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.

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.

My Life Locker

I read a great article last week entitled “10 minute guide to estate planning“. The article starts by framing the problem; everybody knows that they should have their estate planning in place, but only 44% had done anything about it, but then the article strips away the complexities and conveys three simple messages; Get life insurance, prepare your estate planning documents, and then “Create a Master Document for Your Loved Ones”. We’ve discussed at length the creation of the estate planning documents in previous articles, and a Will, Power of Attorney and Living Will can be created easily and inexpensively at www.legalwills.ca, www.uslegalwills.com and www.legalwills.co.uk, but it was the reference to a master document for your loved ones that I found really interesting.

The article describes the master document as

An important aspect of estate planning involves sitting down and listing all of your assets and debts. Next to these items, state everything you want done to close them out and to put the assets in the hands of the people who you wish to have them… This document can be a tremendous help to your grieving family who may end up disagreeing about who gets what, when and how.

It makes complete sense to do this, but very few people do because it’s actually more difficult than it seems. However, recently I was fortunate to meet Sandra Tisiot, the creator of My Life Locker. I think Sandra may be the best person to introduce My Life Locker to you….

My Life Locker is perfect solution for organization everything important in one place all organized into “lockers”. The first locker prompts you to list your family contact information, the second covers important information like property details. You then go on to list financial information in locker three, and finally locker four has space for your professional contacts. If your Executor located your Will, and then saw your Life Locker sitting next to it, they would breath a sigh of relief. In a recent article we talked about the billions of dollars and pounds sitting in bank accounts of deceased individuals, that is never claimed simply because nobody knew it was there. My Life Locker solves this problem.

I recently had to cover a friend’s business interests while he went on vacation in Europe for a couple of weeks and we spent hours going through all of his contacts, procedures for dealing with things and explaining everything that he has to do to keep his business ticking over. It will be a little bit like that for your Executor trying to administer your estate, except they are usually given no information whatsoever. My Life Locker is a great solution for solving an age old problem for the Executor, by simply giving them the information that they need.

Why your next Will probably won’t be your Last Will

It is a mystery why most adults do not prepare their Will. We all know it is an essential document; it describes how the estate should be distributed, it makes somebody responsible to carrying out the directions (the Executor), it may name guardians for children, and set up trusts for minor children. Most importantly it avoids a significant headache for the family and loved ones left behind. But depending on which statistics you believe, anything from 60-80 percent of adults don’t have a Will, and of equal concern is that most people with a Will don’t continually review it to make sure that it is up to date.

We have many discussions with people contemplating preparing their Will and one misguided belief undermines the whole process. Many people have the notion that they only get one shot at preparing a Will. The document that they prepare will be their Last Will and Testament, the actual document that will be read in the days following their departure. If this is the case, then most people want to hold out until they know for sure that this document will be the one that reflects a life time of experiences and encounters. I’ve lost count of the number of times that I’ve been asked variations of “I am expecting a child next April, should I hold off on creating my Will until then”. The answer is that, of course you are going to need to update the Will when the child is born, but nobody should live a single day without a current Will representing their situation on that given day. Write a Will today, and update it next April.

So why are people so reluctant to do this? because it is inconvenient and expensive to write a Will with a lawyer and then have to update it every time a circumstance changes. We’ve heard horror stories of lawyers charging $100 or £100 per edit to a Will, and simple updates costing as much as 400 to 600 dollars or pounds. No wonder people want to make sure that they only have to do this once in their life.

This is why more people are turning to online services like LegalWills.ca, USLegalWills.com and LegalWills.co.uk where a Will can not only be prepared much more affordably, but the documents can also be updated in minutes, at home. A Will can be updated dozens of times a year if need be, at no additional cost. Using a service like this ensures that not only do you have a legal Will, it will always reflect your life at that moment.

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.

Can we trust professional advice on Will writing?

I couldn’t help but chuckle at a recent survey commissioned by the CIBC (Canadian Imperial Bank of Commerce).  The heading of the article was that “Surveys show that Canadians are unprepared with estate planning”. The reason according to the survey is that “84 per cent of Canadians with a will say they have named a family member or friend as executor, a move the bank says could be risky.”

The concern raised by CIBC’s Managing Director of estate planning is “”If you appoint a family member or friend without the appropriate experience or knowledge, it could cost your estate thousands of dollars, as well as months or even years of angst for your loved ones.”

In our opinion this is nothing more than a marketing promotion, thinly disguised as a news article. It doesn’t explain which circumstances lend themselves to naming a family member as an Executor, and more importantly, it doesn’t even mention the fees charged by professional estate planning services like those offered by CIBC. The CIBC representative is correct – if you do choose a family member as an Executor  it could cost your estate thousands of dollars. What he neglects to mention is that if you choose to name the CIBC as your Executor it is guaranteed to cost your estate thousands of dollars. There’s a reason why five of the top eight most profitable companies in Canada are banks.

Naming a family member as your Executor may in many cases be an extremely smart decision and it does not suggest that you or your family are unprepared. I personally had a relative lose his wife. She had a Will and he was the sole beneficiary. All that was required was for the accounts to be transferred solely into his name, and that taxes were filed. The solicitors who took care of this charged the estate £15,000. He was robbed, but like most professional services, their fees were based on a percentage of the value of the estate, not on the amount of time spent working.

Some estates are complicated and could probably benefit from professional Executor services, but don’t be influenced by surveys like this one from the CIBC. It can take time but having a family member take on the role of Executor of your estate could save your family thousands. There are also many resources available for all jurisdictions including Canada, the US and the UK.

We explained in a previous article that 19% of solicitors in England write themselves into Wills as the Executor because they know that this is the most lucrative part of the estate planning business.

At LegalWills.ca , USLegalWills.com and LegalWills.co.uk we promote the idea of not being afraid of the law. Writing your Will and probating your Will are not activities that should be beyond the capabilities of the general public. Put simply, your Will allows you to describe how you would like your estate to be distributed, and the Executor then has a responsibility to carry out these instructions. Many professionals want you to believe that the process is way beyond the understanding of anybody but a trained individual. It is not, and you should not be intimidated into paying thousands of dollars for services that you don’t need.