It was Steven Hawking who said: “Illusion of knowledge is the greatest enemy of knowledge; ignorance is its second greatest enemy.”
The challenge is that we don’t know what we don’t know, and many people are uncertain when it comes to their assets, so it’s worth keeping Steven’s words in mind when it comes to asset discovery within estate administration.
In 2024 we undertook a survey of 2000 consumers in Canada and found that:
- 21% of people can’t easily locate or do not know the whereabouts of Registered Savings and investment plans.
- 38% can’t easily locate or do not know the whereabouts of shareholders certificates or bonds.
- 25% can’t easily locate or do not know the whereabouts of life insurance policies.
- 31% said they would not be able to locate all of a spouse’s assets (or didn’t know), although this reduces to 15% for over 65s.
- 27% have not informed next of kin where accounts are. In the 65+ demographic this reduces to 18%.
These findings indicate that many heirs are being left without inheritance because of poor estate planning, contributing to an increasing number of unclaimed assets across Canada. We estimate there could be up to $6 billion unclaimed assets in Canada. This includes savings and chequing/current accounts; bank drafts, certified cheques, official cheques, money orders, traveller’s cheques, credit card balances, term deposits, guaranteed investment certificates (GIC) and depository receipts. While many Canadian provinces have escheatment processes for dormant bank accounts, there are also other assets and liabilities to consider such as pensions, investments and insurance policies.
Research cited by HGR Graham The Urgent Need for Estate Planning Among Canadians Aged 25-44 | HGR Graham Partners LLP supports our findings and further suggests that an average 16% of people do not know the value of their estate.
Property
The rise in house prices now means property is usually one of the most significant assets within an estate.
Interestingly, we found that almost 1 in 3 (27%) people think their estate is worth less than $50k. This is questionable as it is unlikely to be representative. Research from Statista Research Department, published in February 2024 confirms that about two in three (68.6%) of Canadians lived in an owner-occupied home in 2022. With the average house being worth $720,000 it would seem that again there are challenges with identifying the full extent of a person’s assets – even the assets they are fully aware of.
Digital Shift
The shift to digital documentation has exacerbated the issue of asset discovery. We found that, overall, 49% store documents as paper/digital and 27% store digitally. In the over 65 age group 50% store paper/digital, 12% digitally only. This confirms that due to the digital shift, younger people are less likely to have a paper trail and the challenge of asset discovery is only set to become more difficult as younger generations age and pass away in the future.
Estate Planning
With an aging population in Canada (18% over 65), lack estate planning could lead to contention and litigation. However, as well as uncertainty about assets, Wills are also an issue.
Our own research study also found:
- 48% do not have a Will, 20% said they do but it’s out of date.
- In the 65+ demographic this is lower. 23% don’t have a Will BUT a slightly higher percentage say it’s out of date. (23%)
While most Canadians will understand how planning can ensure their wishes are carried out properly when they pass away, it is clear that many are unprepared. Awareness of the consequences of not having a plan has not translated to action.
RBC Wealth Management discussed why this may be the case in this interesting article:
Estate planning: Report reveals many Canadians are not prepared – RBC Wealth Management Challenges range from misconceptions about estate planning to not knowing where to start.
Help for Lawyers
Regardless of the reasons behind lack of planning, the absence of certainty about assets present challenges for Lawyers instructed to establish all the assets within an estate. At Estatesearch we understand the scale of the problem and are here to help support due diligence processes in identifying estate assets. Our asset and liability searches specifically tailored for Canadian estates, often identify unknown bank accounts containing thousands of dollars, and these searches help lawyers to obtain a fuller picture of the estate and rightfully distribute funds to the beneficiaries. We help lawyers avoid missing assets which are not accounted for in the Will, something that could lead to unnecessary additional legal costs, tax recalculations or in the worst-case scenario, estate disputes and litigation.
We hope the results of our research and this article is helpful to inform professionals about the challenges and solutions available to support their due diligence processes in identifying estate assets.