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.

Where are your assets?

Let us assume for now that you are one of the minority who has written your Last Will and Testament. Now let us assume that you are one of the few of that minority who has bothered to keep it up to date. There’s a good chance that your Will would say something like “I leave my entire estate to my husband John” or “I divide my estate equally between my two children Billy and Betty”.

Now imagine that something were to happen to you today. Would the person who you have named as the Executor in your Will be able to find all of your assets? How many financial accounts do you have? How many insurance policies? What about online accounts with financial assets (like PayPal, GoDaddy PaddyPower or eBay), how many online accounts with family memorabilia (like Flickr, Picassa or Shutterfly), accounts with material assets (like iTunes, Audible, Amazon). There used to be a time when your Executor would go through your mail and take a look at bank statements, but do you receive paper statements from your eTrade, Questrade, William Hill or Party Poker accounts?

Even the people closest to you may not know about every financial or material asset that you own, and if they do, they may struggle to gain access. If you write a Will using a lawyer or solicitor, and have named that legal professional as your Executor, do you let them know every time you open a new account? One of the most common questions we get at LegalWills is “my Dad wrote a Will with a lawyer, but we don’t know which one, how can we find it”. In these situations, the lawyer doesn’t even know that the person has died, so they almost certainly won’t have an up-to-date list of assets.

At LegalWills we are trying to bring Will writing into the twenty first century. Firstly, by letting people prepare their own legal documents at an affordable price for the comfort of their home, and then by letting them update them whenever circumstances change. But modern technology also allows us to do innovative things like integrate My Life Locker into our LegalWills services. My Life Locker allows you to keep an up-to-date record of your key contacts, assets, financial accounts and online accounts which can then be updated at any time, simply by logging into your account. You can at any time download and print your Life Locker and keep it somewhere safe in the house. Alternatively, you can create Keyholders™ and these people will be able to access your Life Locker at the appropriate time; once you have passed away.

If you’ve ever been an Executor, or have ever talked to somebody who has just administered an estate, you will know how difficult it can be to gather the assets, and how impossible it is to know when that task is complete. There are millions of bank accounts around the World sitting dormant because the account holders died, and nobody knew they existed. If you look at online account policies you will often see terms like this;

If we continue to deem your account inactive for a period of eighteen consecutive calendar months, in order to safeguard your monies, we may withhold any remaining monies in your account and close your account. You may contact us to reclaim any such withheld monies at any time

In other words, if you don’t use your account, the money is lost.

Thankfully with services like My Life Locker integrated within LegalWills.ca, USLegalWills.com and LegalWills.co.uk we can provide you with the tools to ensure that all of your assets can reach your beneficiaries.

lifelocker

Six ways the law is a hundred years out of date

DPRI-1-1706-M1_fullwilllargeAs the owner of a company that allows people to prepare their own Will – online, at any time, there are many services we would love to add, but are continually stymied by a law that fundamentally hasn’t changed in centuries. We live in a smartphone, biometric, social World which is entirely ignored by our legal system. Which would be fine if our current system worked, but it is horribly inefficient and open to fraud and exploitation. Given the gaping holes in the way our Wills law works today you would think that lawmakers would be jumping all over new technology to make the system work. Here are just a few ways that the head-in-the-sand approach comes up short;

1. A Will must be printed on a piece of paper;
Today we have video, digital assets, countless online social activity and the only way a Will can be valid is if it’s printed on a piece of paper. an “innovation” that’s been around for a couple of thousand years. The most obvious shortcomings of paper are that it burns easily, doesn’t stand up to flooding very well, is very difficult to find, not secure, easy to forge, and is not easy to update. The single most common question we receive at LegalWills is “my Dad has just passed away, and I know he had a Will, how can we find it?”. It would be relatively easy for us to have an online repository of Wills encrypted with digital signatures and made available to Executors exactly when they are required. Unfortunately the law doesn’t allow for this and currently the only legal document is on a piece of paper – lost, burned, or blown away in a hurricane.

2. A Will must be signed by a handwritten signature
This is perhaps the most ridiculous shortcoming of our existing laws. A scrawled signature is currently the only way of proving that a Will belongs to the person making the Will. Which leads to cases like this , where somebody has to call in a “handwriting expert” to validate the Will because “There are four signatures on it and none of them actually look like any of his signatures.” We sign into our phones with fingerprints, and biometric data. My smartphone uses face recognition to log me in. I can buy a door handle on Amazon that uses “subdermal fingerprint scan technology”, yet according to the law, my entire estate is protected by a chicken scratch signature. You then end up with multi-million dollar properties being contested because claimants “maintain that it is fake and <the testator> never made one”. Or people like this former police officer who “has admitted fraud over a will said to belong to his dead father.” His Dad didn’t have a Will, his son typed one up and passed it off as his Dad’s. Granted, he was caught, but for every one of these there are thousands of fraudulent Wills being presented as originals.

3. The inclusion of digital assets
Lawyers are starting to acknowledge the importance of digital assets, but have yet to come up with a secure, convenient way to tie these together with a printed Will. Generally speaking it’s a really bad idea to include your Facebook account information in your Will (Wills are public record once you pass away), but online accounts can have significant value. Domain names are still sold for tens of thousands of dollars. PaddyPower, PayPal, Bitcoin, WordPress accounts can be worth a lot of money. And of course, families may end up fighting over Flickr, Picassa, Facebook and iTunes accounts, so they should really have a named beneficiary.

4. Global assets
We live in a very mobile World and people hold assets in multiple jurisdictions, and indeed in some cases may not even know which jurisdiction the assets are held in. If I own $500k in Bitcoin currency, is this subject to inheritance taxes of any country? what if I live part of the year in the UK, part of the year in Dubai, and have a house in Florida and have a PartyPoker account? I recently read this article about differences between English and Scottish law which explains “The EU has very recently introduced new rules to help clarify the position in complicated situations, where the law of two or more EU countries could apply. From August 2015, most EU citizens will be able to choose whether the law applicable …should be under the rules determined by the country of their residence or the country of their nationality. However, the United Kingdom has chosen to opt out of these regulations.” In other words the UK has opted out of a law that will come into effect in two years time that will solve a 50 year old problem. Good luck finding resolution to the issues of today’s digital assets.

5. The cost of a lawyer
Lawyers continue to overcharge for their services. In most cases a lawyer will have a client complete a blank form, put the information into some software and generate a standard boilerplate Will. And then charge $600 or £400. Not in every case of course, but a lawyer should be able to say to a client “you know, that was a really simple Will, let’s call it $25” but it won’t happen. We’ve had people come to us having been quoted $1,200 for a Will. It’s just out of touch with reality, especially as Wills should be reviewed at least annually and updated regularly.

6. Using the services of a lawyer
We can automate and “app-ify” many things today. Online and smartphone applications are breaking new ground daily and it not difficult to conclude that if Intuit can build TurboTax for business, it is not much of a stretch to address everybody’s estate planning needs with self service tools. At LegalWills.ca, LegalWills.co.uk and USLegalWills.com we provide a service that works for about eighty percent of people, and we direct people to legal professionals for anything complicated. But it is well within our technical capabilities to provide an online tool that works for 99.9% of the population, probably more effectively that the legal profession. A Will is something that everybody should have, access to a lawyer should not be a roadblock to preparing a Will.

Writing your Will isn’t about you…

We occasionally hear people explain that they haven’t prepared a Will because they don’t really care what happens after they have died – they’ll be dead. This attitude always dismays me a little because writing a Will isn’t about you – your Will is for your loved ones. The excuse is often followed up with “I don’t need a Will, it’s obvious what will happen to my things”. A recent news article highlighted why these approaches are so disrespectful to one’s family.

In Canada, you can claim a tax free spousal rollover from retirement savings, as long as it is all completed within a year. A 54 year old widower lost his wife to cancer, and was the Executor of the estate. According to the rules, he has to submit the paperwork with the bank; including the death certificate, Will and probably probate documents. In this case, the bank lost everything and he was supposed to follow up. But guess what; he has 3 children from 5 years old to 16 and he had just lost his wife. In his words “I was overwhelmed with worry, and the priorities were always the kids. I was reading up on what happens with kids after they lose their mom….Oh, God. There were too many emotions and too many other things happening with the kids.” In this unfortunate case, he simply lost track and was expected to pay tax on the $80,000 savings (the bank has since stepped in and offered to pay).

This expression of being overwhelmed is very common for loved ones when a family member passes away. Throughout these emotionally desperate times there is a funeral to arrange, banking, taxation, care for the family, the list is endless. Many people have a hard time filing their taxes at the best of times, so imagine trying to do it shortly after your partner has passed away.

There are two key points to understand. Firstly, taking care of the bureaucracy is usually much easier with a Will in place. Furthermore, the Will  allows you to choose an Executor for your estate, and given the emotional toll on your spouse, it may make sense to appoint another family member or trusted friend to take care of the paperwork.

I find it odd that people care so much for their loved ones while they are alive, but leave them with a legacy of problems by dying without a Will. It only takes about 20 minutes to write a Will at legalwills.ca, legalwills.co.uk and uslegalwills.com and costs less than dinner and a movie.

Writing a Will isn’t for your benefit, it is for your loved ones.

Intangible assets and your Last Will and Testament

There is a great deal of discussion on the internet about digital assets and how they should be included in one’s Will. We have discussed it in previous blog articles and included a range of examples to demonstrate how wide-reaching the concept really is. There are of course online accounts that need to be closed down; Twitter, LinkedIn, Pinterest, but then there are the accounts that may have some sentimental value; Flickr, Instagram, Facebook. Equally importantly though are the accounts that have serious financial value; PayPal, Blogger, GoDaddy, PartyPoker. Beyond that are the  digital assets that should have some material value; iTunes, Amazon collections, Google Play.

It is a really complicated business because the straightforward approach to these “assets” is to simply store one’s User ID and Password in a safe place available to the Executor of one’s Will. But there still needs to be a beneficiary of the asset. If I have a prestige domain name registered in my name, then it is a simple task for the Executor to log into my GoDaddy account and then transfer the domain name to a beneficiary, but I need to make it known who the beneficiary should be. And for the purposes of tax reporting, the Executor needs to know the value of that domain name.

It has been well reported that iTunes do not allow your purchases to be passed on to a beneficiary. The actor Bruce Willis was prepared to take Apple to court over his right to bequeath his music collection. PayPal on the other hand, does have a clear (albeit convoluted) policy which includes faxing in a death certificate, Will, diver’s license etc.

 

But there are other material assets that are not regarded as “digital,” and the confusing status of these was highlighted by a great article from a couple of weeks back. What about airmiles, frequent flyer points, and other loyalty rewards? It turns out that five of 12 U.S. airlines — Delta, Hawaiian, JetBlue, Southwest and Spirit — do not allow miles or points to be transferred to beneficiaries. Four of 15 hotel companies surveyed — Choice, Omni, Red Roof and Shilo — don’t allow points to transfer. But most simply don’t have a policy. Virgin America, for example, doesn’t have “a formal published policy,” spokeswoman Abby Lunardini says, but transfers a decedent’s reward points to a beneficiary or family member on “a case-by-case basis.” Marriott says a decedent’s points can be transferred only to a spouse or domestic partner, while Hyatt says points can only be transferred to a person with the “same residential mailing address” as the decedent……what?!?

I don’t think it is nitpicking though, these assets can genuinely be worth tens of thousands of dollars.

For now we would recommend making sure that your passwords and User ID’s are kept somewhere safe, and somewhere that is accessible to your Executor. You should consider using a tool like MyLifeLocker to organize and describe your assets. And you should be comfortable listing specific accounts to go to specific beneficiaries in your Will. With a service like LegalWills.ca, USLegalWills.com and LegalWills.co.uk this is a very simple process.

The difficulties facing an estate administrator

We have written posts in the past about the importance of choosing the right person as Executor of your estate, and discussed the responsibilities that come with this position. There are two specific challenges that face an estate administrator that are constantly brought to our attention at LegalWills.

The first is locating the Will. Almost every day we receive an email from somebody who is looking for a person’s Will. Somebody has died, they told everybody that they have a Will, but nobody can find it. We have discussed this previously and the most important piece of advice is to let your Executor know where your Will is stored. Where you store the document is a personal preference and there are pros and cons to every decision, but if your Executor doesn’t know where it is, there is little chance of your wishes ever being respected.

Once the Executor has found the Will, they are then granted the powers from the courts to administer the estate and this is where the work really starts. The Executor has to gather up all of the assets in the estate – but how will they know where all of the assets are held? Often a Will simply states that “my entire estate is to be shared in the following way; one third to person A, one third to person B….etc” How does the Executor know where to find every bank account, every insurance policy, every investment, every stock portfolio, or even that bundle under the floorboards! How does the Executor even know when everything has been identified.

The scope of this issue was brought into focus last week when Citibank created a 16 page supplement in the New York Daily News. The title read “The following persons appear from our records to be entitled to unclaimed property consisting of cash amounts of fifty dollars or more…”. I haven’t counted, but there appear to be thousands of names including the philanthropist and socialite Brooke Astor who died in 2007.

A significant proportion of these thousands of abandoned accounts should have been part of an estate, but the estate administrator had no idea that they existed. This list is for Citibank in New York, and it is reasonable to assume that every bank in every country has a similar list. This amounts to billions of dollars, pounds and euros held by banks, unbeknownst to the estate executors.

Of course, it doesn’t make sense to list every account in one’s Will; it would mean updating your Will every time a bank account was changed, or a stock portfolio was cashed out. At LegalWills.ca, USLegalWills.com and LegalWills.co.uk we encourage everybody to complete a form that allows them to itemize their personal assets as well as list important people to contact. This document does not have the same legal standing and does not need to be signed and witnessed; it can be updated any time an asset changes. It can then be stored with the Will so that the Executor has a complete inventory of assets at the appropriate time.

In our digital age of PayPal accounts, domain name purchases, online gambling accounts, blog revenues and other digital assets, it is more important than ever to communicate to your Executor exactly where your assets are held. Many people do not even know the true extent of their spouse’s accounts, and without a list stored with the Will, an Executor would never even know that they had missed an important or valuable asset.

Some quick tips ahead of preparing your Will

We thought it would be useful to give a few tips for anybody contemplating using one of the services offered at LegalWills. We tell people that you can create a Will in around 20 minutes, but there are a few simple things that you can do to make the process smoother.

1. Don’t be intimidated. You are simply describing how you would like your estate to be distributed if you were to pass away. In most cases this is a very simple process and you do not need to have any legal knowledge to be able to use our service.

2. Do not procrastinate. It seems that many people wait for that perfect time in their life to prepare a Will, not realizing that a Will can be updated at any time. It is more important to have a Will in place that may need to be changed  in a few weeks or months rather than wait until that perfect moment when your life isn’t going to change. Things will happen either to you or to somebody included in your Will and there is a very high likelihood that your Will is going to need to be changed at some point in the future. Write the Will now, and update it when something happens in your life.

3. Think about key appointments. There are two important appointments to be made in a Will. Firstly, you will name an Executor (and an alternate Executor if your first choice is unable to serve). This person will have responsibility to carry out the instructions in the Will. We have described in previous articles how important this appointment is, and talked about the skills and characteristics that need to be possessed by your Executor. Secondly, you may also need to name a guardian for any minor children that you have. Again, we have described some of the considerations that you may think about in naming this person, but it is an appointment that should be made after careful thought.

We also recommend that the appointment of Executor and Guardian should not come as a surprise to somebody. You should discuss these appointments ahead of time with your chosen individuals and make sure that they are prepared to take on the roles.

4. Think about the distribution of your property. This is the why most people write their Last Will and Testament, and it is a good idea to think about this ahead of time. The people who have influenced your life, organizations that you may wish to recognize in your Will, family members, friends. And also think about the assets and possessions that make up your estate and consider how they should best be distributed. Remember of course that the Will can be updated, so if a person or organization makes a profound impression on your life, you can always update your Will to reflect this.

After you have prepared your Will you can add an inventory of assets that can be stored with your Will. At LegalWills.ca, LegalWills.co.uk and USLegalWills.com we have a document specifically to assist your Executor that should be stored with your Will. It helps you to list your personal details and assets including important contact numbers and financial account information. This information typically should not appear in the Will itself as this would require a new Will to be signed and witnessed every time a bank account was changed, but it is an important document that should be stored with the Will.

Once you are clear on the key appointments and the distribution of your property, you are in a great position to start preparing your Will. There is really no need to postpone the task and you really can have your legal Last Will and Testament in your hands in 20 minutes. There is certainly no need to feel intimidated; it is your document, expressing your wishes.