Until fairly recently, being you and the owner of most anything meant having pieces of paper (besides the physical structure) that might be stamped, transferred, photographed, almost encased in bronze to prove that you (and your family) are who you say you are and that what you own is legally titled correctly. Even with the advent of electronic storage, the supposedly paperless society the amount of documentation that we must keep filed (and assumed in a safe place) is still lengthy.

Paper work is for later. Some people are extremely conscientious at documenting their existence, insisting on verifiable proof of everything; the rest of us find paperwork tedious. And some really loathe dealing with the endless paper stream: bank statements, investment lists, utility bills, cable bills, land tax statements, share certificates, passports, pension reports, insurance policies and bills, title transfers, wills & trust documentation, and so on. Very often, these documents only rate a passing glance before being relegated to the "I'll take care of it later" pile.

And life goes on, the 'taking care of it later' part gets put off for months, sometimes years, many years.

And then there comes a day when some asset must be sold, make that very quickly. Case in point, an individual inherits share certificates in physical form for an S&P 500 Index company. The individual is retired, needs the money now, and sees an opportunity to cash in while the stock is at a market high. Seems easy, right? Just pick up the phone and order a sell.

Lack of Title Documentation = Loss of Liquidity.

Three rather large problems almost overwhelmed this case. The shares were held jointly in physical certificate form, and the individual was not sure where they were or how many shares they actually owned. Only one of the shareholders was still alive, the other having passed twenty years ago. The degree of effort and time needed to prove that this Bermudian citizen had existed to a US shareholder services firm was extensive. Meanwhile, the market value of the stock started to drop, drop, drop. Five months later, clear title is assured. The stock is sold, at a 30% discount to the previous market value. "I needed all this money for my retirement", the survivor says.

Naming the right names.

Over the years of working in the investment area, I have seen cases after cases of lost, misplaced, incorrectly or incompletely transferred asset titling. The recent Bank of Bermuda amalgamation was another instance where many clients had to find their assets in order to receive their sale proceeds. At least, with that particular process the sale proceeds values were fixed. Here are some interesting archived cases, accompanied by original comments made at the time. Please note that these cannot be attributed to any one client source:

? "Share certificates, haven't seen them for years, we don't have a clue where they are." From a client who spent months searching for certificates, only to finally dig out an investment statement to see all his shares listed as book stock. One wonders how often he paid any attention to his investment performance!

? "I'm terribly upset, I can't find our share certificates, I think I burned them in the wood-stove by mistake." When an elderly client told me this one winter in New Hampshire, I never understood why he would have valuable papers anywhere near a heat source!

? "We intended to get these transferred out of our parent's name, but couldn't agree on how to do it, so we just kept putting the dividend cheques in our account." - from some nice beneficiaries who had been walking around with a substantial liquidation cheque for a year - unable to cash it. Those little dividend cheques had slipped through, but a large cheque issued to a deceased person, dead some ten years was not going to pass many tellers' scrutiny.

? "I don't know why you are calling me about these shares, they are in a trust and the trustee takes care of this." - comment from shareholders whose shares were listed in their own names years after the trust was formed. One wonders what sort of trustee they picked to provide them with such due diligence and fiduciary responsibility.

? "What do you mean, my ex-wife has to sign for these share redemption proceeds? " This from an individual who had been divorced for 6 years, but the ex-spouse was still listed as a joint shareholder."

Ownership (and beneficiaries) of real estate, life insurance, pension benefits, annuities, valuable personal property, trademarks, patents, bank & investment accounts, etc. should be reviewed by all family members who have a vested interest to be sure that they are titled appropriately.

? "My ex-husband's banker has notified me that I am the beneficiary of his individual retirement account." - from a former client who flatly stated that she had had an acrimonious divorce. Seven years later, he died, never bothering to change his pension beneficiary to his new family. A contract is a contract and cannot be broken, even in a court of law. In this case, the client was close to destitute who says pennies don't come from heaven (or, er, the other place)!

? And worst cases, more common than you think, the male spouse dies prematurely. His wife finds out that their home is: a) either still titled in his parents' name and they evict her, or b) their home is titled in his name, the beneficiaries are his family only and they evict her, or c) their home is titled in his name only and he recently leveraged all the equity into a huge mortgage, so she has to sell, or d) he has not changed his life insurance policy beneficiaries from his then young children who are now adults, and refuse to share any of the proceeds with her.

Review titles of assets periodically to be sure they reflect your all of your wishes. And remember that when financial decisions are made in isolation, everyone loses.

Martha Harris Myron CPA/PFS CFP? is a Bermudian, and VP, Investment Centre, Bank of Bermuda. She holds a US NASD series 7 license and formerly owned a US financial services practice meeting the needs of 400 individual and corporate clients. She can be reached at 299-5578, or confidential e-mail can be directed to marthamyron@northrock.bm

The article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda.