Estate Administration -Part 3 – Hull on Estates and Succession Planning #212
Listen to: Estate Administration
This week on Hull on Estates and Succession Planning, Ian continues to discuss estate administration. Specifically, he examines problems that may arise and how to avoid them.
If you have any questions, send us an email at email@example.com or leave a comment on our blog.
Ian M. Hull – Click here for more information on Ian Hull.
Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag. The podcast you’re listening to will provide information and insights into estate planning in Canada. From the offices of Hull & Hull in Toronto, here are Ian and Suzana.
Ian Hull: Hi and welcome to Hull on Estates and Succession Planning. You’re listening to, and possibly watching, episode 212.
Well, welcome back. We’ve had a little bit of a blip in terms of getting downloading our podcasts and you can see I’m the solo one today. But we wanted to keep the momentum going. And one of the things that I wanted to continue to discuss is problems that come out of estate administrations. Before I do that, I wanted to report out that we just finished up…Suzana and I just finished up presenting at a really interesting Law Society course. It was presented by Suzana. She was the Chair of the Practice Gems seminar. And then our colleague, Jordan Atin, did afternoon seminars on Powers of Attorney. I got to talk about insolvent estates and some of the issues that arise out of that. But today I’m gonna talk about hopefully…and we may overlap a little bit…in the insolvent estate problems. But we want to continue to sort of focus on and talk through today is, what about these estate administrations, and (a) what are some of the issues to watch out for and (b) what are some of the problems or what kind of fights arise out of estate administration?
Now typically most people, when they come to see us, would be normally coming to see us about a fight over an estate. Now what does that mean? And what are those categories? Obviously, a challenge to the Will is the most prominent one. But a lot of fights and a lot of difficulties in estates comes out of the administration of the assets themselves. And that, of course, means that once the executor is appointed, what problems arise. So we wanted to step back in terms of looking at solutions and identifying some problems. And one of the things that we did in the previous podcast was talk about glitches in estate administrations. Well how do we avoid them?
One of the ways that we want to turn to now is the download of information at the outset is so vital because both at the time of giving your Will, when you give your Will instructions, but most importantly at the time of death when you’ve been appointed executor, you’re coming in to see the lawyer and you want to determine the assets of the estate. One of the core questions, of course, is what are the particulars of the estate assets? What do we have to deal with? And my son who’s just learning accounting principles in school tells me all the time about debits and credits and reconciliation and all those sorts of things. Well obviously the in, the credits, is the key starting point when we’re dealing with an administration.
So the particulars of the estate itself, talking about, trying to identify and the executor goes out and pulls together as much information as they can about the core assets. Obviously bank accounts, locations of accounts, bank certificates, stocks and bonds and the like. The next thing is to step back and one of the early stages of downloading the information is the particulars of the real estate. And this is the one issue that sometimes brings about some of the twists and turns. And that is, of course, people who die, before they die maybe do or do not know exactly how the real estate is held. And of course it could be held jointly with right of survivorship with someone, between two spouses, transfers over to the other spouse – no questions asked. Or it can be held in different ways – tenants in common and so forth. Sometimes the clients don’t even know that when they’re telling their lawyer their instructions on how to do a Will. And sometimes you get surprises. So I always tell my clients at the outset when you’re giving instructions, make sure that you give me a copy of the deed or you let me go search the deed. And we can do that now in Ontario all electronically, so it’s not a big undertaking, to make sure that we know exactly how the real estate is held.
Now, of course, that applies and the same problem applies with bank accounts. And when we get the information, we want to determine whether or not they’re held jointly or they’re not held in some sort of trust or some sort of arrangement that the deceased hadn’t really fully disclosed to the lawyer when he or she does their Will. But you’re estate trustee. Your obligation is to bring in the credits and are they credits and how are they held. And the details of those credits is crucial because, of course, then you can identify whether or not there’s gonna be some twists and turns, whether or not an asset is gonna fall into the estate or it’s gonna fall into a jointly held scenario. So the particulars of that and chasing down those details is important.
Other assets, of course, other real estate, other holdings…we have estates where some client had a tremendous holding of gold bars, literally holding gold bars. And that was the way she felt that she would hold onto her investment. So we had to go, and it was a big undertaking in terms of trying to track down where exactly the gold bars were and so on. But there are a variety of assets that can come about. And the thing that we really touch on and make sure that we’ve carefully canvassed is the…maybe not gold’s worth something, but maybe the stuff that’s not worth so much. And those particulars of those assets can be a big, big issue. As an estate trustee, when you’re charged with the obligation, you’re charged with bringing in all of the assets. And personal property, or the teacups, of course, can be a really, really important flashpoint to the beneficiaries. So if I’m the estate trustee, one of the things I will typically do and tell my clients to do is, when you’ve got to go into the apartment, grab a video camera, do something…a still camera…take a ton of pictures. Make sure you’ve identified the starting point. And it ties into, of course, the starting point with estate accounting. We want to start with our opening balance. Well the opening balance, and we’ve seen too much litigation come over this over the years, can be all about where’s the teacup? Or where is that one statue that…it was a mini statue or the Royal Doulton. Where are those assets? And the executor, if they’re not there on the date of death, the executor can get blamed.
So one way to help avoid that or reduce your risk as executor is, of course, to videotape the whole apartment or the whole house. You’ve got a record of what is or isn’t there and then secondly, we often will say look get a professional to come in and inventory all of the assets, so that nobody can say hey, you gave Johnny the Royal Doulton – you shouldn’t have. The Will didn’t provide for it. And your answer is, well it wasn’t even there so why are you saying I’ve done anything wrong? Well, litigation can ensue out of that. So these other asset categories, obviously the bank and the cash and the investment accounts is one cornerstore of what you have to bring in. And that means sometimes going through all of the paperwork of the deceased. The second is the real estate and that you can get some help through the searching through…most, as I say, most in Ontario certainly you can search on-line for that. And then thirdly are these sort of other assets, and assets which on the face of it may not seem like important to the executor at the time. It’s not worth a lot. Who cares about it? But that couch all of a sudden becomes a flashpoint for tension, which is the thin edge of the wedge, which opens up other issues and which starts to bring up the potential for discord and for fighting in that regard. So when I sit down with my executors, I really hope that we try to see them as early as we can after death. And that can be literally within days sometimes to make sure that we’ve got full control over the assets.
So as I say, talking about the fact that I’m learning more and more about basic accounting through helping my son with homework from time to time, those are the credits and then of course the liabilities. And what do those liabilities bring to the table in terms of tensions and problems? And at my next podcast, I’m gonna talk a little bit about that side of the ledger to talk through and identify some issues for an executor so that we can come to the table clean and ready to go, with limiting the potential for claims against me or my clients as executors.
So thank you for joining me. We missed Suzana today as always and we’ll look forward to seeing her hopefully back at our podcast soon. Thanks very much.
You have been listening to Hull on Estate and Succession Planning by Ian
Hull and Suzana Popovic-Montag. The podcast that you have been listening
to has been provided as an information service. It is a summary of current
issues in estates and estate planning. It is not legal advice and you are reminded to always speak with a legal professional regarding your specific circumstance.
To listen to other Hull & Hull podcasts, or leave any questions or comments, please visit our website at hullestatemediation.com.