, for example, if you were in a coma. One’s married partner is usually the first point of contact for physicians who need to consult with a family member on important healthcare decisions.

The law is still quite varied across different jurisdictions and the discussion is probably worthy of a Masters thesis rather than a blog post. However, many basic rules still apply for same-sex couples;

  1. Make sure that you have a Will, Power of Attorney and Living Will in place.
  2. If you planning to disinherit your married partner; seek legal advice as the wishes that you have outlined in your Will may not be enforceable.
  3. If you do get married or divorced, make sure that you update all of your estate planning documents. Marriage typically revokes (cancels) any existing Will.

This is a very rapidly changing legal landscape, and so if you read this in a few months, it may be out of date. If you have any comments to add, please feel free. I am happy to provide any clarifications or corrections.

Your personal directives…

There have been a couple of articles in the news this week related to the importance of preparing one’s own personal directives. These have many names including “advance directives” or “living wills” but in essence it is communicating the type of healthcare that you wish to receive if you unable to speak for yourself or in an irreversible vegetative state.

The Edmonton Journal had an article about the Legal Resource Centre of Alberta who educate the public on the importance of drawing up a Power of Attorney, personal directive and Last Will and Testament. They make some great points in the interview; “It’s going to take some time and effort to think about your beliefs, gather the information, meet with your loved ones and write the documents, but it can save enormous grief… Your partner may not have the legal authority to make the decisions. If parents don’t like their child’s spouse, who would make decisions if there’s a family conflict?…There is no big automatic legal right, and you do need these documents in place.”

It really is a legal quagmire and although you may consider it unlikely, the benefit of having these documents in place by far outweighs the inconvenience of creating them (about 30 minutes of your time at LegalWills and $10.95 for a Living Will including personal directives and a healthcare Power of Attorney).

But really, what are the consequences of not putting these documents in place? well this morning the news in Toronto was full of the tragic story of Hassan Rasouli. The headline is scary enough; Family goes to court to keep dad alive: ‘He talks to us with his eyes’ But the details of the story are heartbreaking – “His doctors at Sunnybrook say they’ve done all they can do for Rasouli, that he is in a permanent vegetative state and that their medical judgment compels them to remove the ventilation keeping him alive.” but “Parichehr Salasel, Rasouli’s wife and substitute decision-maker… a doctor in Iran prior to the family’s arrival in Canada a year ago, believes he is improving and that removal from the ventilator would breach his Muslim beliefs.”

This is of course not an unusual situation; the article is a stark reminder of the Terri Schiavo case about 10 years ago, and the law changes that were put in place as a result.

It’s a terrible situation and the law (in Canada at least) appears to be very unclear as to who has the right to determine whether this man should live or die. The complex ethical arguments are included in the main article and so I am not going to repeat them here, but the real lesson is that this case is with the Ontario Court of Appeal and a judge will make this life and death decision.

This situation will always be tragic, but creating a detailed personal directive can give you a voice in this argument. If we knew what Mr Rasouli would have wanted, then his views would surely carry a great deal of influence in this decision. Any time a family is left with a court battle on their hands against the healthcare and legal communities, it is a desperately difficult ordeal.

So, create a Healthcare Power of Attorney, Personal Directive (Living Will) today, and spare your family some very difficult decisions. You don’t need the services of a lawyer  or solicitor to do this, you can do it in a few minutes at www.legalwills.ca, www.uslegalwills.com and www.legalwills.co.uk.

Which documents are in an “estate plan”?

The term “estate planning” is an often used, but sometimes misunderstood term. We use it to refer to a complete suite of documents that work together to take care of your needs when you are unable to communicate your own wishes. The core set of documents in an estate plan are the Last Will and Testament, the Living Will (with a Healthcare Power of Attorney) and a financial Power of Attorney. Different jurisdictions have variations on the exact terms used, but in essence these are the three key documents.

The Last Will and Testament is the document that everybody must have, no matter what. It only comes into effect after you have passed away, can be updated as many times as you wish while you are alive, and only the most recent (the “Last” Will) describes how your assets will be distributed once you pass away. It is true, that even without one, your assets will be distributed, but this will not be based on your wishes, but on pre-defined laws that vary slightly from jurisdiction to jurisdiction. We’ll talk a little about what happens when you don’t have a Will in a future post. But, everyone will die, so everyone needs a Will.

A Living Will gives you some say in the way you will be treated before you die, in a situation where death is otherwise inevitable.  This can be used in two ways — to put a swift end to intolerable suffering, or to endorse the use of experimental treatment to try to save your life if at all possible.  Most people die in hospitals and often this is after receiving treatment administered in an effort to prolong a person’s life.  Medical staff are duty bound to use everything within the powers of modern medicine to keep a patient alive as long as possible, and within those powers there are regulations to be followed.  Medical staff are obliged to preserve a patient’s life without necessarily considering the financial or emotional concerns of the patient and loved ones. The most common use of a Living Will is to express your desire for a voluntary passive euthanasia.  Simply put, this means that medical staff should not artificially preserve your life under specific circumstances which are determined by you.  In addition, your Living Will or “healthcare directive” can express your views on the health care that you wish to receive if you were ever in a permanent coma.

With the Living Will comes a Healthcare Power of Attorney. A Power of Attorney for Health Care allows you to nominate a Health Care Representative who can make health care decisions for you when you are incapacitated and unable to make decisions for yourself.  It can be used to complement your Living Will. Together the Living Will and Healthcare Power of Attorney are known as your “Advance Directives“.

Finally the Financial Power of Attorney. Again, this is only in effect when you are alive and is immediately cancelled when you pass away. It is a more complicated document as it has a number of variations as to when it comes into effect and how long it lasts. Essentially though, it allows somebody to take control of your finances if you were even unable to do this for yourself e.g. in a coma. This person would be able to pay bills, perform banking transactions or buy and sell assets on your behalf.

These three documents are your estate plan. The Last Will and Testament will definitely be used if you have one, the Living Will (and Healthcare Power of Attorney) and Financial Power of Attorney will only come into effect if the appropriate situation arises. It is however prudent to have all of the documents in place and stored together in a safe place.