By Nick Thiong’o
The passing of laws that have been increasingly zeroing in on institutions such as banks, insurance firms, and pension schemes illegally holding unclaimed assets, has seen the said organisations surrender the fortunes to the Unclaimed Financial Assets Authority (UFAA) to avert legal penalties.
The state agency has in fact announced that it is now holding a Ksh25.9 billion in unclaimed cash and securities. So why are Kenyans not collecting their billions? To date, only a negligible amount has been claimed by the public.
The lion’s share of unclaimed assets in Kenya is often associated with those who have died without a will or without revealing details of their wealth to their kith and kin. Seemingly, we are dominantly occupied with today’s challenges and post-life planning has taken the hindmost seat.
How do these institutions end up with unclaimed funds? The reasons range from a testator (person who has made a will) forgetting to give their correct address or next of kin or they have moved and didn’t inform the bank or investor. This also happens for dormant accounts.
In his book “The 7-Key Steps of Effective Will and Estate Planning Strategy” by Peter Wairegi the author cautions that in the absence of a will, the government decides your children’s legal guardian if both parents pass away. The author further notes that holding companies largely under report unclaimed assets in the absence of a will, and there is a high likelihood of one’s family being disinherited.
The circumstances under which organisations end up with unclaimed assets could be purely accidental. These can range from account holders sharing incorrect address, lack of contact or next of kin, hidden financial assets by their holders and also failure of a corporation to promptly remit refunds, over-payment or dividends to its owners in a timely manner.
However the consequences are dire as the end result of unclaimed funds is that it takes away your wealth and gives it to an unintended receipt; or the wealth is simply lost. While the Unclaimed Financial Assets Act is intended to help return the wealth to the rightful owners or heirs, the process is cumbersome and can be averted by writing a will and putting in place an estate plan.
A quick dipstick survey shows that the twin reasons why Kenyans do not write wills are cultural taboos associated with death and the burden of existential financial challenges. We also lack a sense of urgency on wills and estate planning; while title deeds, birth certificates, and car logs rank high in our list priorities.
However, everyone will most likely end up with an involuntary will written by the courts upon their death. There is no scarcity of case studies that exemplify what happens when one dies without penning a will. There are a myriad of precedent setting landmark cases involving estates worth billions that have passed through the Kenyan courts.
A survey of Unclaimed Property Asset Register put the figure of idle funds held by banks and insurance companies at an estimated Sh200 billion. Holding organizations that were surveyed were found to have a penchant for under-reporting financial assets and deliberately omitting non-financial assets such as land.
Though the Government has taken steps to protect victims of unclaimed funds through enacting the Unclaimed Financial Assets Act 2011, establishing the modalities for reporting and dealing with unclaimed financial assets; information is still scanty on the processes and channels of reclaiming such assets.
However, the Authority has kicked off awareness campaigns to sensitize the public about unclaimed assets as well nudge institutions to return illegally held assets. With UFAA having signed MoUs with regulatory agencies making it compulsory for private firms seeking renewal of their operating licenses for 2018, the amounts surrendered to the agency are expected to balloon further.
Organisations have for a long time been aware that it is illegal hold fortunes that do not belong to them; however they have in the past taken advantage of loopholes to profit from the proceeds of others. Besides loss of unclaimed assets, there is a litany of court cases that have emerged as a result of Kenyans dying intestate. One of the most recent examples is a dispute pitting an 80-year-old widow and her son against her four daughters.
The quartet file a suit in the High Court challenging the award of their late father’s wealth valued at Sh500 million, to their mother and their brother 35 years ago. This after the father, Peter Mondo, died without planning his estate or leaving a written will.
Undoubtedly, the benefits of estate planning far outweigh the issues that arise when people die intestate; often this begets long-drawn family feuds that bring empires built on decades of blood, sweat and tears, tumbling down.
The benefits of estate planning on the other include tax benefits, right to life choices in regard to medical directives, burial arrangements and ensuring one’s estate survives. Few people plan to die in the near future but if you die suddenly without a will, you will be subjecting your family to a confusing and anxious experience over what is already a very difficult situation.
The writer is a strategic communications consultant based in Nairobi.