Explaining Your Estate to your Spouse and Future Steps to Settle the Estate

Two weeks ago, I discussed the importance of documenting and explaining your estate to your spouse (and also possibly your executors). I noted that while documentation was vital (using an estate summary type document), it was only the first step in trying to reduce the stress your spouse will have in settling your estate. 

 

A second crucial step is explaining in “plain English” and practical terms what the documentation means. Today, I will expand on what you may want to consider explaining to your spouse and the future steps they may need to take to settle your estate.

Note: I will be providing some links that provide details on how to deal with some of these estate issues. I do not have the expertise or the time to confirm all the information in these links is up-to-date and accurate. I do not know any of the authors of the articles, so I'm unable to endorse them. Please use this information as a starting point only, it may or may not, be the gospel.

Introduction to Your Advisory Team

Depending upon your personal situation, you may have an accountant, lawyer (maybe even multiple lawyers -one for estate, one for corporate etc.), a private banker, an insurance advisor, an investment manager, or investment advisor. It is one thing to document who these people are, it is another to explain what each of these people do for you and your family and to get your spouse comfortable with them while you are alive.

I suggest you try and do the following with your spouse:

1. Review the section of your estate summary that lists your advisors with your spouse. This section should include the name of the advisor and their contact information. I would then verbally discuss with your spouse what services each of these advisors undertakes for you and your family (i.e. your accountant provides personal tax services, files the family trust, prepares financial statements for your family corporation etc.). This will provide some context to your spouse. After you discuss this with your spouse, you may want to consider writing up a brief summation of your discussions and attach it to your estate summary document.

2. Depending upon how open you are about your financial affairs with your spouse, consider including your spouse at a minimum in your yearly meeting with each of your advisors. This will ensure they get to know these individuals and will provide your spouse a comfort level should they need to contact them about your estate. It will also provide them a greater clarity of your financial affairs. If you are not comfortable with your spouse knowing all the financial details of your life, then arrange lunches or more opaque meetings with these advisors, so your spouse will have some level of comfort with them.

3. After meeting these individuals, it is useful to ensure your spouse understands the granular details of how these people would help them if you passed away. For example, it is not enough for your spouse to know the investment manager is the person who manages your investments. They also need to understand that if you pass away, this is the person who they will contact to ensure they have money coming in to pay the bills and that this person would assist them in understanding their financial situation going forward.

4. My last point on this topic is that if you are a professional advisor and provide these services for your family, you need to clarify who will take over for you. I had not thought of this until my wife asked me who would prepare the family tax returns going forward if I passed away.

Contact Person

When a spouse passes away, the surviving spouse is grieving and overwhelmed. While it is vital to introduce your spouse to all the above professionals, it is even better if you have a financially savvy family member, friend, or executor whom your spouse knows intimately and is comfortable with, to initially assist your spouse, to get their bearings in dealing with the estate. In a best-case scenario, this person is an executor of the estate. However, this does not necessarily have to be the case, as this person is hopefully someone who can provide both emotional support and financial direction.

If you are lucky enough to have such a person in your life, ensure they are okay assisting and let your spouse know who this person is. To be clear, I am not suggesting this person take on executor like responsibilities (it they are not the executor), but just be a sympathetic friendly ear who acts as the initial quarterback until your spouse gets their feet underneath them. This person for example would help direct your spouse who to contact immediately and what matters can wait.

Funeral Costs

While any estate summary should include your burial wishes and details, a practical matter is paying for the funeral costs. Most banks will allow you to pay for the funeral costs from an estate account before probate, but it can be an administrative headache. So, discuss the best way to ensure your spouse has the funds to pay for the funeral. That is often as simply opening a joint bank account (if you do not have one) and ensuring there is always a minimum amount in the account to cover funeral expenses and a month or two household expenses.

Insurance

Ensure that your estate summary includes all insurance policy details and specifically where to find the original policies. Hopefully, you have introduced your spouse to your insurance advisor, and they can help or guide your spouse to navigate the various steps and forms to obtain the insurance proceeds. I know with one estate I was an executor, the insurance company initially balked at paying the proceeds and we needed a lawyer to get involved to get the proceeds paid. In most cases it is smoother than that, but you never know.

Here is a link on how to claim an insurance benefit after death. As noted above, I do not have the time or expertise to ensure the information is correct and up to date. Again, this link should be at worst a good starting point, as I do not know or endorse the writer (I just googled to find an article on the topic).

Investment, Real Estate and Tax Information

You likely have a virtual or physical filing system for your historical investment, real estate and tax information (as well as current information accumulated during the year for tax and other purposes). It is not enough to just document this information in your estate summary, you need to also note the location of this information in your summary. Furthermore, to ensure clarity, physically show your spouse where you keep this information even if you think they know where it is.

Historical investment and real estate purchase information may be required for future cost base purposes, so you need to ensure there is a summary in your estate file.

Personal Items

In a perfect world all personal items are easily accessible and included in your will. One of the biggest issues with families is not documenting who receives your personal items or even worse, telling a beneficiary they are to receive an item and then it is not allocated in your will. It is therefore very important to ensure your spouse has a list of your personal items and where they are located. If for some reason you do not wish to list these items in your will, at least make a list for your spouse of these items and who should receive them. It is my understanding this list may not be legally binding if not in your will (you should confirm with an estate lawyer), but at least you would have your wishes known. Again, to ensure family harmony, your will/list must be consistent with what you have verbally told your children, grandchildren etc. about the items they will inherit.

Mortgage Life Insurance

Lenders typically require mortgage life insurance and upon death, the insurance will typically clear the debt. Ensure your spouse is aware of the insurance and where details of the mortgage and related insurance can be found.

Loyalty Points

We all love our loyalty points. I have seen loyalty points addressed in wills (although I have read some providers will not respect the will), but they are often overlooked. There are far too many loyalty programs to review, but here is a link to a 2019 blog post on many of the most popular loyalty program. It is possible given the date of the article; some policies have been changed by the providers.

You will want to ensure the passwords for these programs and account numbers are included in your estate summary.

Supplementary Credit Cards

Often a spouse will have a supplementary credit card. This article discusses what happens when there is a joint (supplementary card) in step #4 and goes into depth what to do about credit cards in the deceased spouses name. 

 

Telephones and Two-Step Verification

 

Yesterday I was provided a great piece of advice I had never considered. So many services we use now require two-step verification. If you are too quick to cancel a deceased spouse's telephone, you will not be able to access certain services to update or cancel those services if second-step verification is a text to the deceased spouse's phone.

 

Digital World

We live in a digital world. From cryptocurrency to cloud vaults, to blogs, to social media platforms, we are all very much involved in the digital world. It is very important all digital information is listed along with associated passwords in your estate summary. Again, there are so many digital platforms I could not even try to cover a tenth of them. But here are summaries of what happens to your accounts when your spouse passes away for three of the most popular, Gmail, LinkedIn and Facebook.

What Happens to Your Gmail When you Die?
What Happens to Your LinkedIn Account After Death?
What will happen to my Facebook account if I pass away?
 

The scary thing about this blog post is that it is shockingly far from exhaustive. However, it's a good start to help explain your estate to your spouse and the steps that may need to be taken upon your death.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation. Please note the blog post is time sensitive and subject to changes in legislation or law.

New Will Provisions for the 21st Century – Your Digital Life from Facebook to Domain Names

Today I have a guest post by Katy Basi on digital assets and how they need to be considered and reflected in your will. This is the second post in a three part series by Katy. Previously, I posted Katy’s blog on New Will Provisions for the 21st Century –RESPs which dealt with RESP issues that one must consider when drafting a will. Katy’s final installment on Reproductive Materials will be posted sometime in the fall.

So without further ado, here is Katy’s very interesting post that considers everything from your Facebook page to any domain names you own. My only question is, does Katy think any guy has even seen the Princess Bride?

New Will Provisions for the 21st Century – Your Digital Life

By Katy Basi

The treatment of “digital assets” upon death is a hot topic. First it’s important to define what we mean by the term – basically anything remotely relating to a computer may be pulled into this category. One very interesting paper on the topic divided digital assets into five categories: devices and data, e-mail, on-line accounts, financial accounts and on-line businesses. (If you’re interested, check out this paper by Kristina Sherry titled “What Happens to Our Facebook Accounts When we Die?: Probate Versus Policy and the Fate of Social-Media Assets Postmortem”).  

Since I draft wills and help executors administer estates, my main concern is with the difficulties that digital assets cause for executors and whether or not I can add provisions to a will to smooth out these issues before they occur – preventative planning, so to speak. As of the time of writing, there is no legislation in Canada addressing digital assets, but some forward-thinking US states have implemented new laws.

At a minimum, I recommend that your will and power of attorney for property have provisions clarifying that your executor/attorney for property has the legal authority to deal with your digital life. For example, wills drafted by yours truly contain the following provision:

My executor shall be given access to, and may take control of, conduct, continue and/or terminate any and all of my digital assets, including domain names, devices, data, on-line accounts, whether financial or otherwise, on-line businesses, unpublished photographs, manuscripts, and intellectual property of any kind whatsoever stored digitally, property within any video game or virtual world, and any of my accounts on any social networking website, microblogging or short message service website (e.g. Twitter), or email service website.

My hope is that this clause may help executors in their dealings with various on-line service providers. However, many of the providers take the position that they had a contractual relationship with the deceased, and therefore the terms of the contract govern (which are generally available in the form of policies). 

For example, Facebook’s policy is to memorialize a person’s timeline once they have been notified of the death. Only immediate family members and the executor can require Facebook to remove the account of the deceased. Twitter has a similar policy. If you come across the profile of a deceased person on LinkedIn, you can fill out an online form informing LinkedIn of the death and they will “be in contact with you”. Google’s “Inactive Account Manager” was introduced in the US in April.

Depending on the option you select, this feature sends information about your Google accounts to your designated person if your account has been inactive for a certain period of time, or it may just delete your account. (I can’t find this feature on my Canadian Google account yet…which could just be an indication of my general lack of tech ability).

In addition, you’ll see that the digital assets clause gives authority to the executor to take control of all “devices”, i.e. computers, tablets, smartphones, etc. There are cases where a beneficiary refuses to surrender the deceased’s computer to the executor, claiming that it is a personal effect to which the beneficiary is entitled under the will. The executor mainly wants the computer to access passwords saved on cookies, and ends up in an unnecessary squabble with the beneficiary.

Some digital assets really are assets, i.e. they have monetary value in and of themselves. Examples are popular domain names, transferable gaming credits, a Paypal account with a credit balance, points from programs that survive death if the right steps are taken (e.g. Aeroplan), right up to an online business (e.g. Ebay). If you want these assets to go to the person inheriting the residue of your estate, then a specific provision in your will may not be required. However, if you want your gaming credits to go to your nephew Jordan, because he is the only person in the family remotely likely to enjoy them, your will better say so!

Additional will provisions may also be required if you own digital assets that require maintenance in order to keep them alive and healthy after your death, for example a domain name. If your executor fails to pay the expenses associated with keeping your domain name active, the domain name will lapse, and may be acquired by someone else.

Many people are happy to have their domain names die with them – katybasi.com can certainly wither away when I’m gone, unless there’s another Katy Basi out there willing to pay my estate for it (I’m not holding my breath…) However, if I wrote a book called “Prepare to Die”, and I registered preparetodie.com, I may want to create a fund in my will from which all expenses relating to the domain name and corresponding website would be paid after my death. I’m certain that my book

would be a bestseller, triggering an avalanche of royalties that would be paid to my estate for years to come – so I would want my executor to be instructed to keep the domain name alive even when I’m not, and to be given the means to do so. (Yes, my book title is a reference to the movie “Princess Bride”, for the Mandy Patinkin fans – you know you’re out there!) 

Given the fact that our digital lives seem to change hourly, with accounts and services added or dropped constantly and passwords theoretically changed on a regular basis, your will cannot list all of your digital assets. It would, however, be helpful for your executor to know where to find a list, tangible or ethereal, of your digital assets and the passwords to access them. There are many online services that can help, e.g. Legacy Locker, Estate++.

Finally, you may want to consider whether you have any digital assets that you do not want anyone to know about after your death (I’ll let your imagination take over here). In that case, you may want to find a service like Google’s that will simply cause them to disappear.

I make no guarantees about how long this particular blog post will stay up-to-date. Perhaps five minutes given the rapid pace of change in this area. Enjoy the process!

Katy Basi is a barrister and solicitor with her own practice, focusing on wills, trusts, estate planning, estate administration and income tax law. Katy practiced income tax law for many years with a large Toronto law firm, and therefore considers the income tax and probate tax implications of her clients' decisions. Please feel free to contact her directly at (905) 237-9299, or by email at katy@katybasi.com. More articles by Katy can be found at her website, katybasi.com.

The above blog post is for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Readers are advised to seek specific legal advice regarding any specific legal issues.

A Baby Boomer’s view of Social Media

My blog's mission statement is to discuss income tax and money issues and to blog about anything else that crosses my mind. It was suggested to me by some, that I stick to the tax and money issues; because that is the reason they were coming to my blog. I have thus kept my rants, off-topic blogs and restaurant reviews to a minimum. However, today I will inflict upon you an off-topic blog on my views of social media.

As a baby boomer, I think it is fair to say I have embraced social media to a large extent compared to many of my generation. I have this blog, a Twitter account, a LinkedIn account and I even hired a social media expert to help my firm Cunningham LLP.

Despite embracing social media, I am a partner in an accounting firm and I am often asked by my partners "how is this social media stuff translating into practical results in terms of clients and opportunities". (Hey, you cannot take the numbers out of an accountant). Anyways, since I am now a reformed bean counter, I explain that one must be cognizant that social media can also provide less measurable and intangible benefits, such as firm branding and/or personal recognition. I am not sure they buy it, but it sounds good so they leave me alone; although I must say, in some cases, such as Twitter, I still don’t get the point. I discuss my views on some of the key social media mediums below.

Blogs

This topic is near and dear to my heart. I probably broke every blog rule when I started this blog. For all intents and purposes, I started the blog because I put my hand up at a partner retreat. At our retreat last summer, our marketing consultant told us we were sorely lacking in social media and I volunteered to do a blog, since I like to write. Thus, I had no clear objective other than getting our firm started on the social media road. Mostly through luck and a little self-marketing, I got some early recognition from other kind bloggers and the Globe and Mail, which has translated into a nice steady following. The blog has evolved into a more practical tax and money blog, than the originally envisioned, “What’s on Mark’s mind blog.” However, that is fine and I will still have the occasional rant and personalize the blog when the mood strikes.

Although some of my partners want to look at whether the blog results in potential clients, I write because I enjoy writing and educating and the blog does bring some recognition to the firm and me personally, which is the intangible benefit. Hopefully, to get my partners off my back, at some point the blog will result in a few corporate clients coming on board with Cunningham LLP. In fact, I had one lead from a reader for which I thank them.

LinkedIn

My blog routine is to publish my blog, Tweet about the blog posting and then my Twitter account automatically updates my LinkedIn status. LinkedIn is a true business site. Some people swear by LinkedIn while others have not seen much benefit.

I like LinkedIn because if I need to utilize someone’s services I can go to their LinkedIn account to see if I know any of their connections. If we have a common connection I can vet the proposed service provider through these contacts. On the flip side, when I get a lead on a client or customer, if they are on LinkedIn I can see if any of their connections are people I know, and if so, I may be able to use a common connection to provide a warm referral to the prospective client/customer. Recently, I received a referral from LinkedIn when a banker I had lost touch with, found me on LinkedIn and referred a client.

It is also possible one of your connections has a contact you would like to meet and you can use them to arrange a meeting. LinkedIn allows you to see (details depends upon your LinkedIn status) who is viewing your profile, which is useful information.

The downside to LinkedIn is being bothered by people you do not want as connections and some people have concerns their customers/clients will be poached, so they turn off their connections. All in all, I find LinkedIn as a very useful social media site.

Facebook

I do not use Facebook personally, although our firm has a page. I do not consider Facebook a business site. I know many people love it as a personal social site. The only redeeming feature of Facebook for me is I get to see the crazy pictures my kids take in University while drunk. Actually, I would see them if they granted me access, but I have my sources :).

Twitter

As I noted, I Tweet my blogs and that is about it. I may use Twitter in the future to announce Federal and Provincial budget information, but I do not understand Twitter. When I go to Twitter, which is very infrequently, I see multiple Tweets by people I follow, most of which seem to be Tweets for Tweets sake. I just don’t see how anyone has the time to follow Twitter and I don’t see how 99% of the Tweets are useful, but maybe I am showing my age here.

In conclusion, I think social media can be very effective even for us baby boomers, if you are selective and strategic with its use.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.