Wills, Estate Planning, Life Insurance

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Re: Wills, Estate Planning, Life Insurance

Post by tedster »

I just wanted to know how the banks, et al, know that someone died?
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Re: Wills, Estate Planning, Life Insurance

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tedster wrote:I just wanted to know how the banks, et al, know that someone died?
They don't always know.
At the end of December 2012, approximately 1.3 million unclaimed balances, worth some $496 million, were on the Bank's books.
Of course, they're not all dead.

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Re: Wills, Estate Planning, Life Insurance

Post by kcowan »

In Ontario and BC the executor must give all the banks a copy of the death notice. It is illegal to access any account after a death.
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Re: Wills, Estate Planning, Life Insurance

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kcowan wrote:In Ontario and BC the executor must give all the banks a copy of the death notice. It is illegal to access any account after a death.
Makes me a criminal. Traded on the brokerage account too! Both knew me and my dad and were aware of his death.
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Re: Wills, Estate Planning, Life Insurance

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kcowan wrote:In Ontario and BC the executor must give all the banks a copy of the death notice. It is illegal to access any account after a death.
Any account? What about a joint account? Why would it be 'illegal' for the joint owner to access the account?
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Re: Wills, Estate Planning, Life Insurance

Post by Peculiar_Investor »

kcowan wrote:In Ontario and BC the executor must give all the banks a copy of the death notice. It is illegal to access any account after a death.
Keith, might you have a link to the statute pursuant to this statement. It would be educational to address some of the follow-on questions. For example, what are the penalties?
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Re: Wills, Estate Planning, Life Insurance

Post by kcowan »

My input is based upon what TD and TDW told me in BC and TD and RBC told me in Ontario. There were no joint bank accounts involved. There were joint TDW accounts in BC and access continued uninterrupted. MILs name was just removed from the accounts.

They said that continuing access after death was fraud. I suspect there would not have been any charges laid as long as the actions taken were "normal". The TD did cooperate and pay ongoing utilities from Dad's account. Our lawyer helped us navigate that trail in Ontario.
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Re: Wills, Estate Planning, Life Insurance

Post by izzy »

kcowan wrote:My input is based upon what TD and TDW told me in BC and TD and RBC told me in Ontario. There were no joint bank accounts involved. There were joint TDW accounts in BC and access continued uninterrupted. MILs name was just removed from the accounts.

They said that continuing access after death was fraud. I suspect there would not have been any charges laid as long as the actions taken were "normal". The TD did cooperate and pay ongoing utilities from Dad's account. Our lawyer helped us navigate that trail in Ontario.
OK then, so what about preauthorized payments? e.g. the payments for my telephone, hydro, internet, cable TV etc are automatically withdrawn from my account monthly. If no one can access the account prior to probate do these payments stop? or do they continue even if there is no usage?
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Re: Wills, Estate Planning, Life Insurance

Post by AltaRed »

izzy wrote:OK then, so what about preauthorized payments? e.g. the payments for my telephone, hydro, internet, cable TV etc are automatically withdrawn from my account monthly. If no one can access the account prior to probate do these payments stop? or do they continue even if there is no usage?
I think you need to ask your specific branch what happens in that regard. Each bank may vary in this regard. I intend to do the same for my accounts at BNS... via email and then put the response in my Estate file.
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Re: Wills, Estate Planning, Life Insurance

Post by Bylo Selhi »

AltaRed wrote:I think you need to ask your specific branch what happens in that regard. Each bank may vary in this regard. I intend to do the same for my accounts at BNS... via email and then put the response in my Estate file.
This is speculation on my part: The banks are concerned that someone close to the deceased might "raid" their account so as to get an inheritance they're not entitled to. The banks might/would be liable for this since they know the client is dead yet allow someone, not necessarily an executor, to move money out. That's why they freeze the account as soon as they learn its owner is dead. That's why there's legislation against someone with access/authority moving money out once the account owner is known to be dead.

But allowing a PAC transactions for utilities, tax payments, etc. to go through seems to be a different matter. First, it's something the executor, whoever they may be, would reasonably want to continue. Second, the amounts are generally small enough that they're not going to be material to the estate. But that's just my guess.
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Re: Wills, Estate Planning, Life Insurance

Post by AltaRed »

I agree. I will see what BNS says about pre-authorized debits from bank accounts.

I am also in conversation with RBC DI regarding my mother's accounts. So far, I have determined (in writing) that it MAY be possible for someone with pre-existing POA/trading rights, and/or an executor before probate, to be able to sell assets that are vulnerable to market movements, and to POSSIBLY put the cash into a MMF or HISA. RBC DI said this is a common issue and that I would need to contact RBC DI regarding this situation should it occur. No withdrawal from an investment account is possible before probate (other than those with beneficiary designations upon producing a death certificate).
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Re: Wills, Estate Planning, Life Insurance

Post by brucecohen »

Jo Anne wrote: Short gap? How about 3 months. The estate lost about $40K in the meantime.
I was told by a TD Bank employee that even before probate the person named in the will as executor can have all holdings in the brokerage account liquidated. Proceeds can be put into MMF or T-bills but can’t be moved until probate is obtained. Policies likely vary among institutions.
kcowan wrote:In Ontario and BC the executor must give all the banks a copy of the death notice. It is illegal to access any account after a death.
I’m not aware of any Ontario requirement that a death notice be published. The only publication requirement I’m aware of is the notice to creditors. That’s not really required per se, but publishing it allows the executor to set a deadline for creditor claims against the estate and then immunizes him/her from any claims filed after that.
kcowan wrote:It is illegal to access any account after a death.
Not entirely. While waiting for probate, banks will let the executor tap the account to pay a wide range of day-to-day expenses like utility bills and also draw money for special needs like replacing a failed furnace in the middle of winter. But the executor has to clear each withdrawal with the bank.

FWIW, ING does not require probate for an account worth less than $30,000. All they require is a notarized copy of the will, death certificate and letter of direction telling them where to send the money. So this is one way the executor can get working capital. The $30K limit is a banking industry convention and I was told TD respects it, but makes the actual release a judgement call by their estates department and that can take time.
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Re: Wills, Estate Planning, Life Insurance

Post by AltaRed »

brucecohen wrote:FWIW, ING does not require probate for an account worth less than $30,000. All they require is a notarized copy of the will, death certificate and letter of direction telling them where to send the money. So this is one way the executor can get working capital. The $30K limit is a banking industry convention and I was told TD respects it, but makes the actual release a judgement call by their estates department and that can take time.
How many people have anything close to $30k in bank accounts? These days, savvy people have virtually all their money in discount brokerage accounts.
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Re: Wills, Estate Planning, Life Insurance

Post by kcowan »

brucecohen wrote:
kcowan wrote:In Ontario and BC the executor must give all the banks a copy of the death notice. It is illegal to access any account after a death.
I’m not aware of any Ontario requirement that a death notice be published. ..
Yes I should have used the term death certificate not notice. They accept copies.
brucecohen wrote:Not entirely. While waiting for probate, banks will let the executor tap the account to pay a wide range of day-to-day expenses like utility bills and also draw money for special needs like replacing a failed furnace in the middle of winter. But the executor has to clear each withdrawal with the bank...
Yes. Pre-authorized payments and cheques for specific purposes are allowed. TD paid the funeral home out of Dad's account. They will issue cheques requested by the executor but they will be to third parties.
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Re: Wills, Estate Planning, Life Insurance

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kcowan wrote:
brucecohen wrote:Not entirely. While waiting for probate, banks will let the executor tap the account to pay a wide range of day-to-day expenses like utility bills and also draw money for special needs like replacing a failed furnace in the middle of winter. But the executor has to clear each withdrawal with the bank...
Yes. Pre-authorized payments and cheques for specific purposes are allowed. TD paid the funeral home out of Dad's account. They will issue cheques requested by the executor but they will be to third parties.
I was the executor for my mother's estate. Bank was RBC in Ontario. As you say, the bank offered to pay bills for the estate if I brought the bills to the branch. Because the branch was not in a convenient location for me, I paid a few estate bills from my own resources. Just to prove that 'there is an exception to every rule', the bank wrote a cheque to me to reimburse me for the estate's bills (upon presentation of the batch of bills that I had paid).
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Re: Wills, Estate Planning, Life Insurance

Post by izzy »

DavidR wrote:
kcowan wrote:
brucecohen wrote:Not entirely. While waiting for probate, banks will let the executor tap the account to pay a wide range of day-to-day expenses like utility bills and also draw money for special needs like replacing a failed furnace in the middle of winter. But the executor has to clear each withdrawal with the bank...
Yes. Pre-authorized payments and cheques for specific purposes are allowed. TD paid the funeral home out of Dad's account. They will issue cheques requested by the executor but they will be to third parties.
I was the executor for my mother's estate. Bank was RBC in Ontario. As you say, the bank offered to pay bills for the estate if I brought the bills to the branch. Because the branch was not in a convenient location for me, I paid a few estate bills from my own resources. Just to prove that 'there is an exception to every rule', the bank wrote a cheque to me to reimburse me for the estate's bills (upon presentation of the batch of bills that I had paid).
But what about STOPPING preauthorized payments for services which are no longer being used e.g. cable TV, internet, newspaper or magazine subscription etc? I suspect that someone would have to contact the providers but are THEY obligated to accept such instructions before probate? And will the bank accept a notification, either from the provider or the next of kin to terminate the arrangement? It is notoriously difficult to terminate magazine subscriptions ,even for the living. Yes they are all relatively small sums but they add up since many of us use such arrangements so frequently these days.
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Re: Wills, Estate Planning, Life Insurance

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izzy wrote:...But what about STOPPING preauthorized payments for services which are no longer being used e.g. cable TV, internet, newspaper or magazine subscription etc? I suspect that someone would have to contact the providers but are THEY obligated to accept such instructions before probate?
We cancelled Telus and Shaw and paid the final bills for MIL but Shaw screwed up and continued to bill her. Then they sent it to collections. We got several calls and just informed them that she had died. They said that it would destroy her credit rating. We said she no longer had a need for any credit. :rofl:
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Re: Wills, Estate Planning, Life Insurance

Post by Norbert Schlenker »

Peculiar_Investor wrote:
kcowan wrote:In Ontario and BC the executor must give all the banks a copy of the death notice. It is illegal to access any account after a death.
Keith, might you have a link to the statute pursuant to this statement. It would be educational to address some of the follow-on questions. For example, what are the penalties?
It's probably case law, not a statute. The financial institution will tell you that things must (not) be done a certain way, there is undoubtedly a reason why the rule is there that almost certainly depends on having been spanked by a court in years past, but the chances of finding that case (or anyone who knows what case occasioned the rule) are minimal.
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Re: Wills, Estate Planning, Life Insurance

Post by ockham »

Norbert Schlenker wrote:
Peculiar_Investor wrote:
kcowan wrote:In Ontario and BC the executor must give all the banks a copy of the death notice. It is illegal to access any account after a death.
Keith, might you have a link to the statute pursuant to this statement. It would be educational to address some of the follow-on questions. For example, what are the penalties?
It's probably case law, not a statute. The financial institution will tell you that things must (not) be done a certain way, there is undoubtedly a reason why the rule is there that almost certainly depends on having been spanked by a court in years past, but the chances of finding that case (or anyone who knows what case occasioned the rule) are minimal.
ISTM, there are two separate, though related, issues in this thread:
1. When dealing with financial institutions, on death, who, if anyone, has legal authority to act as or for the estate?, and
2. What risks, if any, does a financial institution run by allowing some person X to act as/for the estate? What risks, if any, does person X run?

Where there is no will, on death no one has legal authority. Until and unless the court appoints an administrator, no one has authority, period. This does not mean, however, that all accounts are necessarily "frozen" or that person X is necessarily acting "illegally" if accessing a deceased's account. For instance, financial institutions always allow payment of a (reasonable) funeral account. Reason being that the risks both to the financial institution and to person X are nil. Reasonable funeral expenses are a first charge against the estate's assets, pretty much no matter what. Moreover, if the estate is not large, and/or if the family of the deceased is well-known to the institution, and/or if pleasing the survivors of the deceased is really important to the business of the local branch, the financial institution may allow the accounts to be administered without court order, typically relying on personal indemnities from family members. The rationale is that the risks are low, if not nil, both to the institution and to the survivors. Who, after all, is there to complain?? But appreciate, this is a business/risk assessment made by the institution. It doesn't "have to" do any of this, because without a court order, there is no one who can force it. But doing it is not "illegal".

Where there is a will, on death the executor(s) named in the will has legal authority. But who knows, is there another will?? was the deceased competent at the time of the will's making? A grant of probate is a court order declaring that a specified document is the last will and declaring that a specified person has authority to act. Yet financial institutions regularly allow testate estates to be administered without a probate grant where they reckon the risks sufficiently low, just as in the case of intestacy -- they know the family, the assets are not too large, they're comfortable with personal indemnities, etc. This is as before a business/risk assessment. They don't "have to" since, without and until probate, they can't be forced. But it's not "illegal" in any useful sense of the word if they do, either for the institution or for the family.

There may be particular statutory provisions in various jurisdictions bearing on the above, but this is the general scheme. If you get the idea that financial institutions have an enormous amount of discretion in how they deal with death, it's because they do. No wonder people's experiences vary so widely. The search for the "rule(s)" governing the situation is more likely to frustrate than enlighten.
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Re: Wills, Estate Planning, Life Insurance

Post by Thorn »

Another wrinkle to consider - when the deceased has inter-generational joint accounts with the executor or a child.

Two Supreme Court decisions in recent years have ruled that joint account contents be reported in the will execution as estate assets, specifically if most or all of the account funds were provided by the deceased.

In recent years I have overheard bank employees tell someone that "the account is theirs" once the (say) parent co-owner is deceased. Just goes to show that many people working in banking don't keep up with the rules.
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Re: Wills, Estate Planning, Life Insurance

Post by sydney2 »

We were at TD the other day, my Daughter is arranging financing for a house purchase. The TD Rep, was encouraging them to take life insurance. I mentioned that they both had RRSP's and he has a good insurance policy at work and the eventual mortgage after they sell their home they now live in would be low.

She said are they a beneficiary on the RSP's or successor annuitant, because if they are just beneficiary it could not be rolled over. I am sure all paperwork would be done correctly when the RSP was opened at the bank, but is this true.
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Re: Wills, Estate Planning, Life Insurance

Post by twa2w »

Sydney, I assumeyou are referring to your daughteer and son in law.
The diference between the beneficiary and successor annuitant designation is
a)with the successor annuitant designation, on death of the annuitant of the plan, the sucessor annuitant simply takes over the plan. The ownership name on the plan is simply changed if you will.(some paper work is needed obviously)
b) With a beneficiary, this does not happen automatically. IIRC The money is normally cashed out of the RSP, and a tax slip is issued, The money is rolled into a new or exisitng plan in the beneficiaries name with a reciept issued. On the tax returns a rollover election is made to essentially zero out the tax.

I haven't seen successor annuitants with RSPs before - It is usually used with RIFs
Here it can make more of a difference because on a RIF with a successor annuitant designation, there is no need to pay out the minimun payment on death. The successor annuitant merely takes over the RIF(a name change if you will) and the minumun payment or regular payments, if scheduled, just continue on to the new annuitant.
With a RIF with a beneficiay, the minimum payment must be paid out to the estate if not already paid and claimed on the deceased tax return. The RIF is closed out and is then moved to the beneficiaries RIF or RSP. Again I beleive tax slips are issued and elections have to be made on tax returns.
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Re: Wills, Estate Planning, Life Insurance

Post by Bylo Selhi »

twa2w wrote:RIFs
Here it can make more of a difference because on a RIF with a successor annuitant designation, there is no need to pay out the minimun payment on death. The successor annuitant merely takes over the RIF(a name change if you will) and the minumun payment or regular payments, if scheduled, just continue on to the new annuitant. With a RIF with a beneficiay, the minimun payment must be paid out to the estate if not already paid and claimed on the deceased tax return. The RIF is then moved to the beneficiaries RIF or RSP.
As I understand it if both spouses have RRIFs the minimum annual withdrawals for both RRIFs can be based on the younger spouse's age. If the younger spouse dies first, can the surviving spouse continue to base annual withdrawals on the now-deceased spouse's age? Does the designation of beneficiary or successor annuitant affect this?
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Re: Wills, Estate Planning, Life Insurance

Post by CROCKD »

As I understand it a successor annuitant would be a surviving spouse. However a beneficiary can be anyone - in my case the joint beneficiaries of my RIF are my son and daughter as I do not have a spouse. The proceeds of the RIF can be paid to them as securities in kind or cashed. This forms part of the estate for income tax purposes. However the value of the RIF does not have to be included for a probate tax calculation.
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Re: Wills, Estate Planning, Life Insurance

Post by twa2w »

Bylo, the answer to your question is yes.
If I am the older spouse and base my RIF pay out on my younger spouses age, and she then passes away, my RIF continues to be based on her age. If I am the successor annuitant on her RIF, the name on her RIF simply changes to my name and payments continue(based on her age). If I am the beneficiary on her RIF, it would be closed down and the funds could be rolled over into my RIF which would be based on her age if that was what was selected when it was set up. Alternately I could set up a new RIF and transfer her RIF to the new RIF. Because she is deceased I could not use her age for the payments on this RIF. So essentially once a RIF is set up, the age it is based on remains for the life of the RIF.
CrockD, my answer to Sydney2 was for the specific example she mentioned. Sandra Fosters book is out of date and does not apply to all provinces. I would be careful in relying on it - particularily if you live outside of ONTARIO.
In your case with children as beneficiaries, the RSP/RIF will not have any tax withheld when it is cashed after your death but your estate will be responsible for tax on the estate. AIUI if there is insufficient funds in your estate to pay the tax on the RIF proceeds, they can come after the beneficiaries to pay it. As for whether this amount is to be included in probate may depend on the province as I have seen conflicting information on this. I happen to be in Alberta so it doesn't matter as we have very limited probate costs.
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