Where Are Your Important Financial Documents?
Written by Brenda Spiering
Tuesday, April 24th, 2018
A friend recently told me she was helping her newly widowed mother sort through her finances. Her dad had always taken care of everything, including their investments. Her mom wasn't even sure where to look for them.
It's a story that's all too common. At the end of December 2017, the Bank of Canada reported it had approximately 1.9 million unclaimed balances, worth some $742 million, on its books. That's money that has either been forgotten or left behind by someone who moved on without a trace.
In my friend's case, her dad had saved everything. That was part of the problem. It took weeks of wading through his files and drawers to locate what was important. Plus, because his safety deposit box was in his name only, there was a long delay before her mom was able to access what was stored inside.
While a safety deposit box is a great place to store important documents, Janet Sim, partner of Osler, Hoskin & Harcourt LLP and leader of their Trusts and Estates Group, says usually only joint owners (and the executor of an estate) can open a box after someone dies. It's therefore a good idea to have a trusted joint owner who knows where to find the key and to make sure your executor has access to your will outside the box.
Some of the key documents Sim recommends storing safely are:
Your will is one of the most important documents you need to store safely, since it directs how your assets will be distributed when you pass away. "If you don't have a will, that's something to take care of. If you don't, the government will decide how your estate will be divided based on certain formulas, which may not match your wishes," says Sim.
A List of Your Investments
Maintain a readily accessible list of your bank savings (both registered and non-registered), stocks, bonds, pensions and life insurance policies. Sim says, "also, consider naming beneficiaries for your registered accounts such as TFSAs, RSPs and RIFs. The assets can then be transferred to your beneficiary or beneficiaries on your passing, without having to go through your estate."
Real Estate Titles and Deeds
Sim also says it's important to safely store the title and deed to any property you own. "Your principal residence is exempt from capital gains tax at the time of transfer to a beneficiary. But other real estate left to someone other than your spouse or common-law partner is deemed to have been disposed of at its fair market value. If it's gone up in value since the time of purchase, the increase must be reported as a capital gain on your final tax return."
Six Years of Tax Returns
The Canada Revenue Agency (CRA) recommends that you keep past tax returns for 6 years. Given your executor is responsible for filing your final income tax return, having access to your previous returns will help them gather the information they need.
Ensuring these items are readily accessible will help protect your estate and your loved ones. Just take care when storing a record of your documents to protect yourself from identity theft by never saving any passwords related to your accounts on your computer where they could potentially be obtained by online intruders.