For high-net-worth individuals, wealth is rarely static or simple. Over time, assets accumulate across multiple banks, investment platforms, jurisdictions and structures.

Accounts are opened, investments are made and interests are acquired, some of which may later fall out of active use or awareness.

However, without robust record-keeping, even valuable assets can become difficult to identify, access or recover, as Jo Summers, Partner and Head of Private Wealth & Tax at Jurit LLP, explains in a recent article for the STEP Journal about handling dormant assets.

Poor asset records may not present an immediate issue during a client’s lifetime, but it can create significant complications for families and advisers following death. Indeed, it is one of the most common, and avoidable, causes of delay, cost and uncertainty in estate administration.

When assets cannot easily be found

Executors and professional advisers frequently find themselves trying to piece together incomplete information about what the deceased owned, where assets were held, and which institutions were involved. This challenge is amplified where assets were acquired many years ago, held in different names or spread across several jurisdictions.

For internationally mobile families, the position is often more complex still. Different countries have different legal systems, disclosure requirements and approaches to unclaimed or dormant assets. Without clear records, estates may face prolonged administration, increased professional fees and, in some cases, the permanent loss of assets.

Information deadlock in asset discovery

In England and Wales, if you write to a bank explaining you are a Personal Representative (PR) or are a professional acting on behalf of the PR, banks are obliged to tell you what assets they hold for that client and the balance of any accounts as at the date of death.

Of course, this relies on the PR knowing which bank(s) to contact in the first place. If the PR doesn’t know the deceased held an account at a particular bank, the account could be missed.

From a financial institution’s perspective, matters are no clearer. If a customer ceases contact, the bank or investment provider may have no way of knowing why. Has the customer simply moved, lost capacity or sadly died?

There is no system requiring banks to spot that a customer has died, or to write proactively to that customer’s PRs with relevant information. You only have to look at the number of companies that specialise in financial asset searches, to see quite how big the problem of ‘missing’ assets really is.

And other countries may have different rules, which means they won’t release information at all until they have proof of who inherits or who has authority to deal with the estate.  This would make it even harder for a PR to locate all the assets that the deceased owned.

Dormant accounts and statutory schemes

To address this issue, many jurisdictions have introduced legislative frameworks to manage dormant or unclaimed assets.

In England and Wales, the Dormant Assets Scheme allows banks and other institutions to transfer qualifying dormant assets to Reclaim Fund Ltd, a body established by HM Treasury. Crucially, the owner, or their estate, retains the right to reclaim the asset at any time.

Comparable regimes exist in a wide range of jurisdictions, including Jersey, the Cayman Islands, Australia, Canada, France, Italy, Luxembourg and the UAE. While the detail varies, the underlying policy aim is consistent – to deal responsibly with assets where owners cannot be traced, while preserving ownership rights.

Nevertheless, reclaiming dormant assets can be time-consuming and administratively burdensome, particularly where supporting documentation is limited.

Physical assets and the Crédit Agricole case

A recent English court decision illustrates the difficulties that can arise where assets are held physically rather than electronically.

In Crédit Agricole Corporate and Investment Bank v Persons, the court considered how a bank should deal with 14 safety deposit boxes that had remained untouched for between 44 and 122 years. Despite extensive enquiries, the bank was unable to identify or locate the owners or their successors.

The court confirmed that where owners are unknown, banks may proceed without naming individual defendants and, in certain circumstances, may be authorised to sell the contents of the boxes once reasonable steps have been taken to trace the owners. After deducting reasonable costs, the remaining proceeds were paid into court.

While the facts of this case were extreme, it serves as a cautionary tale. Where assets are poorly documented or forgotten altogether, even reputable institutions may ultimately be required to take steps that remove assets from the owner’s direct control.

Practical steps high net worth individuals can take

There is a clear lesson here around the importance of maintaining transparent, up-to-date asset records.

As part of good wealth stewardship and estate planning, you should consider:

• Maintaining a central, regularly updated record of assets
• Including bank accounts, investments, private company interests and physical assets
• Recording institutions, account numbers and key contact details
• Documenting overseas and legacy holdings that may no longer be actively managed
• Ensuring that executors and trusted advisers know where this information is held

This relatively simple exercise can reduce delay, cost and distress for families significantly, and help ensure that assets are not overlooked or inadvertently treated as dormant.

For individuals with complex or international wealth, asset record-keeping should sit alongside wills, trusts and succession planning as part of a coordinated private wealth strategy.

If you would like to review your current arrangements or discuss how best to document and safeguard your assets for the future, Jurit LLP’s Private Wealth & Tax team would be pleased to assist.

Read the full article from Jo Summers TEP in the STEP Journal.