If Something Happened Tomorrow, Would Your Family Know Where the Money Is?

A strong financial plan can fail your family if nobody knows where the accounts, insurance, debts, and important documents are.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published September 29, 10:30 am EDT

Your family may know your phone password, where you keep the spare keys, and which drawer contains the passports. But would they know where your Registered Retirement Savings Plan (RRSP) is?

That question becomes important fast if you die or become unable to manage your finances. A family can have plenty of money and still face a mess if nobody knows which accounts exist, which bills need paying, or who has authority to act. The fix isn’t complicated. It just needs to happen before anyone needs it.

farmer watches cornfield as sprinklers irrigate water — Source: Getty Images

Make a map

Start with a financial inventory. List bank and investment accounts, RRSP, Tax-Free Savings Accounts (TFSAs), Registered Education Savings Plans (RESPs), pensions, mortgages, credit cards, insurance policies, and major recurring bills.

You don’t need to hand everyone your passwords. Your spouse, executor, or another trusted person should know where to find the information and how to identify the institutions involved. Beneficiary designations deserve a check too. A will doesn’t automatically solve every account issue, and estate rules differ by province.

The federal government recommends preparing or updating a will and choosing an executor who can handle financial responsibilities. Executors may eventually have to locate assets, repay debts, file tax returns, and distribute what remains. That job becomes harder when step one is figuring out whether an investment account exists.

Plan for before

Death isn’t the only scenario worth preparing for. An accident or illness could leave someone temporarily unable to manage bills or investments. That’s why a current power of attorney for property or equivalent provincial document can matter.

The rules vary across Canada, so the documents should match the province where you live. The goal isn’t giving somebody control today. It’s making sure the right person can act if you can’t. A one-page financial summary updated once or twice a year can do more for your family than another complicated spreadsheet nobody knows exists.

The same idea applies to investing. A portfolio containing dozens of tiny positions, old employer plans, forgotten accounts, and overlapping exchange-traded funds (ETF) can become difficult for someone else to understand. Consolidating accounts where appropriate and building around understandable Canadian blue-chip stocks can make long-term finances easier to manage without abandoning diversification. One example is Bank of Montreal (TSX: BMO).

BMO

BMO operates Canadian and U.S. banking, wealth management, insurance, and capital-markets businesses. It isn’t exciting to explain to an executor, and that’s part of the appeal.

The bank’s latest quarter showed improving operations. Third-quarter adjusted net income increased 19% year over year to $2.86 billion, while adjusted earnings per share (EPS) climbed 22% to $3.96. Canadian personal and commercial banking adjusted net income increased 15%, while adjusted U.S. banking earnings rose 11%.

That improvement is useful because BMO has spent years working through its large Bank of the West acquisition. Improving U.S. profitability remain the central piece of that improvement. BMO also pays a quarterly dividend of $1.71 per share, or $6.84 annualized. At $240.39, that’s a yield of about 2.8%. For investors building long-term wealth inside a TFSA with available contribution room, those eligible dividends and future gains can compound tax-free.

Considerations

I wouldn’t confuse simple with cheap. BMO’s fair value currently sits at $197; therefore, at today’s $240.39, the stock trades well above that estimate. Fair value is an analyst opinion, but it puts the recent rally into perspective.

BMO also needs its U.S. business to keep improving, while credit losses remain a risk if Canada’s economy weakens. The bank recorded $722 million in provisions for credit losses last quarter. That makes BMO a stock I’d build gradually rather than chase.

Bottom line

Good financial planning isn’t only about accumulating more. It’s also about making sure somebody else could understand what you’ve built.

A current will, the right legal documents, a list of accounts and insurance, clear beneficiaries, and a portfolio your family can identify can prevent money from becoming another problem during an emergency.

Your investments should make your family’s future easier. Not require detective work to find them.