Managing Expectations – Hull on Estates and Succession Planning #214
Listen to: Managing Expectations
This week on Hull on Estates and Succession Planning, Ian and Suzana discuss managing the expectations of the surviving spouse.
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Ian M. Hull – Click here for more information on Ian Hull.
Suzana Popovic-Montag – Click here for more information on Suzana Popovic-Montag.
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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 episode #214.
Suzana Popovic-Montag: Hi there, Ian.
Ian Hull: Hi Suzana.
Suzana Popovic-Montag: How are you today?
Ian Hull: I’m well. And yourself?
Suzana Popovic-Montag: Good thank you.
Ian Hull: Fantastic. Well we have got a busy fall and we’ve been out and about doing some mediations and doing our case load and so on. And one of the things that we keep running into and bumping into is managing expectations of the surviving spouse.
Suzana Popovic-Montag: That’s a good introduction to this podcast, Ian, because we are, as you say, seeing more and more of these kinds of situations where people recognize that there is a surviving spouse but would rather not have to deal with what comes about as a result of that.
Ian Hull: Absolutely. And so we look at this and first of all, spouse – the definition of spouse – is in Ontario and in most jurisdictions, is a broader definition than just simply a married spouse. But the spouse or the person who is left standing in the relationship has significant claims. And we’ve talked about those claims. Dependant relief claims, Succession Law Reform claims, that way and the Family Law Act claims. But we wanted to talk a little about today is more about how do we deal with that reality? And looking at it from the perspective as the family members, the survivor’s family members and looking at the perspective as being an executor. Because it is really an important…we find…a very important part of the process is managing that spousal claim. So first of all, let’s talk about who’s a spouse? Go ahead. Why don’t you talk about…when we’re looking at, when we think of spouses, what conventional wisdom, sort of, are we looking at there?
Suzana Popovic-Montag: And as you say, Ian, our definition is a lot broader than it used to be. And we’re talking about married spouses in the traditional sense and we’re also talking about common law relationships that meet a defined period of time after which, you know, the Courts will recognize someone as a common law spouse here in Ontario. And you may also be extending the claim to the individuals who are in same sex relationships who similarly have met the timelines for those kinds of relationships to be recognized at law.
Ian Hull: Absolutely. So we’ve got this person who has left and they’re typically in a high emotional state when their spouse dies, whether it’s a husband, wife, same sex partner. And they are then faced with sometimes urgent financial circumstances, whether or not they have access to the money and so on, if the other spouse was looking after the money. And they’d go see a lawyer fairly quickly. And at some times we find our clients who are on the other side of it, are the beneficiaries, the children of the deceased or the executors, they get a little huffy about the fact that the surviving spouse has gone to their lawyer so quickly. But there are time limits that the surviving spouse is stuck with and there’s a good reason to go see someone quickly…I mean, go see a lawyer quickly.
Suzana Popovic-Montag: That’s right. And that’s even if you have a Will that specifically provides for that spouse as well, because they want to make sure that they’re protecting themselves right from the get go. And so when we talk about timelines, we know certainly here in Ontario that it’s a six month limitation period from the date of death within which to bring a claim for equalization under our Family Law Act. And then there’s also a six month limitation from the date that you obtain probate or a Certificate of Appointment of Estate Trustee with or without a Will here again in Ontario, for which time you can bring a dependant’s relief application under our Succession Law Reform Act.
Ian Hull: So generally speaking, you’re looking at months. And that can turn into literally days. And most of us who have organized estate plans still have contingent liabilities out there. For example, tax liability or maybe you’re involved in a business operation and you’ve got an outstanding piece of litigation or something. So to crystallize what is really available for that surviving spouse can take and often takes more than six months from the date of death.
Suzana Popovic-Montag: And factor into that a grieving period. I mean, you are really going to be talking about days at the end of it when it comes right down to that number crunching and when it gets done, and when reasonable or rational decisions can actually be made.
Ian Hull: And that’s so true. You know, the emotional side of it…you forget that sometimes. As a lawyer, you sort of think clinically we’ll get on with it. But it may be that say, money isn’t a pressing issue right away. That surviving spouse needs some time before he or she is ready to go sit down with a lawyer and to get and take in advice as to what his or her options are.
Suzana Popovic-Montag: That’s for sure.
Ian Hull: So talking about the management side of it then. Again, that’s really what we wanted to touch on because we are struck on the litigation side by the high emotions on both sides. And not to oversimplify but as I say, I mean it’s typically the surviving spouse is devastated by the loss of a lifetime partner, or even a short-term partner or a long-term, medium, whatever term partner. And the family are typically devastated by that loss but are typically devastated and react badly to the gold-digging, surviving spouse.
Suzana Popovic-Montag: And just to give a little bit of context to that, I think Ian when you called it gold-digging, surviving spouse we’re really looking at a situation where there’s step family members involved. And so it’s a lot easier for a child to be adversarial against a step-parent than their own parent. I’ve even seen situations where even that has come into it as well.
Ian Hull: And sometimes the lawyers, through no fault of their own, just in the process of protecting the surviving spouse aggravate the situation. And a letter that says I want to see all of her assets and I want to see any joint accounts and I want to see any insurance policies is perceived by the family or by the lawyer whose acting for the family as aggressive steps as well. And again, if they can sit back and just look at…and as I say manage what the expectations of that person are versus your expectations in the context of the law, we have to accept the fact that there’s been a general trend towards equalizing or more fairness for the surviving spouse. So those kinds of questions are almost always legitimate.
Suzana Popovic-Montag: But they’re not very well received…
Ian Hull: Never.
Suzana Popovic-Montag: …because so many people would be focused on the intention. The deceased intended for you to get so much and you should be happy with that, and you should want to uphold that testamentary intention and leave things alone. But when you take the law and you intersperse that into the intention and people’s rights outside of the terms, the four corners of a Will, it becomes a very different situation. And I think that’s where we see the most tension that arises.
Ian Hull: You’re absolutely right. I think the intention, expectations on both sides are the driving force in a lot of these lawsuits because as you say, you’ve got black and white that says this is what Dad intended and this is what the surviving spouse got, so they should live with it. And when the surviving spouse is not given anything, that surviving spouse is angry typically at the deceased…
Suzana Popovic-Montag: That’s right.
Ian Hull: …who hasn’t got organized. And when you sit back at it and the Courts will, you know, analyze it as they see fit. But a lot of the times the Courts are sort of a little bit grumpy with these testators or these deceaseds who are not closing that loop. They can have this wonderful relationship and if it’s an end of life relationship or a long-term whatever, but they don’t close the loop with…and especially with a non-married spouse. And in Ontario and most jurisdictions you are still treated differently and preferred in some respects if you entered into a marriage relationship as opposed to a common-law relationship. That’s just a cultural diversity there that exists and the law supports married relationships in many respects more than non-married and that’s just the fact of the way the laws have evolved over time. So anyway, we’ve been really struggling with these and we’ll continue to. And what we try and encourage our clients is to get in that situation where a judge isn’t gonna be critical of you not organizing your affairs, and not explaining your affairs to all parts of the puzzle before death.
Suzana Popovic-Montag: That’s right. And you know, we also see a lot of tension… and you eluded to this at the very beginning with the executors as well…because they’ve got now the four corners of a Will and they’ve sort of got their marching orders and the directions in terms of how to distribute this estate. And then suddenly when they’re faced with these extremes they may or may not have expected, it does throw, you know, a curve ball into the whole system.
Ian Hull: Absolutely. So we can…all we can do is tell our clients until we’re blue in the face – get this organized as best they can so that we don’t have to face these inevitable tensions without some parameters of realistic wealth being transferred to the surviving spouse and realistic wealth being transferred to the surviving family.
Suzana Popovic-Montag: That’s for sure.
Ian Hull: Alright. Well thank you very much, Suzana. It was great to see you again today. And we look forward to our next podcast.
Suzana Popovic-Montag: 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
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