When parents open joint accounts with adult kids, others may pay the price

I'm always disappointed when I see that parents continue to put money into joint accounts with their children, when they don't intend for that child to own the money. It causes so many problems, lawsuits, delays, expense and family upset that it's simply a terrible idea.

The parents create these legally impossible situations for the children left behind. The children consult lawyers, battle lines are drawn and the family is often completely destroyed. All because it seemed "easier and cheaper" to use a joint bank account rather than a trust or a power of attorney.

This reader sent me in a question that arises out of a parent doing exactly the wrong thing, which was leaving money in a joint account with one person when she actually intended for someone else to have the money, followed by a daughter who apparently also did the wrong thing. Here is the question:

"My mom's will reads that she left money for her two grandaughters of her deceased son via two joint accounts set up between mom and her daughter. The daughter worked at that bank, stole the money and then closed the accounts. Not sure when the accounts were closed. What can be done?"
This area of law should be so clear, but it is currently very muddy. In your situation, it seems that everyone involved has made errors in judgment, including your mother, the daughter and the bank. The grandchildren pay for the mistakes.

In the old days, a joint account was always a joint account, and the surviving owner of the account always owned the money in the account when one owner died.

The law regarding joint accounts between generations - as in this case, a parent and child - changed in 2007 as a result of a couple of cases from the Supreme Court of Canada. The new law says that when there is an inter-generational joint account and the parent dies, the money is to be held in trust for the parent's estate and does NOT belong to the surviving child. If the parent did actually want that child to inherit the account, there are ways of documenting that intention that will stand up.

For some reason, many banks in Canada have simply decided not to follow the new law.

Many banks in Canada are still treating inter-generational accounts as regular joint accounts and still pay the funds to the child. This is probably what happened in your case; likely nobody batted an eye when the daughter cleaned out the account. Ironically, the court cases were intended to stop exactly this kind of financial abuse by children. Having said that, it's possible that the daughter had some kind of written document from your mother that confirmed she wanted the daughter to own the account. It would be in direct conflict with the will, but theoretically it could exist.

It looks as if the daughter is taking advantage of the mother's trust in her, the bank's failure to follow up-to-date legal policy, and the grandchildren. Many people in her situation do exactly the same as she has done. However, it's always possible that she had a different understanding about whether she was supposed to do with the account. Does she know what's in the will regarding this account? Has she ever come up with any written intention by her mother that would lead her to believe she could have the account for herself?

If communication has broken down or the daughter has dug in her heels, it's probably going to take a lawsuit against both the daughter and the bank to retrieve the money that was in the account. I'm not sure what your relationship is to all of this, but if you are the executor, then it's up to you to launch any lawsuit. Please see a lawyer with extensive experience in estate litigation to have a frank discussion. Present all of the facts and hold nothing back. Estate litigation is unpleasant, lengthy and expensive but sometimes it's the only solution. Think carefully before going ahead.

I and many other lawyers keep warning parents over and over again not to open joint accounts with their children, but until they start heeding the warning, this unfortunate situation is going to keep repeating itself and the children are going to keep paying for the parents' choices.

Murder and the joint account

We've all heard the saying that "crime doesn't pay". The law sets up punishments for criminal behaviour that are above and beyond any jail terms or fines the criminal justice system might impose. For example, if you kill someone, the law says that you can't collect on the person's life insurance policy that names you as a beneficiary.

But what about a situation in which one joint bank account owner kills the other? Would the surviving joint bank account owner be entitled to the whole account? Half of the account? None of the account? This situation is fortunately extremely rare so I was interested to see how the courts would deal with it.

Click here to read an article from lawyer Chris Staples in which he looks at the recent New Brunswick case of Doyle v. Doyle. In this case, the widow of the deceased was charged with murdering her husband but at the time the joint account case was heard, she had not yet been either convicted or exonerated. In this case, the court decided that she was entitled to one-half of the joint bank account because she owned half of it already while her husband was alive.

Does a low dollar amount mean that an estate doesn't need to go through probate?

What happens when an estate is small? Is probate waived because of the low dollar amount? Not always! A reader sent me a note about this and I thought many of you would be interested in the answer.

Here's the question:

"My mother's sister recently passed away. My mother is the sole beneficiary and the trustee of the estate. Can she pay outstanding bills prior to probate? Does she need to probate the estate, as it has a value of less than $15,000?"

Yes, an executor can pay bills prior to receiving Letters Probate. In fact, most of the time it's a good idea to do so, as it helps to avoid penalties, late fees, or interest that eventually would have to be paid out of the estate. The authority to do this comes from the will itself, rather than from the probate.

If the bills in question include a funeral bill, your mother can submit the bill directly to the deceased's bank and ask that it be paid from the deceased's account (assuming there is enough money in the account for that). Sometimes a bank will even pay other bills that are clearly the deceased's bills, but that is in the discretion of the bank itself.

If your mother pays the deceased's bills or the estate's bills out of her own money, she can claim them back for reimbursement from the estate once funds become available (again, assuming there is enough money).

If the estate is quite small, as this one apparently is, there may be no need to apply for probate. But keep in mind that dollar amount is not the only factor. The type of asset will also matter. For example, there may be a mines and minerals title in the estate that is practically worthless at present, but you still need probate to transfer it because it's registered at the land titles office.

Assuming that in your case there is nothing unusual but there is, say, a bank account, a vehicle and personal belongings, your mother most likely will not have to apply for probate. The bank that holds the deceased's account does have the right to require your mother to apply for probate, but has the discretion not to insist on the requirement when the dollar amount is small.

Dollar amounts may not be everything, but they do matter. Banks who hold the only asset of the estate in the form of a small account may waive the requirement for probate because they realize that the court fees and lawyer's fees to obtain a probate could more or less wipe out the estate. The risk to themselves is smaller as well. If a bank releases a bank account without a probate document and it's later discovered that there is another will or another beneficiary, the bank could be on the hook for the amount they released. They will often accept that risk as long as your mother signs an indemnity form.

You will not need probate to transfer personal or household goods or a vehicle.

Keep in mind that sometimes there are reasons to probate a will that have nothing to do with dollar amounts, such as questions about the validity of the will, the need to obtain tax information, or claims by third parties.

Joint accounts - will my daughter share with my son?

A reader has brought up a question about putting his daughter's name on his bank accounts as joint owners. This is always a hot topic at seminars and meetings, and I know that many of you want information on this as well, so I'm sharing my answer here.

Here is the question:

"I have added my daughter's name to the majority of my bank accounts and been told that they are marked 'with rights to survivorship'. We live in Ontario. I have asked my daughter to do whatever she sees fit with the money which includes sharing some with my son. My son is bad with money. Would I still need to put in my will that the money is her's to spend as she wants?"

There are a few things to consider here. First of all, if your daughter gets divorced or is sued or is influenced by her husband, or just wants to go on a spending spree, you can kiss your money goodbye. You have taken some steps to address things when you pass away, but you still have to live in the meantime. You have just placed your money at great risk.

Next, who is receiving the tax T-slips for the accounts? Have you just placed a tax increase on your daughter?

As for your daughter actually receiving the money as a joint owner after you pass away, yes, including a statement about it would help clarify your intentions. There is a question about inter-generational bank accounts such as yours being true joint ownership. The law changed in 2007, though banks have been very slow in coming to terms with the change. Currently the law states that when a parent owns an asset then adds a child's name to that asset, on the death of the parent the asset is frozen and held in trust for the parent's estate. This is to acknowledge that so many people put the kids' names on things during their home-made estate planning to avoid probate, or to allow the kids to help the parents with their banking.

Right now that new rule is being applied very unevenly across the country and it seems to me there is quite a bit of confusion in individual estates as to whether an inter-generational account is really meant to be joint. If you want it to be a true joint account so that your daughter inherits all of the money in the accounts for her own purposes, then mentioning it in your will is a good way to clear up that confusion.

That leads me to my next question. Are you sure that what you really want is for your daughter to inherit all of it? If so, why didn't you just give it to her outright and not leave it in joint accounts? You mention a son. Keep in mind that under your current arrangement, she doesn't have to give him a cent. He may be somewhat upset about this and even try to sue her over it, but legally the money will be hers if you confirm this in your will.

You mention that your son is bad with money. Are you thinking that your daughter will share with him and look after the money, in that way protecting him from blowing any money he might inherit? If so, you have chosen possibly the worst possible way to bring that about. You've created no legal right for him to inherit. Your will probably says to divide your estate between your kids, which will likely upset  your son when he realizes much of the estate is already in your sister's name and out of his reach. You've placed your daughter in the unpleasant role of having to be a parental figure to her brother, deciding whether he is fit to get an allowance and doling it out to him.

I don't know which role would be worse - the brother who has to beg for money, or the sister who has to decide what to give him.

Since you're making a will anyway, you might consider putting a share for your son into a simple trust using your will. You can prescribe the terms such as when he gets the money and in what amounts.

It doesn't really make sense to me that you'd make a will, but also make all of these accounts joint with your daughter unless you really do intend to cut your son out of those accounts and ensure that only your daughter gets them for her personal use. It feels as if you're using certain tools to achieve things they were never designed to achieve. My recommendation to you is that you find a really good wills lawyer and frankly discuss your goals with him or her.

Where do I find the deceased's accounts and investments?

A reader has asked me a question that I hear frequently, so I'm sharing the question and my answer with all of you. Here's the question:

"When a person passes away, how do you locate all their accounts and investments if you don't have an updated list? Is it as simple as using their SIN card to locate them?"

I don't think you're going to like my answer, because there is nothing simple or easy about this. It usually takes a lot of legwork to find a deceased's assets and liabilities.

Having the SIN card is definitely helpful, as banks and other asset-holders can search their databases using a SIN card. This can be helpful since many people may have the same or similar name, but only one person will have a particular social insurance number. It should make searching easier.

The problem is determining which banks or brokers or investment advisors to ask. There is no place that you can enter a SIN and come up with a comprehensive list of everything a person owns in various institutions. You will have to ask one bank or advisor at a time. It used to be worse; at least these days you can go to any branch of a bank and get a search of all branches of that bank. In the not-so-distant past you had to approach each branch individually.

So how do you know which banks or advisors to ask?

Check paperwork at the deceased's home and office. Look for statements and bank books of course, but also any correspondence such as insurance offers.

In these days of paperless banking, fewer and fewer people leave paper statements around. If you don't have access to the deceased's computer, you're going to have to do it the hard way.

If you see a credit card in the deceased's wallet, check the bank that issued the card. People frequently get credit cards from the same place they do their regular banking.

Check to see which banks have branches close to the deceased's home or place of work. Most people choose to bank where it's convenient for them. Seniors in particular tend to choose the branch closest to home, within walking distance if possible.

If you have access to the deceased's past tax records, check to see which banks issued T5 slips for investments. There should be a copy of each T5 attached to the deceased's copy of a filed return.

When you check with a bank, whether or not you are successful in locating a bank account, ask the personnel to check the bank's investment arm as well. The major banks all have investment advisors attached to them (Scotia McLeod, RBC Dominion Securities, etc). Also remember to ask about safe deposit boxes, because many people will store original share certificates, deeds to the house etc. and you can often find clues there. For example, look at the deed to the house to see whether there is a mortgage registered against the house; the title will tell you which bank holds the mortgage.

Remember that many people have assets in more than one bank. So the fact that you've located an account in, say, Scotiabank, doesn't mean that you should stop looking.

The cold hard fact is that it is often an immense amount of work to figure out what another person owned, particularly where most records are kept on a computer that you can't access. This is why estate planners are always suggesting that people make an updated list of assets and liabilities.

As I said, you're probably not enjoying this answer one little bit, but unfortunately there may not be an easier way.

If the account is frozen, how does the executor pay for the funeral?

Seminar season is in full swing for me, making me doubly busy but also letting me interact with even more people than I usually do. I always encourage questions from my audiences, and always get plenty of them. I notice than many listeners are interested in the mechanics of  an estate - how things work, who does what, how long things take, etc.

At one recent seminar, there were questions about whether a deceased person's bank accounts are frozen at the time of death, and if so, whether an executor has to pay funeral and other expenses out of his own pocket.

If the deceased owned a joint bank account with right of survivorship, the account won't be frozen. The surviving joint owner will be able to continue to use the account as before. For tax, estate and other reasons, the surviving joint owner should make sure that the bank is alerted of the death of one owner and the name on the account adjusted to reflect the current situation.

If you are one of the thousands of Canadians who owns an account jointly with your parent or your child, be aware that there is no longer an automatic right of survivorship on these accounts. Though you may have been told by the bank when it was set up that there was a right of survivorship, the law has changed right across Canada. An inter-generational joint account where the parent put in the money and later added a child as a joint owner is considered to be held in trust for the parent's estate. That account will be frozen.

If you have an inter-generational joint account, talk to an estate planning lawyer or your bank manager to find out what you can and should do about it while both owners are still alive.

RRSP, RRIF and LIRA accounts are not generally frozen. They are normally paid to the named beneficiary. If they are payable to the estate, they may be frozen until the executor obtains a grant of probate.

The deceased may have had bank accounts or investment accounts in his or her own name. These account are normally frozen on the death of the owner. Once the executor obtains probate, the bank or investment advisor will release the funds to the executor.

As mentioned, the follow-up question to whether an account is frozen is whether an executor must pay estate expenses out of his own pocket. In particular, funeral bills were a concern, as they tend to amount to thousands of dollars. The good news is that if an executor or family member takes the funeral bill to the bank where the deceased held his account, the bank will pay the funeral bill directly from the deceased's money. The money won't be given to the executor or family member; it will be sent directly to the funeral home.

This holds true for other expenses as well, as long as they are obviously bills that the deceased would have had to pay, such as the utilities on the deceased's home. This is up to the individual bank branch to determine, but it's always worth asking.

Dude, where's your stuff?

This article from lawyer Kyle Krull covers one of those completely practical questions that I love to see addressed, simply because most people don't think about them. If you die, how will your family know where your stuff (bank accounts, insurance policies, house title etc) is? Click here to read the article.

Note that in this article, the author says that "state treasuries" hold billions of dollars in unclaimed bank accounts. Our equivalent is the Bank of Canada.

More on the perils of joint bank accounts

Even though I've repeatedly talked about why parents should not add their children's names to their bank accounts and investments, I'm including a link here to an article from All About Estates on that topic. It's a subject so important that it bears repeating. Please read this article if you are considering adding your kids's names to your accounts!

Can a sibling contest money left in a joint bank account to another sibling?

This post arises from a reader question, and covers a very important issue. Despite all of the news coverage and warnings about joint bank accounts being abused by the children of seniors, thousands of elderly parents continue to add their children's names to their bank accounts. And as a result, many of them lose not only their money but their relationship with their children as well.

So I'm happy to answer this question about whether a sibling can contest money left in the joint account to the other sibling. I'm even happier to say that yes, a sibling can contest it, in certain circumstances.

The first circumstance must be that the money in the account was contributed by the parent, not the child. Most of the time, this means adding a child's name to an existing account owned by the parent. Sometimes it means putting the parent and child's name on an account that was opened to hold, for example, the funds from the sale of the parent's house. In other words, it's the parent's money.

The second circumstance is that there is no written confirmation by the parent that he or she intended the child to own the money when the parent passes away. The account was opened either for the convenience of the child helping the parent, or to avoid probate fees.

To explain this second circumstance further, I point out that a couple of years ago, Canada's highest court said that when there is a joint account (or investments or other assets) between a parent and a child, the law will presume that the child was only put on the account for convenience, and not so that the child would inherit the money. This is true UNLESS the parent left some written indication to the contrary.

This means that the child who now has the joint account doesn't own it unless the parent said so in writing at the time the name was added. Timing is important. It must be at the time the asset became joint, not months or years later. Also, telling the joint owner child verbally isn't good enough.

The parent's confirmation can be in many forms. It could be a clause in the will that confirms the joint account is supposed to belong to the child. It could be a note added to the bank form that set it up. I always encourage the staff at the Scotiabank branches to specifically ask the parent about his or her intentions, and document the answer in case the parent doesn't document it himself.

Something that holds individuals back from contesting a situation like this is that they don't want to appear greedy. I encourage anyone who questions a joint bank account between a parent and child to think of your involvement not as greed but as ensuring that your parent's plans are properly carried out.

When dementia drains the pocketbook

Beginning the process of helping your aging parents with their finances can be a nightmare, as this article from the New York Times illustrates. Click here to read it.

I read with interest the comments about how the bankers and other people along the way had suspicions that the aging parent was having trouble managing her finances, but didn't take any steps to do anything. Believe me, on the banking end we feel the same frustration. I can think of several customers whose banking officers have stated that they believe the person is beginning to have trouble. Unfortunately, we can't second-guess what our customers want to do with their own money. Ideally, it's a customer who is willing to talk to me about estate planning and to get something into place - something that gives legal authority to one of their kids or the trust company - to help them with their finances. At least in those cases, I can help. Frequently though, the aging parent declines the banker's suggestion that they take legal steps.

How do I advise banks that I've been appointed Power of Attorney?

When lawyers prepare Enduring or Continuing Powers of Attorney for their clients, they have the opportunity to educate the client a bit about how the documents will be used in the future. Unfortunately, there is rarely an opportunity to educate the person appointed under the document as to how to use it.

The vast majority of individuals appointed under a family member's Power of Attorney have never been in that position before and really don't have a very good idea of how to go about things.

At some point, you're probably going to have to use the Power of Attorney at the bank that is used by the person you represent. Make an appointment with a banking officer, or if it's a very small branch, with the branch manager. Take the original Power of Attorney with you, but don't leave the original at the bank. They will want to make a photocopy of it. In some cases (particularly if they have not seen the original document themselves) they will request a notarial copy of the document.

Take two pieces of government-issued identification (driver's license, provincial I.D., social insurance card, provincial health care card, etc) and expect the bank to take a photocopy of them. The bank will check to see that your I.D. matches the name on the Power of Attorney.

The vast majority of Enduring or Continuing Powers of Attorney are "springing" documents. This means they contain a clause in the document that says that the document doesn't have any legal effect until a certain condition is met. That condition is usually that a doctor (or two doctors, or another person) has to sign a Declaration saying that the person has lost the ability to make his or her own decisions. You can't use the Power of Attorney if that Declaration is not attached. They will check for this in the bank and if the Declaration isn't there, they will refuse to honour the Power of Attorney.

Sometimes even when the Power of Attorney does have the proper Declaration in place, the bank will request a couple of days to send it to their legal department to check. This is to help prevent fraud. The people in the legal department are much more familiar with legal documents than are the banking personnel.

Don't be embarrassed to ask for help or information. If you remember that almost all others appointed under these documents are new at it too, perhaps it will be a bit easier for you to ask. Finding out your responsibilities and limitations right up front could prevent a lot of trouble in the future.

For the wealthy, it takes a village

This article from the Globe and Mail describes some of the services that people can now expect from their banks - at least the large banks that have trust companies and private banking branches. It's worth reading, as I discover almost daily that people in general don't really know about the newer services that are available. In fact, some of the people who work in banking don't know the full range of what's out there for customers. Click here to read the article.

Found money just web search away

Have you ever wondered what happens to bank accounts that nobody ever claims? They eventually get transferred to the Bank of Canada. Click on the link below to read the story and to search for unclaimed bank accounts. Too bad more executors don't search for this to find out whether the deceased person they represent is owed unclaimed money.

Found money just web search away

Joint or not joint - that is the question

It used to be, not so long ago, that if an asset was held in joint names with a right of survivorship, then the asset automatically went to the surviving joint owner when one of them passed away. Though this is still the general rule, it has been modified quite a bit over the last few years for assets that are held jointly between two generations.

In other words, the rules have changed for inter-generational joint ownership. When an elderly parent and his or her child own a joint bank account, joint investment account or joint real estate, there is no longer an assumption that it's a "real" joint asset, especially if it was first owned by the parent and the child's name was added later. Now there is a question that must be answered: did the parent really intend for the child to own this asset on the parent's death? Or was it only put into joint names for convenience?

"Convenience" covers a lot of possibilities, but the most common are bank accounts that are made joint so that the child can help the parent with banking, and real estate that is put into joint names to avoid probate. The arrangement was made not so that the parent could give the child the asset, but so that the child could help out at present and give the asset back when the parent died. Though the steps were taken by the parent with the intention of making things simpler, they often have exactly the opposite effect. Disputes break out among the children. The estate is delayed. Legal fees eat up the children's inheritance.

The main problem is that if one child gets to keep the house or bank account, the other children are never really sure whether the parent wanted things that way, or whether the child with the asset took advantage of the parent.

These days, thanks mostly to the shamefully large number of elder financial abuse cases, if you make an asset joint with one of your children, you have to leave some clear evidence of your intention with respect to the right of survivorship. You have to leave evidence of whether the child is supposed to own the asset when you're gone, or whether the child is simply named on the asset for convenience. This, says the Supreme Court of Canada, may be the deciding factor in who gets to keep the asset and who doesn't.

So how do you leave clear evidence? What exactly does that mean? Here are some ideas for making sure that your executor, your children and anyone else involved in your estate know what your intentions were for that bank account or house:

1. You can use your Will (which normally would not address jointly owned property) to confirm that an account that is joint is actually intended to go to the other joint owner on your death.

2. You can have your lawyer prepare a short trust document known as a "bare trust" for the joint asset, which basically confirms that the jointly owned asset is only held that way for convenience and the joint owner doesn't get to keep it.

3. During your estate-planning session with your lawyer, make your instructions about the account clear so that the lawyer can keep notes about your intentions, and draft the Will accordingly.

4. Prepare an Enduring Power of Attorney that will allow your children to help you look after your financial affairs without you having to put assets in their names.

5. If you put your child's name on a bank account or investment, explain to the bank personnel why you are making this change, so that the banker can include some notes about your intentions.

Given the number of times these joint accounts have caused unbelievable trouble, delays and disputes on an estate, it's surprising that anyone actually puts their child's name on their accounts anymore. I suppose it's a testament to optimism that nobody thinks it will happen to them.

How is a bank power of attorney different from an Enduring Power of Attorney?

If you want to name someone to take care of your finances when you're not able to do that for yourself, you have options. Some options are more extensive than others, as you will have seen in my posts about adult guardianship, informal trusteeship and Enduring Powers of Attorney. Another choice is signing a bank Power of Attorney. By this, I mean the form you can fill in and sign at your bank branch.

There are several differences between the bank Power of Attorney and the Enduring Power of Attorney, and I'm going to look at some of them in this post.

One difference is the scope of the authority you can give your representative in your document. A bank Power of Attorney will allow you to give someone access to and authority over an account that you own in that bank. An Enduring Power of Attorney will give someone authority over all of your property, including your home, investments, cottage, etc. unless you put restrictions on it. Neither arrangement is "better" than the other; you can choose the option that works for you depending on what you need.

Another difference is that not all bank Powers of Attorney are "enduring" or "continuing". This means that if you should lose your mental capacity to look after your own finances, the bank Power of Attorney may come to an end just at the time you need it most. You would have to read the form to find out which kind you are signing. An Enduring Power of Attorney is designed to endure or continue through incapacity. Therefore if you're doing long-term planning, you should probably get an Enduring Power of Attorney.

In an Enduring Power of Attorney you can give guidance on how things are done and put restrictions of your choice on your representative. In other words, you can personalize it to make it fit you, and to make it consistent with your overall estate plan. With a bank Power of Attorney you are bound by the pre-printed details of the form.

Finally, a difference that I don't think customers fully appreciate is that you don't get legal advice when you fill in the bank form. If you make a request at the bank, their personnel will do what they can to give you the banking item you requested. They aren't lawyers. Their business is banking and it's not up to them to advise you on how signing the bank Power of Attorney might affect your taxes or your overall estate plan.

Each of these documents has advantages and disadvantages. As with all decisions with legal consequences, when you are considering either one of these documents, instead of asking "can I do this?", ask "should I do this?"

What happens to a power of attorney when the person giving it dies?

In this post, I'm discussing Enduring (Continuing) Powers of Attorney that were made in advance, then brought into use when the person giving the Power of Attorney (called the "donor") lost his or her mental capacity. Most of the time, these documents are very extensive, and give the Attorney acting under them power to deal with everything from bank accounts to real estate. In some cases, the Attorney looks after the donor's finances for several years.

What happens when the donor dies?

The authority in the Enduring Power of Attorney ends immediately upon the death of the donor. The Will kicks in. The Attorney has to stop making decisions on behalf of the donor and hand over all of the assets to the Executor of the estate.

If there is no Will, the Attorney still has to stop acting as Attorney for the donor. This can be a bit of a tricky situation for the Attorney, as there will be a gap in time from the death of the donor until someone is appointed by the Court to be the Administrator of the estate.

In addition to handing over the assets themselves, the Attorney has to hand over his or her records of what he or she has done with the assets and debts over the months or years acting as Attorney. The Attorney is required to account for everything he or she has done, and if the accounting given is not adequate, the Executor can apply to the court to compel the Attorney to give a more thorough accounting. This might mean that the Attorney has to come up with receipts for major purchases, bank statements or other documentation.

If the Attorney cannot account for money that has gone missing, he or she is at risk for having to repay it from personal funds. Most Executors will be pretty adamant that the Attorney explain himself or herself, as the Executors don't want to have to explain to family members and beneficiaries where missing money has gone.

Sometimes the Attorney and the Executor are the same person, such as an adult child who is in charge of his or her parents' Enduring Powers of Attorney as well as their Wills. This may mean that the Attorney doesn't have to account to another Executor, but it does mean that now that the Attorney is wearing the Executor hat, he or she is accountable to the beneficiaries of the estate.

Can an executor review an aging parent's bank records?

Recently I was asked whether an executor named in a person's Will (in this case the person happened to be an aging parent) could legally go through the person's bank and tax records.

Assuming the person who named you as executor is still alive, then no you don't have the right to go through any private documents or records. The Will has no legal effect until the testator (person whose Will it is) has passed away.

I assume that if this question is being asked, it's because the aging parent is showing some signs of difficulty in handling his or her financial affairs. If so, you are right to start thinking about how you can offer some help. However, the Will isn't going to do anything for you. What you need is an Enduring (or Continuing) Power of Attorney.

The Power of Attorney gives someone the right to give assistance with financial, tax and property matters while the person is still alive. If there are already signs of confusion or memory loss, it might be a good idea to consider an Immediate Enduring Power of Attorney that will allow the helper to start assisting right away.

Another solution to consider is that some jurisdictions in Canada allow the aging parent to sign an agreement with a co-decision-maker. The difference is that a co-decision-maker makes decisions with the aging parent while an Attorney under Power of Attorney makes decisions for the aging parent. It is best to consider the least intrusive ideas first.

If you need to help an aging parent with finances, take action as soon as possible, because you don't want to allow the memory loss to advance to the point where options are very restricted. If you act quickly, your parent will still be able to make his or her own choice of who they want helping them.

Be sure to consult an experienced Wills and Estates lawyer because you don't want or need a "cookie-cutter" document. You want real assistance for your parent.

What is a "custodial account"?

Banks and trust companies offer a type of bank account known as a custodial account, which more and more people are discovering to be really useful for older parents. The details of the accounts vary from bank to bank, but the general idea is that the bank or trust company manages the account on behalf of your parent.

All of the usual automated debits and credits can be run through the account. The difference is that with a custodial account, the bank or trust company will also take care of othre financial transactions, such as getting your parent's tax return prepared, investing any overage in funds, managing investments, paying bills and notifying your parent when a financial instrument matures and needs to be reinvested.

This can be a really useful solution for a parent who does not handle money well or doesn't want to handle finances. Sometimes this is because of the onset of mild memory loss due to aging, but not always. It can also be useful for someone who has perfect mental capabilities but doesn't want to take care of these matters himself or herself.

For example, a custodial account might be used when a person is widowed, and the spouse who passed away was the one who had always handled the family's finances. The surviving spouse sometimes just doesn't feel comfortable taking over that job. In fact, he or she might find it stressful or even overwhelming to try to learn how to handle the finances, when he or she is already adjusting to the loss of a spouse.

This arrangement is a good idea where a parent needs or wants a bit of help but isn't ready or willing to give power of attorney to anyone just yet. It lets the parent maintain privacy and independence.