Let the Records Show

The purpose of this book is twofold. First, it will offer the non-accountant a step-by-step guide, providing the tools necessary to efficiently and confidently perform the financial record-keeping duties of either a) an attorney acting under a continuing power of attorney for property (or similar document), or b) an estate trustee (executor) acting under a will (or an estate administrator acting in the absence of a will). Second, it will provide brief and practical explanations of many of the legal aspects related to the accounting duties of an attorney/estate trustee, without the legal terminology that can often lead to exasperation and unnecessary worry. With over 50 years of experience between us in accounting and legal practice, we have had many opportunities to assist people in understanding the record-keeping responsibilities that come with looking after someone else’s money, either because they are an attorney under a power of attorney or an executor under a will. In our respective practices, we have kept a practical focus on assisting clients with estate planning and management issues leading to and ensuring client-centred solutions. The need for this book became apparent after being engaged numerous times to prepare and present formal schedules of financial activity (“accounts”) for submission to the court during estate litigation. There were a number of similarities between the cases with respect to the accounting challenges that had to be overcome in order to prepare accurate and comprehensive accounts to satisfy the court. For example, missing documentation, conflicting information supporting the whereabouts and treatment of some assets and liabilities, and/or questionable activity in numerous bank accounts not owned by the person for whom financial affairs were being maintained—all provided points of contention during the course of litigation. Indeed, most of the litigation was fuelled, if not caused, by a lack of proper record keeping, which would have provided timely, accurate and transparent information without the need to resort to the costly and time consuming process that is estate litigation. Estate litigation teaches many lessons, and one of the most fundamental lessons is that there is a gap between the requirements provided by the legal statutes governing both power of attorney and estate trustee financial record keeping and the practical aspects of maintaining these financial records. In other words, the law requires that you keep certain records, but it does not tell you how to go about keeping those records. Moreover, specific record-keeping requirements contained in various statutes and regulations governing this area appear to make little sense to the average, non-legally and non-financially trained individual. However, upon a closer look at what is really required, one discovers that essentially what is being asked for are itemized lists and the proper management and recording of the items on those lists. As most of the items on these lists are of a financial nature, generally accepted bookkeeping practices must govern the creation, maintenance and presentation of these lists no matter in which province one lives. Again, the average lay person finds that they are in a world where the terminology, both accounting and legal, is outside their usual vocabulary—such words as debits, credits, financial instruments, dispositions, adjusted cost base, transparency and fiduciary are all terms that do not make up everyday conversations. There is also a notable deficiency of tools available offering practical guidance on how to maintain financial records that will help them meet the legal requirements of completeness and presentation. Although some information is available in a number of legal texts dealing with estate management, one must either painstakingly extract it from detailed discourses on the legal requirements or be fortunate enough to read the appendixes first and come across, at the very most, a checklist. At first glance the checklist appears to be very comprehensive, but at best it ends up being general and tells you what your duties are. This of course is important, but the checklist does not tell you how to deal with the practical aspects of recording and keeping account of the financial information required to properly fulfill your duties. This book will provide the reader with the how to of their financial record-keeping obligations, demystifying and simplifying accounting terminology and the related work processes associated with creating a complete and proper information trail that will satisfy both legal obligations as well as responding to any requests for information from appropriate parties. At the same time, this book will also provide a concise, legal context aimed at clarifying the basic obligations related to the financial record-keeping duties of an attorney and/or estate trustee to help the reader better understand the importance of those duties. Ultimately, it is hoped that anyone reading this book will find the necessary instructions and encouragement to perform financial record-keeping duties in such a way that the costly and stressful event of estate litigation never occurs. Who Will Find This Book Useful? Most people will find many of the elements of this book useful and a worthwhile investment, including: • People who are maintaining, or assisting to maintain, the property and/or financial affairs of a relative or friend, regardless of whether they are acting under a formal Power of Attorney. • People who have just been made aware that they are an attorney or are named as an estate trustee under a will or appointed as an estate administrator by a court order. • People who are contemplating making a Power of Attorney or a will can find this book useful to gain a better understanding of the type of information that the person they are thinking of appointing as their attorney or estate trustee will require in order to perform this task. • People who are acting as an attorney for personal care or who have been appointed by the court as guardian of the person will also find this book useful, because it will explain why the attorney for property must have certain information and the importance of why the attorney for personal care or guardian must be willing and able to provide that information in a timely and accurate manner. • People who are acting as an attorney or estate trustee with others will find this book invaluable to help all attorneys or estate trustees understand their legal record-keeping obligations regardless of whether acting jointly (together with another) or acting jointly and separately (acting independently). • Lawyers who prepare CPOAPs and provide estate administration advice to attorneys and executors will find this an invaluable tool. • People who have recently acquired the honour and duty of being an estate trustee will find this book useful because it provides a step-by-step approach to identifying and obtaining all the required information to assist them in executing their legal and fiduciary obligations with respect to record keeping and accounting to beneficiaries and potentially the court. • Finally, anyone who will eventually die (and alas, that is all of us) will find this a useful book. It will identify what information your surviving relatives or friends will need in order to wind up your affairs and distribute your estate as you have indicated in your will. The material covered in this book is presented to allow the reader to identify the sections most relevant to them and proceed accordingly.