You’ve spent a life-time working on building your assets, diversifying your portfolio and saving pots of money here and offshore. You may be able to tap into it, but when you die, will the people to whom you intended to pass on the labours of your toil be able to access investments? Looking at my own jumble of affairs, I’d say it’s going to be a messy unpicking business for my family members. I’ve got a will, but the devil is in the detail. The will provides general directions but it doesn’t share the keys to accessing funds. This is the topic that estate planning specialist Frank Guthrie tackles in this excellent column for BizNews. Guthrie has first-hand experience of trying to piece together the threads of large estates that can’t easily be accessed. He gives his clients a Red File to protect their intended beneficiaries. – Jackie Cameron
By Frank Guthrie*
As a professional Financial Planner specialising in Estate planning, I am often alarmed to discover that, despite my best advice, clients do not update and manage their wills and estate documents as efficiently as they should. To this end, we have created the Red File. As well as your estate plan, your insurance and investment portfolio, this is a comprehensive compilation of every important document, agreement, licence or anything your family will need in the event of your death or incapacity.
Why do you need one? Let me give you a true example:
A married client of mine – let’s call her Joanne – inherited a large amount of money invested both locally and abroad. While I managed her local investments, she handled all the offshore investments herself. Her husband, let’s call him Eric had his own broker and never discussed his affairs with me.
Eric died four years ago. His personal Will did not comply with the Master’s requirements and he was deemed to have died intestate. Fortunately, it was Joanne who handled most of their day to day expenses and had the pin numbers to his accounts and access to his bank accounts. However, because of the delays caused by Eric dying intestate and her now also having her own serious health issues, the family was unable to wind up Eric’s estate before her untimely death some 4 years later.
As her Financial Advisor I had ensured she had an updated and compliant will. This gave me a starting point to sort out the estate. When I had asked about certain documents, she had nodded confidently towards the home office and said you will find it all in there. I wish I had checked then – she did not have a Red File or even a box of any colour.
Joanne and Eric were both hoarders without any system of storage; trying to establish an estate account has been a nightmare with no record of banks accounts – it seems she had one with every major bank, and a couple of others just for good measure. How could the family access them? Where were they? We all knew she had overseas bank accounts but with which banks or investment houses? Were they all in the United Kingdom or could some of them have been elsewhere?
There were also several properties jointly owned by Joanne and her late (intestate) husband. The family now had one intestate parent and one who had never divulged the true extent and whereabouts of her estate to her children or to me.
There was only one thing we could do – sift through the mountain of files in the home and garage in the hope of finding any relevant information. In addition to boxes and boxes  of papers, mostly irrelevant, we found unlicensed firearms, a cigar box with $1,000, and a still frozen chicken in the freezer dating back to 1993.
While we were able to track down and find a lot more money than we had expected, we have still not found any info on an Icelandic bank that the family insists Joanne had. The British accounts will not reveal any information without a mound of documentation and have requested an original will as well.
The family have had to appoint a professional Executor to handle Eric’s Intestate estate, only then can we begin to work on their mother’s estate. Currently these children are having to maintain and pay monthly costs for the rates and taxes and insurances for the three properties. As there was no life insurance, it is coming out of their own pockets. The rental monies cannot be used as the agent will only pay to the estate account which can only be established once Eric’s estate has been wound up.
Read also: Estate planning: How to manage worldwide assets so you don’t turn in your grave
While this couple may seem an extreme example – are they? Aren’t we all to some extent hoarders, have you ever put away a document in a “safe place” that not even you can find?
The death of a parent, or any family member is bad enough, do you really want to put your family through this kind of time-consuming stress and expense?
Get your estate plan updated and start your own Red File.
Speak to your Financial Advisor or contact me directly at [email protected] if you would like some guidance with this.
Keeping it simple is the true genius.
- BizNews welcomes contributions from independent financial advisers. If you’d like to join the BizNews team of contributors, contact [email protected].
