Dealing with Estate Planning – Hull on Estates and Succession Planning Podcast #116
Listen to Dealing with Estate Planning
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss dealing with estate planning and encouraging everyone to draw up a will.
Dealing with Estate Planning – Hull on Estate and Succession Planning Podcast #116
Posted on June 10, 2008 by Hull & Hull LLP
Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #116 of our podcast on Tuesday, June 10th, 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: Terrific, thanks.
Suzana Popovic-Montag: That’s good.
Ian Hull: So, remember, of course, to everyone that we can attend to and listen for your call-ins at 206-457-1985 and we welcome any call-ins to our podcast.
Suzana Popovic-Montag: And also if you’d like to send us an e-mail, our e-mail address, just to remind you, is firstname.lastname@example.org, or you can visit us, of course, at our blog at estatelaw.hullandhull.com.
Ian Hull: Well, Suzana, last week we were working on this, I think I called it “Setting up the Perfect Set of Accounts”. And we ended the podcast with a discussion on capital encroachments which I’d like to, if we can, sort of close the loop on that issue a little bit today if we have time. But before we go into that, we are the recipients of, the proud recipients of, and grateful recipients of, various newsletters that come in. And one of the newsletters that comes in from Fiduciary Trust Company of Canada. And this is a really interesting group and I highly recommend that you look into them as a possibility to help assist you in your estate planning matters. It’s fiduciarytrust.ca. There’s a great group of people there that we know of and we’ve worked with over the years. And, of course, you know, from that perspective, they’re a great resource. And they send out a newsletter. And I just thought, Suzana, you and I thought we might talk about the spring 2008 newsletter. It was from Issue 2, Volume 5 which we are going to get scanned and put onto our webpage so that people have access to it. But, we wanted to talk for a few minutes about what I thought was a really interesting topic. And that is dealing with estate planning and how to encourage everyone to draw your Wills. Because we’ve talked about it in the past, the nightmares that arise out of a situation when someone dies without a Will. And this is an interesting article which talks about six ways to stall estate planning.
Suzana Popovic-Montag: And I highly recommend it to people, Ian, because the whole, the way that it’s written is very, very easy to read and it just highlights the fact that people of all ilks in life are dealing with the same kind of issues, perhaps on different scales and perhaps with different complexities. But these are all basic issues. And I even like the title of this, in terms of turning into the negative, ‘Six Ways to Stall an Estate Planning’ as opposed to, you know, why we should go ahead with it. It’s just a neat, easy read and very, very informative.
Ian Hull: And they pick up on a statistic that I typically throw around when anybody will listen and that is at the outset, that over 50% of Canadians do not have a properly planned and executed Will, Power of Attorney and healthcare directive. The author of this article sort of answers the question as to why people are prepared to leave their estate planning so unplanned, so to speak, and the one word they use is procrastination. So, let’s start with number 1. What is the first thing that the stalling of the estate planning is matched up with?
Suzana Popovic-Montag: It’s actually one that I often hear, Ian, and that is that “I’m just too busy right now to worry about estate planning. It’s just not the right time in my life to sit down and turn my mind to it”.
Ian Hull: And that’s a really troublesome one. Whatever age you are, young people, of course, you have to concern yourself that if something tragic happened and unexpected, the old analogy of getting hit by a bus is the one that most young people typically have to focus on, because the option of passing away does not necessarily sit top of mind in their world. But the other aspect is, and what we see most troubling in our course of litigation practice, is that last-minute estate planning by anyone, and certainly anyone who is, I would say, anything starting at 65 years of age and over…the last-minute estate planning creates so many troubles and so many possibilities of litigation that it doesn’t make any sense. It’s never made any sense to me to allow yourself to procrastinate yourself right into the lawsuit.
Suzana Popovic-Montag: That’s a really good point because we know that when it comes to prioritizing our days and we hear people talk about time management issues and that. And even the article here distinguishes between, you know, things that are of an urgent nature and those that are just important. And they sort of remind us that estate planning is not only important but it can be urgent because, as you say, that five minutes to midnight planning is just not the best way to do it. Or the other alternative that something could unpredictably happen the next day to preclude you from ever being able to do that estate planning.
Ian Hull: Okay, the six ways to stall, from this article, and I should have said at the start, Thomas Junkin is the author of the article. And we’re going to try to get through a few of them now before we get into our capital encroachment discussion. But that was Item No. 1. And Thomas is a Senior Vice President of Personal Trust at the Fiduciary Trust Company of Canada. So we’ve got to give him all the kudos because, after all, it was his good organization and good writing that we’re working from here. But let’s talk about the second item and one item that we see every day as a lurking problem.
Suzana Popovic-Montag: And that is that thinking about death and then planning for it, is basically just a very frightening thing for most people to do.
Ian Hull: And, in fact, some people feel superstitious about planning for death. I’ve had cases where clients will sit across the table from me organizing their Wills and Powers of Attorneys and they have feared this moment because they think that somehow that’s going to trigger death. And you know, the superstitious belief as well, I mean, it’s not easily overcome. But again, I mean one of the points that the author notes in the article is that the way to approach this is deal with it as an intellectual exercise and not an emotional one. And I use the simple illustration of the tremendous costs that you’re going to allow to be undertaken if you do not do a proper estate plan, just from legal fees alone, even if you don’t have a fight. The Government of Ontario and the governments across the province will govern how your estate is to be distributed and that is typically not Position A for most clients, obviously.
Suzana Popovic-Montag: So moving then to Mr. Junkin’s third reason that most people will stall their estate planning, he points out that often times we hear that clients are confused and intimidated by the very complexity of what they view to be the estate planning process.
Ian Hull: And that one is a comment that generally is a fair one. You know, the difficulty is even for young people who are organizing their affairs, organizing their affairs in the context of the estate planning issues, the tax issues, all of the things that we talk about in our weekly podcasts, can be a bit overwhelming. And I think the easiest answer is to get yourself into the hands of good advisors or advisor, who can simplify what they are going to do for you. Not to say that the documentation is going to be simple, but that they can simplify the process for you. And we talk about primary and secondary Wills here in Ontario as a basic estate planning technique. Someone who sits down with you and goes through that issue carefully could spend hours describing the different nuances, but at the end of the day, it probably can be described in fairly short order as being a tax planning technique. You are avoiding the estate tax in Ontario if you do it. Having said that, there are other planning techniques that come out of primary and secondary Will planning. So get into the hands of a good simplifier, so to speak.
Suzana Popovic-Montag: And the author of the article that we’re talking about, Ian, does a very good job in terms of bringing it down succinctly by saying that all estate plans really just deal with three basic concerns and those are: people, property and plans. And he says the people are your family relationships, your financial affairs are your property and then, of course, the plan is the one that you’re going to deal with your investment advisors, your legal advisors, your tax advisors, to put together depending on the nature and extent of your estate.
Ian Hull: Okay, well listen, I think we want to work through this article again and as I say, this was sort of a last-minute decision and we thought we’d get it on the internet for you, on our webpage so that you can have it and look at it for next week’s podcast.
The one last comment we wanted to talk through briefly today and this is obviously a topic for those that deal with this, could take up many, many hours of discussion. It’s a complex area of the law, and that is what we talked about last week is encroachments on capital or taking the capital out of the estate, out of the trust, before its time, so to speak, before you have the spouse or surviving spouse pass away and before it passes on to the next generation, because the spouse needs it, quite frankly. And we wanted to spend a couple of minutes on the nature of the considerations that you have to go through when you’re an executor to encroach or take out capital.
Suzana Popovic-Montag: And I always want to remember the fact that sure, the person who’s looking for the encroachment, of course, is going to want that encroachment to have no difficulties with it. But what we’re really dealing with here is the gift-over beneficiaries at the end of the day, the residual beneficiaries of that life interest who are the ones who are sort of going to be watching over the executor’s shoulder during the course of the administration to see to what extent was an encroachment made, for what purpose and was it something that they would otherwise have something to complain about.
Ian Hull: And I think in summary, the whole question of encroachment, the Courts have said very clearly that if you are going to take capital out and give it to the surviving spouse, for example, or this life tenant before its time, you have to undertake it in a judicious and careful decision-making process. You can’t simply do it on a whim. And you have to show why it was a good idea, in your mind, at the time.
Suzana Popovic-Montag: And as part of being able to show that at the end of the day, of course, you want to document the stuff, the decisions that are made and the reasons for those decisions during the course of the administration.
Ian Hull: Okay, well I think that’s sort of a brief summary of this area of the law. We may touch on it again as we work through our audit checklist, but I thought it was an important one. And when we touched on it last week we thought it would helpful to sort of close the loop. So it’s been great doing this podcast with you today, Suzana.
Suzana Popovic-Montag: And thank you, Ian. Just a quick reminder to our listeners, if anyone would like to call in with any comments or any feedback, to feel free to contact us at 206-457-1985.
Ian Hull: And please feel free to go to our blog at estatelaw.hullandhull.com, e-mail us at email@example.com. And obviously, feel free to go to hullandhull.com. Our webpage, as I say, will have some more new product on it to help you guys guide through this process. So thanks very much, Suzana.
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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