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Kevin Greenard: Estate planning: Leaving a detailed digital footprint for your executor

The third in a series of estate planning information and tips from Kevin Greenard.
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Kevin Greenard

As an executor, one of your first responsibilities is to confirm and secure the deceased individual’s assets.

This is a fiduciary responsibility that the executor has to all the beneficiaries. Part of securing all assets includes ensuring the principal residence is locked. Another component is securing all other known assets.

One of the challenges an executor faces is obtaining a complete list of all assets of the deceased. Today, the task of securing all assets is more challenging than ever as people gravitate towards paperless records and online-only accounts.

It was not uncommon for an executor to believe that they have a list of all assets, only to discover additional assets at a later time. Sometimes reviewing bank statements might trigger the discovery of additional assets, such as transfers to accounts not previously documented.

Going through the regular mail was also a way to obtain recently issued account statements and gather current information on assets. When opening the mail, a cheque could be discovered that would lead to additional assets.

Not only do individuals have bank and investment accounts with companies that are only online (no brick and mortar), but individuals may also own digital assets. The amount of digital data, including digital assets, is growing at an exponential rate.

With digital assets such as cryptocurrency and non-fungible tokens becoming commonplace, leaving guidance for your executor on how to secure and access any of these assets is important.

Some digital wallets give users a certain number of tries before locking the user out forever. We have all heard the stories of individuals forgetting the password to their digital wallet and losing access to millions of dollars in cryptocurrencies.

If individuals happen to forget or misplace their passwords, how is their executor to know these passwords? Without the proper documentation, your executor runs the risk of losing access to any digital assets that you might own.

In the days before investments were held in nominee name, clients would often hold physical share certificates. In other situations, a share certificate for a growth stock that doesn’t pay a dividend would be found in a pile of papers or up in the attic. The question then arises, does this share certificate have value, or is it defunct?

When a certificate is found by an executor, we can help by doing a search. The search will determine if the company has value or not.

Every year, I find myself doing fewer and fewer certificate searches. People who still have share certificates with value are encouraged to bring them to a Portfolio Manager to put them into nominee name, especially to make things easier for their executor. If you have a share certificate that you know is defunct, then it is best to shred or destroy them to avoid confusion or uncertainty later.

Clients have the option at most financial institutions to either receive statements or to go paperless. It is also not uncommon to see clients having multiple small Registered Retirement Savings Plan (RRSP) accounts spread all over town. Clients who have selected paperless document delivery options should ensure they have a mechanism for your executor to obtain completeness and certainty that all assets have been identified. Writing everything in a book that your executor can find is a good starting point.

What is becoming more important is for individuals to discuss their digital footprint with the executor they have chosen.

In my personal will, I refer to a “digital memorandum.” This is a complete listing of my digital footprint. The memorandum is divided into a few categories: retailers, financial, utilities, telecom, work, social media, and other. The memorandum contains all the pertinent details, including the website, username and password. Periodically I go through the exercise of updating my digital memorandum for any various new or closed accounts and changed passwords.

This digital memorandum ensures your executor can print off your paperless bills, as making bill payments is one of your executor’s responsibilities. Many bills, such as utility bills, are now primarily paperless. After all bills are paid, it is then prudent to authorize your executor to close all appropriate accounts.

With more options to have access to services online, there are more passwords to remember. We all know the frustration when you go to a particular site and you cannot remember the username and password combination due to increased security and constant password updates. This is why it is important to update your records each time you update or change your username or password.

Best practices for passwords would be to never write this information down. In my opinion, that is not practical from two standpoints.

Firstly, unless someone has an unbelievable memory, I would think this would be nearly impossible. My digital memorandum has hundreds of different usernames and passwords, with hundreds of different passwords to remember. I would think best practice would be to ensure that you do not have the same password for everything you access.

Secondly, it doesn’t matter how good your memory is once you have passed away. Your executor would not know any of your account information unless you record it in a manner that they can access.

In recent years, subscription services have gained popularity. Many businesses are opting for annuitized revenue streams. They are doing this by charging a small dollar amount to many users on a monthly basis that is perpetual until cancelled. Examples of subscriptions include Amazon Prime, Netflix, and Spotify, or even subscriptions for cellphone apps. Some of these subscriptions are monthly, but in many cases, there is an annual option to pay upfront for the year ahead.

Many subscriptions are on an auto renewal basis and will continue until cancelled. Similar to investments which auto renew, we also do not like the auto renewal function on subscriptions. While your subscriptions will eventually show on bank or credit card statements, we recommend listing the subscriptions you currently have, with account usernames and passwords, in your digital memorandum. Doing this will help make the process of cancelling your subscriptions as easy as possible for your executor.

As mentioned earlier, a good starting point for this is writing everything in one book. This can work, but it is also harder to keep organized with constant updates. If your handwriting is anything like mine, it can be difficult for your executor to decipher.

Another option would be to maintain these records digitally in either a Word or Excel file. This can make it easier to read, and easier to update, without having to erase or scratch out old information. You would simply delete the old information and replace it with the updated information. The Excel or Word document should always be password protected on your computer.

It may be a good idea to give your executor the password to first log into your computer, and also the directory where the digital memorandum is stored along with the password to unlock the Word or Excel file.

Once you have decided on your preferred method of maintaining and updating your information, it is important to keep an updated printed copy of the digital memorandum with your original Will in a safe and secure location. This will help your executor with their duties and allow them to deal with your digital footprint.

Kevin Greenard CPA CA FMA CFP CIM is a Senior Wealth Advisor, Portfolio Manager with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week at timescolonist.com. Call 250-389-2138, email greenard.group@scotiawealth.com, or visit greenardgroup.com.