By Peter Lillico
A letter from his bank reminded Matthew Shaw that one
of his Guaranteed Investment Certificates (GICs) was
coming due. But Matt, 80, shook his head at the low
re-investment rate, mentally calculating his diminished
On the way to his bank the next day, he noticed that
another financial institution was advertising its GIC
rates at .5 per cent higher.
At his own bank, Matt pointed out the competitions
rates, but representatives said the rates were set by
head office. So for the first time in his life, he took
his business down the street.
You Cant Take It With You
A couple of years later, Matt went to his reward. His
children, Peg and Mac, were his executors and beneficiaries.
Peg and Mac did a very capable job of selling his condominium,
liquidating his investments, dealing with taxes, paying
bequests to charities and ultimately dividing the estate
assets between themselves, just as Matt had wanted.
Another bank letter arrived a year later, at Matts
old condo. The new owner glanced at it. It was from
Matts new bank, reminding of an imminent renewal
of the GIC. Peg and Mac, for all their expertise, had
never thought to check the bank down the street. Why
would they? In his papers, there was no bank book or
other record of the transaction, nor any cancelled cheque
to tip them off about the purchase. Their dad had always
dealt exclusively with his own bank, so far as they
knew, and he had never mentioned a change to them.
The new condo owner dropped the bank letter in the
wastebasket along with the junk mail. The GIC would
never be renewed, and Peg and Mac would never see this
part of their inheritance. Poor Matt, if he but knew,
would be gnashing his teeth.
Now You See Them, Now You Dont
If you think this story is unlikely to happen to you
or your family, think again. Every year, by law, millions
of dollars from unclaimed bank accounts end up with
the Bank of Canada. But its not just accounts
that are at risk: so are unclaimed or overlooked term
deposits, Guaranteed Investment Certificates, Canada
Savings Bonds, uncashed bank drafts, certified cheques,
money orders, safety deposit box contents, even positive
balances on credit cards. According to Bank of Canada
statistics, more than three quarters of a million Canadian
investments are unclaimed and outstanding. We are not
talking about loose change here, either. At the end
of 2001, some $168 million in lost inheritances were
in the Banks coffers!
How does this happen? Why would people walk away from
their own money? In some cases, no doubt, the owner
has simply lost track of or forgotten about a bank account,
perhaps when moving from one community to another. Another
explanation is a loss of mental capacity by an owner.
If so, the investment and asset information can be very
difficult to piece together by others. Its likely
that many unclaimed balances arise when, as in Matts
case, a family member has passed away and the executor
is not aware of the existence of an account or investment,
so never looks for it.
No matter how the inactivity arises, federal law requires
the original bank to send a reminder letter to the owner
at his or her last known address after two years of
no customer transactions. If there is no response, another
letter is sent at the five-year point. This will normally
be sufficient to jog the memory and lead to recovery,
but not always.
If the owner has moved without a forwarding address,
or becomes incapable, or has died, the reminder letters
will not be of much practical use.
After nine years, a third reminder letter is sent,
and finally, after 10 years of no owner activity or
response, the funds are sent by the customers
bank to the Bank of Canada. There, all amounts over
$500 are kept indefinitely, until claimed. Amounts under
$500 are retained for a further 10 years (20 years in
total, including the time at the customers bank),
but then these smaller amounts are forfeited to the
Charity Begins At Home
No doubt the government is very grateful for the forfeited
loot. Most citizens, however, would much prefer to have
their own hard-earned moneys, large or small, remain
with their loved ones. There are several steps to take
to avoid gifting the federal government with the family
Avoid The Squirrel Syndrome
The best way to prevent forfeiture of your money is
to not lose it in the first place. Many of us have several
bank accounts, some of which may be relatively inactive.
Often people deal with more than one financial institution
for investment, either to take advantage of preferable
rates or to avoid having all eggs in one basket. There
is nothing wrong with this, but, like squirrels mislaying
their winter trove of nuts, people do lose track of
Simplify your life. Reduce the number of your bank
accounts, consolidating several small scattered investments
into fewer, larger ones. Arranging for bills to be paid
by automatic withdrawal and for pension and other income
moneys to be deposited directly makes life easier, and
leaves a clear paper trail for others to follow.
This easy and inexpensive step pays a big bonus. You
will benefit by reducing the amount of time and effort
writing and depositing cheques, reading statements and
reconciling accounts. Your executors will bless you
for making their job easier and more certain. Finally,
your beneficiaries will be relieved that parts of their
inheritance will not be diverted to the Bank of Canada!
Keep The Family Informed
Every family has its secrets, but where you bank and
invest shouldnt be one of them. You should let
your family know, at least in general terms, of these
matters. This is particularly important if you change
financial institutions or start working with another
investment adviser. If you dont share the information,
you run the risk that valuable assets may go unclaimed.
Words To The Wise
If youre prudent, youll write down a brief
but thorough record of your financial institutions and
accounts. You dont need to specify account numbers
and investment particulars, since these may change.
You do need to identify the branch of the banks you
deal with, and the name and address of any financial
adviser who manages your investments. Keep this list
in an accessible place, such as your desk drawer, file
cabinet, or bedside table. There you will see it now
and then, and be reminded to update it as needed. As
well, your attorney (under a power of attorney, if you
become incapable) or your executors (by your Will, if
you pass away) will locate it sooner rather than later.
This will save them time and reduce the risk of overlooking
an important asset.
Executors and attorneys have a crucial role to play
in preventing forfeiture, too. If you are settling an
estate and are not 100% certain you know where every
bank account and investment might be, then its
Go over previous bank statements carefully for
account activity. A direct deposit item might be simply
a pension payment, but it could also be a clue to the
existence of an investment that is paying interest automatically.
Review past tax returns for income information.
T5 information slips will tip you off as to income received
and from what source, even from an investment that may
not come due for several years.
Normally, mail is redirected by Canada Post at
the request of the executor or attorney for a period
of 6 months. This may be too short a time for tax information
slips, investment records and bank reminder letters
to be sent out. Allow for at least one year from date
of death or incapacity to be certain you know all there
is to know; two years is even safer.
Check with the Bank of Canada when you take over
as executor or attorney to find out if there are any
unclaimed accounts waiting to be recovered. Check again
after 10 years if you did miss an account or
investment initially, the Bank will return it to your
tender care upon request. (See sidebar: Getting Your
Dont Be A Loser!
Elephants aside, no ones memory is perfect. Whether
you are an executor for an estate, are acting as attorney,
or are simply concerned that you may have left some
money behind you on your travels through life, dont
be a loser. Check with the Bank of Canada to locate
any lost inheritance or leftover loot. It wont
cost you much in time or money, and the governments
loss may be your gain!