Administration of the Assets of the Estate – Hull on Estates and Succession Planning #107
Listen to Administration of the Assets of the Estate
This week on Hull on Estates and Succession Planning, Ian and Suzana discuss things to consider when administrating the assets of an estate and point out burdens of being and executor.
Administration of the Assets of the Estate – Hull on Estate and Succession Planning Podcast #107
Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #107 of our podcast on Tuesday, April 8th, 2008.
Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by
Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada, from the offices of Hull Estate Mediation in Toronto, Ontario, Canada. Here are Ian and Suzana.
Ian Hull: Hi Suzana.
Suzana Popovic-Montag: Hi there Ian, how are you today?
Ian Hull: Just terrific, thanks.
Suzana Popovic-Montag: That’s good. We just want to take this opportunity before we get into the substance of our podcast to just remind our listeners that if they would like to leave us a comment, they can feel free to give us a call at 206-457-1985.
Ian Hull: And, of course, feel free to chase down our blog or send in a comment to email@example.com and the webpage hullandhull.com gets you a quick link to our blog which we’re posting almost every day on and had some interesting comments last week from our posts, so feel free to engage in the social media adventure.
Suzana Popovic-Montag: That’s great. Now I know, Ian, that you actually were podcasting solo last week because I couldn’t be here to join you and I thought you did a great discussion of your recent attendance at a seminar. And so I thought what we might do is to, sort of, pick up from where we had left off at the end of our last podcast.
Ian Hull: Well, that sounds great. I do want to say one thing since that podcast was launched into the internet, I’ve had some interesting feedback that seminar was well received. Talked to a couple people that actually were at it and not particular, just what, of course, I said, which was hopefully helpful. But some of the other speakers and the twists that were being put on the whole elder law scenarios that we’re going to be faced with more and more in society. So speaking of society, we have to refocus a little bit this week and talk about some issues relating to the administration of the assets of the estate and our ongoing slug through the burdens of being an executor.
Suzana Popovic-Montag: And we had at the last time spoken about the fact that we were looking at a situation where we suddenly had the Certificate of Appointment in hands, this probate document, and we were looking at some of the things that we take in terms of initial steps as an executor, once that document was obtained.
Ian Hull: So we’ve talked about this in the past and we’ve talked about personal effects, talked about the fact that we think it’s so important to make sure you document it, maybe take a video quickly of all of the personal effects or have some photos or whatever. But once you’ve inventoried it, what do we do about getting the action steps to be taken to actually transfer or sell those personal effects?
Suzana Popovic-Montag: Well, Ian, in accordance with the terms of the Will the executor is going to want to deliver the individual personal effects directly to the beneficiaries who are named in there, and then obtain a receipt from those individuals, so as to have the protection of the fact that that gift or that bequest was made and that it was received by the recipient of it.
Ian Hull: And that receipt can’t go understated in the importance of that. We… I just had an estate that I recently administered and I personally made sure that the jewellery items that were delivered and they weren’t phenomenally expensive jewellery items, but they were very personal items and ones that, you know, the sort of chain of the ring from the deceased to you to the beneficiary is so very important. And a lot of times, I’ll just say to clients, look if you’re the executor, don’t break the chain, so to speak. Once it’s in your hands, make sure that you’ve got full control of it and that you do not release it until you get a proper receipt.
Suzana Popovic-Montag: And then I guess, of course, there’s going to be personal effects that aren’t specifically spoken to and in those circumstances, an executor is going to want to arrange for the sale of those items.
Ian Hull: Absolutely. Now the sale of the items, too, can create its own spicy tension within the administration of an estate. One of the things that I tell my clients is that they want to quickly go on the internet, take a couple of minutes and search out what the sort of the star local sales avenues are. I mean, the classic one is Sotheby’s. But not all of us have, you know, John Lennon pianos to put up for sale. But, you know, Sotheby’s has an operation in Ontario, Ritchies has an operation, Waddingtons is another one. All of these houses are wonderful. They do it so professionally and most of them will do sort of the gambit. If you give them – some of the stuff isn’t worth a lot but some of it is, they’ll often inventory it all for you and give you some help on how to deal with the stuff that is more modestly priced. And then put in up for sale properly and by a third party, so you can’t get accused of messing up on the sale of selling that painting that sat over Grandma’s dining room table for 30 years, for a song. You’ll get the professional advisor telling you what its worth. They have some…like I know I just dealt with one from Waddington’s. They have phenomenal internal resources like experts on Canadian art for certain periods that they’ll bring in and they won’t throw these things into the market, sort of, willy nilly.
Suzana Popovic-Montag: That’s great, Ian. And it’s something certainly to keep in mind because there’s always going to be these things that need to be dealt with. Another thing that I try to remind people of is the fact that once you’re in this stage where you’re actually liquidating or transferring assets, you want to consider also cancelling any insurance on those assets that you’ve maintained up until the time that that transfer is actually done.
Ian Hull: Geez, that’s a good point, you know. I had an estate recently that had a bunch of art and the insurance on the art was almost an overwhelming cost to the estate and the beneficiaries were not happy that it took an extra month to cancel the insurance. So that’s a really good point.
Suzana Popovic-Montag: And I think it sort of follows from the checklist that we’ve suggested that people maintain because it sort of brings you back to think about that and you can take care of it right at that time.
Ian Hull: Okay, so that deals with personal effects. What about cars and automobiles and that sort of thing?
Suzana Popovic-Montag: I think we’re looking at the same kind of situation there where there’s going to either be a transfer to someone who’s actually named in a Will or there’s going to be the arrangements made by the trustee to actually sell the vehicle.
Ian Hull: And again, I guess, your good advice on the insurances on that one as well.
Suzana Popovic-Montag: And so if we’ve looked at personal effects, we’ve dealt with automobiles, then those are usually the big items there. Then we just are left with whatever’s ultimately left there and how we actually go about realizing those last things.
Ian Hull: And liquidating deposits and getting the, sort of, estate bank account established as quickly as possible is crucial. And that, sort of, takes us into what we’ll start to call, I guess, the business side of the estate administration. The one side of many estates that we see the most problems in and that is, dealing with the accounting.
So first of all, setting up the bank account. You need your probate typically, to get a bank account opened. So you’ve got your probate certificate, you go to a bank. You want, I tell my clients to go to a branch that’s convenient to you because you will be surprised how often you will have to actually deal directly with the bank. This isn’t always like us when people are alive, they can do internet banking, they can do, you know, cross-city branch banking, and so on. You want to establish, I tell my clients anyway, to set up an account that is easy for you to get to.
Suzana Popovic-Montag: And once you’ve done that, you also want to think about setting up your bookkeeping mechanism because as an executor or a trustee, you’ve got to maintain very good records so that at the end of the day, if you’re called upon it, you can account to the beneficiaries of the estate or the trust.
Ian Hull: And it’s really at this time that I tell my clients to think about the end game now. You’ve been so careful so far, right from the moment of death or the moment you were told you had the job, you’ve been so careful. This is really the turning point to maintain a level of almost perfection. You have to have receipts for everything, no money can go astray, obviously. But your system is crucial. And if you’ve got a situation where it is likely that you’re going to need to ultimately go to Court and pass the accounts, then now is the time to establish that system early, as opposed to remaking it at a later time when you don’t have all of the information at your fingertips.
Suzana Popovic-Montag: And so, Ian, in terms of advice, how do you usually tell your clients that they go about setting up this mechanism?
Ian Hull: Well, I think they’ve got to get good advice and accountants and lawyers know how to create estate format accounts. And it doesn’t hurt to (a) learn a bit about that and (b) set up a system that can be easily transferred into an estate format scenario. Because the estate format accounting itself is – it can be something that is new to individuals who are not, you know, savvy on this form of accounts. It’s not rocket science, but it is a different form of accounts that you need to consider.
Suzana Popovic-Montag: And my clients are always surprised, Ian, by how different estate accounts are from normal financial statements. And I think that’s part of the education process that we provide to them about how these things are maintained.
Ian Hull: And I think, really, as I say, this is such an important turning point and starting point to the process, that I think it’s worth getting some initial advice on this and it may cost some money, but its all money well spent.
Alright, so now that we’re setting up the bookkeeping, we’re setting up the estate accounts. Let’s talk about, sort of, some of the long-term business aspects of administering this estate.
Suzana Popovic-Montag: In a situation where you’ve got a business that actually had been run by the deceased, in this instance, you’ve got to meet with the estate trustees and create, sort of, a plan going forward of how you’re going to either continue running that business or basically hiring individuals to do that for you as an estate trustee.
Ian Hull: Alright and that, of course, turns us at this point, we’ll wind up because it’s a good turning point in terms of how we will talk about the business side of things and let’s start focusing on some of the investment side that the – what people are going to expect you to be doing with the investments and what you’re expected to do on that front, depending on the estate itself. So I think that’s a good spot to wind up this podcast.
Suzana Popovic-Montag: Okay, and just another reminder to people who’d like to call in and provide us with their comments, to feel free to call us at 206-457-1985.
Ian Hull: And, of course, go to our webpage at hullandhull.com and work your way into it. Feel free to e-mail us at firstname.lastname@example.org and watch our blog. Thanks very much.
Suzana Popovic-Montag: Thanks to you, Ian.
You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
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