Diana Clement: Don't let your money vanish when you go

Pity the poor relative who has to trawl your house for paperwork if you die suddenly.

Most people's paperwork is a dog's breakfast when they die. That's especially the case for someone who dies before his or her time or has suffered dementia in the years leading up to death.

Virtually no one follows best practice advice of having everything documented from their bank account numbers to lists of who they'd like contacted on their death. Even if you've prepared such a list, do your relatives know where it is?

The idea for this article came from a conversation with a 50-something friend about where he kept his will. "What will?" was his answer.

That's an altogether different article. But it occurred to me even if you have a will, your relatives need to know where it is and what assets or debts you have.

When someone dies, it's not uncommon for relatives to walk into the Public Trust or their lawyer's office with boxes of papers.

They've scoured the house for anything that looks like it might be a business paper, says Andrew Walter, solicitor at Graham & Co in Mt Eden.

It's easy for an account or investment here or there to be lost - although the balances will eventually find their way to the Inland Revenue Department's unclaimed money service.

Solicitors will be happy to take your box or suitcase and make contact with the financial institutions that may or may not still hold accounts for the deceased. But it's going to cost you.

Even worse than the suitcase-bearers, says Walter, are the relatives who, through grief, can't even face sorting through the papers.

What's more, you don't know what you don't know and, sometimes, lost investments such as these may surface years after a person's death when a letter from the company arrives out of the blue.

They may have won a small prize in Bonus Bonds or the company may simply be trying to sell the deceased person another product.

After drinking coffee with my will-less friend, I picked up a Spicers' customer magazine serendipitously and found an article about InfoCapsule, a personal electronic storage device to record information not normally included in your will or other legal documents.

InfoCapsule is a great idea and, at only $41.10, it's not going to break the bank. It is quite simply a series of templates on a memory stick.

It includes categories of information that you may not have considered to record - such as the actual location of important documents, sports club membership details, addresses for people you'd like contacted on your death and even email passwords.

Ted Walker, founder of InfoCapsule, said one of his friends found that her deceased husband had a TAB account she didn't know about and it contained some winnings.

Another relative had had an insurance pay-out which no one knew about. That turned up a few years later on the Inland Revenue Department's unclaimed moneys website.

Old-fashioned pen and paper works for some people. Another approach to a personal information vault is to fill in a Word template or PDF and print it off. I scoured the internet and found such a template on the Eglin Air Force Base website at http://tinyurl.com/24bqa7u.

I also discovered that the ASB has an online vault for its customers to record personal information. It's only available to you, but you could print out a copy of your information and store it in a sealed envelope with someone close to you.

The ASB told me this week that it would consider making the information available to executors if it received a "specific request relating to a customer".

For your papers, you can get a safe deposit box or store documents in safe custody with your bank. Annual fees are from $14 for a small envelope to $100 for a box. But make sure you have a friend or relative as the co-signer.

It mightn't be a bad idea to store your InfoCapsule or printed records with your solicitor, although that makes it difficult to update each year.

Whatever method you choose, don't divulge online passwords for bank accounts or investments even to your closest relatives.

One common problem when people die - especially unexpectedly - is finding the will and ensuring it is the most up-to-date or "last" will.

Solicitors and trustee companies keep an eye on the death notices, says Angela McPherson, the Public Trust Orewa customer centre manager. Sometimes relatives call the Public Trust itself on the off chance of finding a will for a deceased person.

Once dead, the process is that any powers of attorney cease and your executor/s and trustee take over the management of your affairs and the distribution of your estate. The executor/s is often your lawyer or the Public Trust. But it can be anyone you name in your will.

If you don't have a will, you're said to die "intestate" and someone must apply to the High Court to be the "administrator" of the estate.

Rules of how the estate will be distributed are set out in the Administration Act 1969.

The executor's role is to make sure the wishes of a loved one are carried out and to go through the probate process (the process of certification that a will is authentic and valid). The trustee's role is to distribute the assets.

The stages in the estate administration process are:

* Agreeing on a plan of administration.

* Confirming assets.

* Getting court approval.

* Dealing with the paperwork such as closing bank accounts and settling debts, expenses and taxes.

* Distributing the estate.

* Accounting for everything.

Many families are saddled with the cost of a funeral before receiving assets from the deceased. Usually life insurance policies are paid out to the owner, which means they're tied up with the estate until probate is completed.

In the meantime, your relatives will have to pay for your funeral, although either Work and Income or ACC can provide financial assistance for a funeral in certain circumstances. The Public Trust Act 2001 allows that organisation to close a sole named bank account to pay for funeral costs before probate.

Many people choose to take out funeral insurance in their lifetime or have a funeral trust, which pays out on their death. Funeral insurance pays out to a named beneficiary as soon as a death certificate is produced.

There can be hiccups, which can slow down the distribution of assets, such as the will being contested. McPherson says people usually have up to a year from probate (which usually happens about four to five weeks after death) to contest a will. The period can be longer in special circumstances - such as a special needs child contesting the will.

In most cases where a will is being contested, this will come to light soon after the death, says McPherson.

"If we have been advised of a potential claimant, we will not be in a position to distribute [assets] until the claim has been settled."

Introductory details of how to contest a will can be found at: www.howtolaw.co.nz/html/ml110.asp.

The Whitireia Community Law Centre has an excellent Guide To Death, Funerals and Small Estates, which can be found at: http://tinyurl.com/23g3ygh. It covers issues mentioned here as well as others such as registering the death and the role of the personal representative.