Ever since COVID-19 became a global issue, I’ve been getting a lot of questions about estate planning. I reached out to my friends over at LegalWills.ca who provided today’s guest post on keeping an inventory of your assets and why it’s so important. Turns out, it’s an important part of your estate and many people don’t put enough thought into it. Fortunately, getting everything organized is easy as long as you follow the right steps.
How many assets do you actually have?
What I mean by assets is things like bank accounts, investments, trading accounts, insurance policies, retirement savings plans. There are also online accounts to consider such as a PayPal account, revenue streams from a blog, an Etsy store, a Shopify account, and more.
You may also have other online accounts that have some value such as Wealthsimple, Questrade, PaddyPower, Pokerstars, or digital assets like your domain names. Typically, when one thinks of assets, they only consider the obvious big ticket items they own – but your digital accounts are also considered assets.
Now, consider how many does your brother-in-law have?
Why is that question relevant? Because your brother-in-law may have named you as the Executor of his Will, or perhaps granted you financial Power of Attorney in the event of his incapacity.
Imagine gathering up all your own assets today, how long would it take to liquidate everything and place it all into one single bank account?
This is exactly what the Executor of your Will is responsible for doing. They are required to locate, secure, and gather all your assets, and then administer your “estate”. Your estate goes beyond financial assets, it also includes your possessions, and extends to family heirlooms and mementos, including family photos.
This task wasn’t as difficult for our parents and grandparents. In previous generations most people would have one or two bank accounts and receive monthly printed statements that would be filed away.
But for our generation, our financial interests have become more diverse. There are even financial assets available today, like cryptocurrencies, that didn’t even exist a generation ago. Perhaps post-war generations were more inclined to keep a secret bundle of money tucked away for a rainy day. But today, more people seem to explore a variety of financial instruments to weather any storms.
Don’t list your assets in your will
If you have written your Will (and I sincerely hope you have), you have probably made general reference to “my estate”. You may have left your entire estate to your spouse, or divided it in equal shares between your children, or grandchildren. A Will is not the place to list your assets for two important reasons.
Firstly, your Will is unlikely to come into effect this week. It will be some (hopefully distant) time in the future. Your assets will change over time, and you don’t want to have to update your Will every time you acquire or lose an asset.
Secondly, once your Will is probated, it’s a public document – anybody can apply to read it. Obviously, you may prefer to keep the extent of your assets between you and your loved ones.
This leaves your Executor with the task to identify and gather your assets. You may think this won’t be an issue because you have named your spouse as your Executor. But according to a number of surveys, around a quarter of couples have a financial secret kept from their partner.
Supposing your spouse isn’t able or willing to serve in the Executor role, and it falls to your backup Executor, consider this – would they have any chance of finding your assets? And how would they know when their task is complete?
How do you maintain an inventory of your assets?
Generally speaking, there are two approaches for documenting your assets; paper-based and software based. Each has their pros and cons. Clearly there are security questions associated with each approach; a logbook in the wrong hands can be devastating. But a software service is only as secure as the User ID and password that you use to protect it.
A paper-based list of bank accounts, investments and digital assets is the simplest approach to documenting your assets, and there are even handbooks that can guide you through this process to ensure that you have captured everything.
You would need to include at least a list of bank accounts, investments, credit cards, key people to contact, subscriptions, and the online accounts that you have (without necessarily including the passwords).
Online inventory services
Many services have been created to help list your assets online such as Everplans, Cake, Lifesite and Clocr. However, you want to pay close attention to how your information is stored. Ideally, you store an inventory of your assets and assign some kind of “Keyholder” who is able to access that information at the right time, and not before. Some companies manually release the information after receiving a death certificate, while others have some level of automation to the process.
LegalWills.ca offers two services that work in this way: MyLifeLocker is an inventory of your assets, and MyVault allows you to actually upload documents and files to be accessed after you have passed away (or lost capacity).
Regardless of which service you choose, you’ll want to see who is running the site. Research where their head office is located, who runs the company, what their business model is, and even the technology behind their service. You should have no doubts about the company since you’ll be giving them access to some of your private information.
Passing on passwords
Beyond financial assets, there is a range of online accounts that must be managed by your Executor or Power of Attorney. These include access to bank accounts, but also social media accounts, email services, application subscriptions and online shopping accounts.
Most of these services have strict “terms of service” agreements that prohibit the sharing of login credentials, but in practice, it is the easiest way for these services to be managed. Between applications, games and social platforms, you probably have hundreds of online accounts. You could certainly simply just let them persist after you have passed away, but there is something unnerving about all of your loved ones being invited to congratulate you on a LinkedIn work anniversary the year after you have died.
It is unrealistic to expect your Executor to contact each platform to scan your government issued ID and death certificate to close down your account at somewhere like MyFitnessPal. The most effective way to do this is to use a password manager like Roboform, Dashlane or LastPass with a master password, and then keep that password somewhere safe in a place that is known and accessible to your Executor. It should of course be stored in a sufficiently cryptic format so that if it did fall into the wrong hands it doesn’t have catastrophic consequences.
Your list of passwords also extends to physical devices, like access to an iPad and iPhone or other smart devices around the home. There have been many news stories about widows no longer able to access a shared iPad, and Apple refusing to unlock the device. It is certainly not uncommon for a partner to not even know the wifi password in the house!
In Canada there are four critical documents in every adult’s estate plan: A Last Will and Testament makes key appointments like your Executor, Guardians for children and describes the distribution of your estate. A financial Power of Attorney allows you to name somebody to take control of your financial affairs if you are alive but have lost capacity to handle your finances yourself. A “Living Will” is a combination of an Advance Medical Directive where you can express the types of medical treatment you wish to receive if you were in an irreversible terminal condition, and it also allows you to name a medical decision maker.
The final document is an inventory of assets and key contacts; whether paper-based or software-based it is a critical step in your estate planning portfolio, and sadly, a step that is too often overlooked.
It’s a gift for your loved ones, your Executor and your Power of Attorney to take the time to document this information. Without it, you place a huge burden on the people you have left behind, at a time when they are at their most vulnerable.