Kevin Wong, CPA
03.29.21 | T&E Chat
Have you ever found money in your pockets that you have forgotten about? I know I have on multiple occasions. Forgetting about an asset is a common occurrence for people, and it is not limited to the cash in your pocket. It could be your brokerage accounts, investments, and real estate to name a few. You may even have received a letter from your bank about an unused account. If you can’t properly account for all your assets, how do you expect your beneficiaries to do so after your death?
Individuals were receiving monthly, quarterly or yearly statements in the mail for many years in the past. However, with the advent of the internet, most people have opted to receive their statements electronically. If you were the only one that had access to the accounts during your lifetime and there were no hard copies lying around, there is a chance this could be missed by the executor of your estate.
People sometimes hide assets from their families and thus family members are unaware of the location or existence of these assets. Similarly, they may have life insurance policies no one is aware of. Using a fictional example, let’s see why full disclosure of your assets to your family is recommended.
David was a successful entrepreneur. He accumulated significant wealth during his lifetime, including a securities portfolio, retirement plan accounts, artwork and real estate. He also owned his home jointly with Angela, his wife. In addition, he took out several life insurance policies on his life.
In his Will, David designated Angela as the beneficiary of most of the assets but divided up the residue between his two children. David named his wife and children as equal beneficiaries on the life insurance policies. Sadly, David passed away this year.
The problem: David had hidden some of his assets without disclosing their location to his family. His loved ones had no knowledge of these assets, including their account numbers, logins or passwords. Neither Angela nor the children were aware of the existence of one of the life insurance policies and an IRA account as David opted for electronic statements.
What happens now after David’s death? It will take considerable time and effort for David’s family to track down all the assets. With their emotional state, it’s not certain that they’ll be completely successful. There is a chance that the family will not collect on either the life insurance policy or the IRA account. By being secretive, David has made things difficult for his loved ones and may actually cost them lost money.
Please don’t make the same mistake as David. Have an open discussion with all relevant parties, including your estate planning attorney, about your possessions. Make a list of all the assets you own and provide locations, account numbers, logins and passwords. Arrange for this information to be stored in a secure place. Your family won’t have to deal with the added stress of not having access to your assets in the event of your death or incapacity. Contact us for help in compiling your list of assets and all other relevant information.
Questions? I can be reached at 212.331.7441 | firstname.lastname@example.org or contact your Berdon advisor.
Kevin Wong is a Tax Manager in the Personal Wealth Services Group of Berdon LLP with nearly 10 years of professional experience. He works closely with high net worth individuals on matters involving their personal income tax, family businesses, and fiduciary, gift and estate taxes.