You’re on your way out the door and as you reach for your keys where you are absolutely certain you placed them only minutes ago, you grasp at nothing but air. Sound familiar? While most people can relate to misplacing everyday items, it may surprise some to hear that experts estimate there to be approximately $5 billion worth of unclaimed assets being held in Canada just waiting to be recovered. This raises some questions from an estates law perspective. Primarily, how are these assets being forgotten; and secondly, what can be done about it?
Assets often go missing as a result of general forgetfulness or poor organization of one’s financial affairs. This sometimes occurs during the process of moving if a change of address is not updated. In other cases, lost or damaged records may affect the ability to stay up-to-date. The increasing prevalence of digital assets is another factor. Paper statements are falling out of favour and more bank accounts are held by branchless institutions making it is easier to forget.
Unfortunately, one of the most common reasons assets go unclaimed is due to poor estate planning. This can take the form of failing to identify all assets such that your Estate Trustee cannot easily identify and retrieve them for distribution. Or, it may occur as a result of declining mental health without having previously created an inventory of assets for administration. All too often, this is due to the difficulty many people associate with having those tough conversations about estate plans and final wishes with loved ones. This raises obvious concerns for those acting in a personal representative capacity. While an Estate Trustee or Attorney for Property will want to ensure they have done their due diligence in locating all assets for distribution or management, without a comprehensive list, potential assets may inadvertently be ignored.
As the cumulative total of unclaimed Canadian assets continues to rise, many have questioned Canada’s apparent lack of unclaimed property legislation. According to this article, the Bank of Canada’s unclaimed accounts grew 52% over five years to reach $532 million. Currently, only Quebec and Alberta have comprehensive unclaimed property legislation and public databases to perform a central search for lost assets. British Columbia has a voluntary system where the province, courts, and credit unions are obligated to transfer unclaimed property to the British Columbia Unclaimed Property Society; however, trust funds, brokerage accounts, and life insurance policies are only transferred on a voluntary basis. The intention behind this type of legislation has been to promote returning lost property to its rightful owner.
In Ontario, there is a noticeable gap in addressing the issue. Without any legislation in place, many institutions are under no obligation to search for the legal owners of dormant accounts. The primary exception is federally regulated banks which are obligated to turn over unclaimed deposit accounts, term deposits, drafts, and certified cheques to the central bank after 10 years (excluded are non-Canadian currency accounts, RRSPs, credit union balances, gold/silver certificates, contents of a safety deposit box, insurance payments, court payments, stocks and dividends, wages and real estate deposits). The Bank of Canada has its own procedures in place for dealing with unclaimed assets it holds which can be read about in more detail here and a central database is kept which can be used to search for unclaimed balances.
Attempts to pass unclaimed property legislation in Ontario have been largely unsuccessful to date. In 1989, Ontario passed the Unclaimed Intangible Property Act but it was never proclaimed into force and in 2011, the act was repealed. New legislation was promised in the 2012 budget and consultations were held; however, no new developments have come up since.
Thank you for reading.
Listen to becoming an executor after death.
This week on Hull on Estates, Ian Hull and Suzana Popovic-Montag, discuss becoming an executor after death and three issues that must be addressed immediately.
Listen to Assets and Liabilities
This week on Hull on Estate and Succession planning, Ian and Suzana expand on last week’s discussion about determining value. They also discuss taking an inventory of an estate’s assets and liabilities.
Comments? Send us an email at email@example.com, call us on the comment line at 206-457-1985 or leave us a comment on our blog.
Listen to Determining Value
This week on Hull and Estate and Succession Planning, Ian and Suzana talk about values and appraisals. They specifically look at some of the issues related to assigning value to assets such as jewellery, automobiles, antiques and artwork.