Prevent executor headaches

Slightly less than 50% of Canadians say their vital documents are only “somewhat accessible,” according to a recent poll by the Canadian Life and Health Insurance Association Inc. And 20% of those surveyed said their personal and financial information would be “difficult” to find.

“People’s financial affairs have become extremely complicated,” says Wendy Hope, vice president of external relations with the CLHIA in Ottawa. “It’s not just a matter of a bank account. People have investments, life insurance policies and real estate holdings. Passports, health cards and credit cards all need to be tracked down and cancelled after death.”

Administrative complications

A recent survey by Bank of Montreal confirms the CLHIA’s figures: almost 50% of Canadians in BMO’s survey who had been appointed executor of a will have experienced administrative complications. More than 25% have experienced legal issues.

“If everything is not written down and documented, the difficulty in sorting out the mess can tie up the settling of an estate,” says Carol Bezaire, vice president of tax and estate planning with Mackenzie Financial Corp. in Toronto. “You want to make the process as easy as possible, so that nothing is overlooked.”

Compiling an asset list is similar to putting together a financial plan, and this is an area where you can be helpful. “The financial advisor can help prepare an executor checklist,” Bezaire says, “and ask the questions that result in a complete inventory.”

Sara Plant, vice president and national director of wealth services for BMO Harris Private Banking, a division of BMO, in Toronto, suggests starting with a “big red binder” and making sure the appropriate family members know where it is.

The binder should include information on the location of the will and POA papers. It should also include: copies of life, home and car insurance policies; real estate documents; the past few years of tax returns; the name and location of any financial services institutions in which the client has assets, such as bank accounts and RRSPs; and contact information for the client’s accountant and financial advisor. Any information regarding a planned or prepaid funeral, or burial wishes, Plant adds, also should be in the binder.

Your client also should include paperwork regarding employee benefits, such as life insurance policies, pensions and group RRSPs, as well as the name of the person to contact in the employer’s benefits department. Make a list of club and association memberships, ongoing charitable donations and subscriptions, so these can be cancelled. Note the location of any safety deposit boxes and where the keys are located. List any pre-authorized payments that are flowing through bank accounts, such as condominium fees or credit card payments. Debts and mortgages held by the client and any automatic debt payments should also be recorded, as well as any debts owed to your client.

It also is helpful to provide copies of the deeds to any real estate properties, such as homes and cottages. Otherwise, the executor or holder of the POA will be forced to go to a land title office and search for the deed. Ownership documents for cars and boats and authentication papers for significant assets such as valuable art also should be included.

Your client doesn’t have to disclose asset values or detailed account information in the binder, Plant says. The key is to give the executor information on where to get those details.

“It’s important not just to get organized once and put the binder away to gather dust,” Plant says. “This information must be kept current.”

The CLHIA website offers Virtual Shoebox, a free online tool that prompts users to enter the location of documents such as insurance policies, divorce papers, pre-nuptial and cohabitation agreements, business partnership agreements, wills and powers of attorney.

Virtual Shoebox is divided into five sections: personal; real estate; banking and credit; insurance polices; and investments. The section for personal data covers such information as social insurance numbers, passport numbers, health records, home alarm codes and computer passwords.

A living document

“People tend to stick all kinds of information in a file or shoebox,” says Hope, “so we’ve taken the concept of a shoebox as an organizing tool. It’s a living document and should be reviewed and updated every year.”

The “shoebox” or binder document should be kept in a secure place. If stored online, this information can be kept in a locked, password-protected file. Make sure the right people know how to access it, but be sure it can’t fall into the hands of the wrong people. Keeping a copy at your client’s lawyer’s office along with the will is another option.

The challenge is to cover all the bases. For clients who have opted for online statements from their banking and brokerage accounts, there may not be a paper trail. Executors and holders of POAs will need to know what exists in the electronic world and how to access it.

Find out if your clients have social media accounts such as Facebook or LinkedIn so they can supply passwords. “Many people are putting the passwords to their Internet accounts with their will or other important documents,” says Christine Van Cauwenberghe, director of tax and estate planning with Investors Group Inc. in Winnipeg.

Technology has made some things simply invisible, says Mike Van der Kooy, regional vice president of estate and trust services with Royal Bank of Canada’s wealth-management division in Toronto.

RBC’s estate experts, in their capacity as executors, have learned to become good “detectives.” In some cases, the bank has had to take possession of the deceased’s computer and hire experts to search the hard drive to find crucial information.             IE