Diana Clement: What happens to your dough after you go?

Now our savings live in cyberspace, what happens if you die without telling your family about it? Photo / 123RF

COMMENT:

In the old days relatives often found a shoe box of share and savings certificates when people died.

Now our savings live in cyberspace. So what happens to that money should you die without telling your family about it? How do families know you had that investment or life insurance?

Organisations that carry out business in New Zealand are required to report inactive accounts under the Unclaimed Money Act 1971. That could include a bank, insurance companies, energy provider, accountant, lawyer, rental agencies or employer.

Any money that hasn't been touched must be paid to the Inland Revenue Department.

In the case of bank accounts, it needs to be done within six years for accounts that don't pay interest, or 25 years if they pay interest, says Philip van Dyk, communications director at the New Zealand Bankers' Association.

The good news is that the IRD doesn't get to keep this money if you come forward. It tries to contact owners and there is a list of every sum over $100 on its website.

The money getting to the IRD does rely on companies having robust systems and noticing that you're no longer in circulation.

I phoned Simplicity KiwiSaver's Sam Stubbs, who told me that only three clients had died so far and the executors of their wills had made contact. In a previous life running Tower Investments Stubbs signed off on about 10 cases a year of clients who could no longer be contacted.

I did wonder what happened if you had an online only account with one of the many new-fangled platforms such as Sharesies or InvestNow, which I wrote about recently. They don't send out annual snail mail investment-holding statements.

Any untouched money must be paid to the Inland Revenue Department.

I asked InvestNow's general manager Mike Heath how the platform identifies when clients have died, and the answer is the company subscribes to a service called WillNotice.co.nz.

Heath says: "Our first action is do what we can to protect the assets. The same applies if we are made aware of a marriage split on a joint account. After that we then look at reaching out to the appropriate persons regarding managing the estate."

Stuart Bale from WillNotice says around 100 people a day die in New Zealand. About 90 of those are included in WillNotice's daily update to clients; compiled from newspapers and other information sources such as tribute and funeral directors' websites.

If you die overseas it can be harder for your name to appear on updates to financial providers. If an article appears in New Zealand newspapers about an overseas death, WillNotice picks this up.

Bale says his clients are mainly lawyers, but also include some financial services companies such as InvestNow. The Public Trust and other trustee companies usually have in-house teams to compile their own reports.

I also asked myself how the providers of very obscure investments would track their investors. I phoned Simeon Burnett, chief executive of Snowball Effect, a peer-to-peer crowdfunding platform which enables individuals to invest in fledgling companies that aren't listed on the stock exchange.

Bitcoin will be lost forever if your executor doesn't have the password.

How would these companies know you'd died if they don't pay dividends or send out communications needing response?

Snowball Effect runs a share registry for many of the companies that have raised money on its platform. Burnett says that in many cases an individual's lawyer or financial adviser is aware of the investment and will get in contact on behalf of the estate should their client die.

Stubbs made the point that some people want to hide money; for example in the run up to getting divorced. Some of that money will eventually turn up thanks to the Unclaimed Money Act. If it's hidden overseas, or even in bitcoin, it could be lost to the beneficiaries should the person die.

The moral to the lost in cyberspace story is that even with the Unclaimed Money Act it's essential to make sure you have a will, that your beneficiaries know how to find it, and that whoever will execute your will has a complete list of your insurances and investments.

Include everything. Your PayPal account, overseas holdings and any foreign exchange accounts you hold such as TransferWise, and especially bitcoin, which is lost forever if your executor doesn't have the password.