Category: Estate & Trust
Listen to Applying for Probate
This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the applying for probate. They discuss some of the ways that estate administrators can simplify the process.
Listen to Getting Probate
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss probate – what it is and when you need it.
It’s About the House’s Current Market Value, Stupid.
One of the first steps in any estates litigation matter is valuing the estate assets. Most assets are easy to value: RIFs, bank account, etc. But for many estates, the major asset is house. This is particularly true in the GTA (Greater Toronto Region, for our U.S. readers), where baby boomers who bought modest homes decades ago have seen the value of their house skyrocket.
The twist for both estates lawyers and litigants is that house valuations are inherently less precise and more subjective than most assets. Accurate information on the market value of a house can be crucial.
The subprime fiasco in the U.S., a potential serious recession and Toronto’s new land transfer tax may possibly create the unthinkable horror: a decline in the housing market. I am far, far away from being an authority on real estate, but it may be prudent to consider attaining current appraisals where there is doubt about a home’s value. That is especially the case for matters that have dragged on for years. Obtaining an appraisal from a reputable appraiser, for instance one certified by the Appraisal Institute of Canada (see: http://www.aicanada.ca/e/index.cfm), is one option to consider.
The information gleaned may be invaluable in driving a better settlement.
Thanks for reading and have a great week.
Listen to Assets and Liabilities
This week on Hull on Estate and Succession planning, Ian and Suzana expand on last week’s discussion about determining value. They also discuss taking an inventory of an estate’s assets and liabilities.
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What are some of the "red flags" to be wary of in the course of a retainer to prepare a Will? Corina Weigl considered this issue in an article she wrote for the 2007 LSUC Six Minutes Estates Lawyer (find it here) titled "How to Bullet-Proof Your Will". By far the most typical "red flag" arises in the context of third party involvement, such as where a close friend or relative (commonly a child of the testator), contacts the lawyer directly asking for advice in respect of the testator’s estate (i.e. “My Dad needs a will drawn up”). This is a common scenario for most estate planning practitioners. The lawyer should remind the third party who the "real" client is and that best practice demands that he or she deal with the testator (as opposed to the third party) directly. Lawyers are advised to hold meetings in private with the "real" client; to prepare detailed notes of telephone conversations and meetings with the "real" client, and to scrutinize motivations in cases where there are blatant departures from the provisions of former Wills. Another “red flag” is the unequal treatment of beneficiaries. To avoid the possibility of a dispute down the road, clients should be clear in expressing their wish to exclude an obvious beneficiary (i.e. leaving out 1 of his 3 kids). The lawyer may ask for an explanation of why the person is being treated differently, and the lawyer will likely take notes. Unequal treatment inevitably leads to family friction and may up the chances of a will challenge. Lastly, it is a lawyer’s duty to be satisfied that their client has the requisite mental capacity – once again the lawyer is advised to take notes and when in doubt, consult expert opinion.
Sarah Hyndman Fitzpatrick
I came across a really interesting blog (find it here) the other day that considered an article published recently by Kristine S. Knaplund (Professor of Law, Pepperdine School of Law), entitled The Evolution of Women’s Rights in Inheritance, 19 Hastings Women’s Law Journal 3 (2008).
The article describes how archived probate files in Los Angeles are a valuable source of information on the history of women’s inheritance rights. Issues such as whether women were routinely appointed as the executrix of their husband’s estate, and whether they were left the residue of an estate outright or with a life interest or by way of a trust, are considered. The following is an excerpt from article:
“The probate files are a rich source of information about the lives of women and men in Los Angeles as it transitioned and grew into a major city. The availability of land and the use of promissory notes allowed the industrious the opportunity to save money and leave an estate to their families and friends. Ten women left estates over $10,000 in 1893 dollars, compared with twenty-two men. Of these, one woman began as a maid from Ireland who ended up being the richest woman dying in Los Angeles in 1893, with an estate of over $285,000.”
The article summarizes that Los Angeles in the 1890s was ahead of other parts of the country in women’s rights. For example, men in Los Angeles routinely named their wives as executrix of the estate. Relatively few men tied up legacies to a wife or daughter in a trust or a life estate, choosing instead to give the beneficiary an outright interest in the property. I would be interested to see how the history compared to women living at the same time in Ontario and the rest of Canada.
Sarah Hyndman Fitzpatrick
A new study (find it here) suggests that even when a testator (and family members) support organ donation, there is no guarantee that these wishes will be carried out when someone dies. Researchers at the University of Southampton in the UK have concluded that relatives are often reluctant to carry out the deceased’s wishes regarding organ donation, due primarily to conflicting feelings over “protecting the body” of the deceased and “making a gift of life”.
In Ontario, custody of the deceased’s body belongs to the Executor and Trustee, and he or she has the authority to make the necessary arrangements. Testamentary instructions regarding organ donation have no legal effect and depend solely upon the wishes of the next of kin and the trustee for implementation.
Nevertheless you may wish to include such instructions in your Will. Making your views on the subject known to family and your Trustee, and signing your Ontario driver’s license, may also help to ensure your wishes are respected. Various charitable organizations (such as the Kidney Foundation) have sample donation clauses, and Part II of the Trillium Gift of Life Network Act is worth considering.
Sarah Hyndman Fitzpatrick
Listen to Determining Value
This week on Hull and Estate and Succession Planning, Ian and Suzana talk about values and appraisals. They specifically look at some of the issues related to assigning value to assets such as jewellery, automobiles, antiques and artwork.
I recently attended this CLE program of the LSUC chaired by Laura Kerr, Jennifer Pfuetzner and Corina Weigl. The panel used an annotated Will as a framework to consider drafting tips, and highlighted many significant recent developments.
Notable provisions included “Air Miles Designations” (of value if a testator or testatrix has acquired a significant quantum of frequent flyer points), a “Debts, Funeral and Testamentary Expenses” clause which included provision for “reasonable travel expenses” for relatives and/or friends wishing to attend the funeral, and an updated “RESP” clause. Because an RESP is the property of the deceased subscriber (usually the parents or grandparents of the beneficiaries), consideration should be given to whether the testator wants to plan to continue after his death (and, if so, who should become the succeeding subscriber). Alternatively, the testator may prefer that the Trustee collapse the plan and direct the proceeds into the residue of the estate.
Many more issues were canvassed with a focus on emerging concepts in estate planning. Most significantly, the attendees were urged to keep an eye on the definition of “issue” in light of the current reality of more complex family relationships (i.e. common law, step families) as well as potential challenges raised by the more widespread use of reproductive technologies in today’s world.
Sarah Hyndman Fitzpatrick
I came across an interesting article in The Prairie Star, a Montana-based newspaper, about an incentive being offered to farm and ranch couples, both young and old, who plan their estates early.
Montana State University is offering a promotion whereby the first 40 couples who work through an estate planning process will receive $100.00 off any follow-up legal fees.
A reason for the program is to encourage families in the agricultural business to start thinking about how they are going to plan their estates early on. This is especially important where there is an operational farm which will make up the bulk of the estate. Complications can arise when, for example, there is no clear plan in place and one beneficiary wants to keep and run the business, while another wants to take his or her inheritance in cash.
The presence of a family farm can affect the estate planning of more than one generation. For example, members of an older generation may control the farm, while members of a younger generation may be structuring their estates in anticipation of inheriting it. Or, members of multiple generations might have ownership interests in the farm that will affect the way it can be dealt with in the estate of any one of them.
Of course, many of the issues that families owning a farm in Montana my face are the same as those faced by families owning any kind of business anywhere. However, the program does underscore the importance of planning early and planning well.
You can read more about the program in Montana here.
Thanks for reading,
Megan F. Connolly