Tag: estate plan
Many of us are in the midst of spring cleaning, or, this year, the deeper, extended COVID cleaning.
As part of cleaning process, consider cleaning up your estate plan. Organize the documents and information relevant to your estate plan for your own reference, and for the ultimate ease and convenience of your estate trustees.
There are many websites that offer tips on organizing and simplifying your estate documents. There are apps available to help organize and store your information.
As a starting point, BDO has produced a comprehensive list, “My Financial Story and Estate Organizer”, that can be completed by the testator and left in a readily accessible place: perhaps with the testator’s Estate Trustees.
I have seen too many estates where a person passes away leaving a state of chaos. Often, it is not known whether the person left a Will, or who the estate trustee is. This presents immediate problems when trying to address the steps necessary upon death, such as making or implementing burial decisions. In addition, after burial, the estate trustee is often scrambling to find out what assets the deceased had, and where they are.
This game of cat and mouse can be readily avoided by listing what and where your assets are. Not making such a list is simply vexatious.
Remember Gerald Cotten? He was the founder of QuadrigaCX who died in 2018. He was the only one who knew the password to access the $137m or more of holdings of the company’s clients. Leaving an organized estate plan (or even a sticky note with a password scrawled on it) would have eased a lot of tension. See Natalia Angelini’s blog on this, here.
The issues that arise upon one’s death are difficult in the best of cases. Make them easier to address by organizing your affairs so as to assist your estate trustees. Take advantage of the time available now to clean up your estate plan.
Have a great weekend. Stay safe.
We have blogged over these past couple of weeks about the novel issues which have arisen with the drafting and execution of Wills during the COVID-19 pandemic. Although we remain hopeful that there will be guidance and/or legislative changes from the government soon regarding how to address issues such as the witnessing of Wills for individuals who are in quarantine or self-isolation, a recent article from Dale Barrett in Lawyers Daily notes that it may not all be doom and gloom surrounding estate planning during the COVID-19 pandemic, as the recent significant drop in the stock market could make it an ideal time for certain individuals to complete an “estate freeze”.
An estate freeze at its most basic accomplishes exactly what the name implies, insofar as it “freezes” the value of an individual’s assets at a particular date and time prior to their death, with any “future growth” on the assets being attributed to someone else (often the individual’s children). The use of an estate freeze is often done as a tax planning tool, with the underlying rationale being an attempt to reduce the potential taxes associated with the deemed disposition of their assets upon their death, which is accomplished by “freezing” the value of the assets at their current value such that the growth is not as great as it otherwise may have been (assuming the asset would continue to grow in the future). Although the structure that is required to accomplish this is somewhat complicated and will require the involvement of professionals, in a very basic overview it is typically accomplished by having the individual create a new company that will ultimately hold the assets being “frozen”, with two classes of shares being created the first which is retained by the individual implementing the freeze and fixed at the value of the assets on the day the of the freeze, with the second class of shares being attributed any “gain” in value of the assets after the freeze attributed to someone or something else other than the individual carrying out the freeze (often ultimately benefiting their children). The implementation and steps required is more complicated and nuanced than the description above suggests, and will almost certainty require the involvement of professionals to ensure that the individual does not go offside complex tax rules, but you get the basic idea.
Although the availability and potential use of an estate freeze is not for everyone, the recent drop in the stock market associated with COVID-19 could create a potential advantage and incentive for people considering an estate freeze to do so now as they could potentially “freeze” the value of their assets at a lower value than they otherwise may have been able to. If you are considering an estate freeze you may wish to speak with a professional now about whether it may be an opportune time to do so and to ensure that it is properly implemented.
Thank you for reading and stay safe and healthy.
Oakland Rose is no ordinary child. He is special in more ways than one.
Oakland was diagnosed with Autism at the age of 2 years old and had no verbal communication until the age of 5.
Oakland is currently 20 years old. Although his verbal communication has drastically improved, he is not able to engage in abstract thinking. Oakland’s responses are often rehearsed and premeditated. He is not able to take public transportation alone. Although Oakland will graduate from a specialized high school program, he will never attend university. Oakland has the capacity of a young child.
Oakland will be dependent on his parents for the rest of his life.
Approximately 1 in 66 Canadian children were diagnosed with Autism Spectrum Disorder in 2018. Autism is just one of many developmental disorders that children are diagnosed with each year.
Families with children with special needs are in a unique position when it comes to estate planning. Planning for one’s death and ensuring that your loved ones are supported is an overwhelming task for the average person. For parents with special needs children, the task becomes even more burdensome.
According to one author, a child with special needs includes any child who, at birth or as a result of an illness or injury, is physically, mentally or emotionally disabled. While some people with special needs have successful careers, many will be dependent on their parents for the rest of their lives. Not only will the person be physically and emotionally dependent on their parent, but they will also be financially dependent. As a result, parents of a special needs child face exceptional estate planning challenges.
The higher functioning a special needs person is, the more likely he/she will require assistance from a parent’s estate. This is because government funding typically only provides for basic necessities.
Estate planners must determine whether their clients have children or other immediate family members with special needs. They must also ascertain that individual’s level of functioning. Specialized planning will be required for these families.
A parent of a special needs child might wish to consider:
i) Providing financial compensation for future caregivers in their will
ii) Setting up a special needs trust to ensure their child is not disqualified from government benefits – this trust will supplement but not replace the government benefits
iii) Creating a life care plan for their child which includes educational, living and career planning
iv) Writing a letter of intent summarizing the child’s habits, likes and dislikes
v) Naming a guardian if your child is under the age of 18
It is important to remember that children with disabilities have evolving needs. Thus, parents should create an estate plan that allows for flexibility. The plan should be reassessed and updated regularly to ensure it is in line with the child’s current needs.
Although creating a will and considering your own mortality is a daunting experience, it is far better than the alternative of leaving your child without adequate support!
Thanks for reading!
David Morgan Smith and Tori Joseph
It is not uncommon for the lawyer who drafted a testator’s will or codicil to subsequently be retained by the Estate Trustees after the testator’s death to assist with the administration of the estate. The rationale behind the drafting lawyer being retained to assist with the administration of the estate appears fairly self-evident, for as the drafting lawyer likely has an intimate knowledge of the testator’s estate plan and assets they may be in a better position than most to assist with the administration of the estate.
While retaining the drafting lawyer to assist with the administration of the estate is fairly uncontroversial in most situations, circumstances could become more complicated if there has been a challenge to the validity of the testamentary document prepared by the drafting lawyer. If a proceeding has been commenced challenging the validity of the testamentary document, there is an extremely high likelihood that the drafting lawyer’s notes and records will be produced as evidence, and that the drafting lawyer will be called as a non-party witness as part of the discovery process. If the matter should proceed all the way to trial, there is also an extremely high likelihood that the drafting lawyer would be called as a witness at trial. As the drafting lawyer would personally have a role to play in any court process challenging the validity of the will, questions emerge regarding whether it would be proper for the drafting lawyer to continue to represent any party in the will challenge, or would doing so place the drafting lawyer in a conflict of interest?
Rule 3.4-1 of the Law Society of Ontario’s Rules of Professional Conduct provides that a lawyer shall not act or continue to act where there is a conflict of interest. In the case of a drafting lawyer representing a party in a will challenge for a will that they prepared, an argument could be raised that the drafting lawyer is in an inherent position of conflict, as the drafting lawyer may be unable to look out for the best interests of their client while at the same time looking out for their own interests when being called as a witness or producing their file. There is also the potentially awkward situation of the drafting lawyer having to call themselves as a witness, and the associated logistical quagmire of how the lawyer would put questions to themselves.
The issue of whether a drafting lawyer would be in a conflict of interest in representing a party in a will challenge was dealt with in Dale v. Prentice, 2015 ONSC 1611. In such a decision, the party challenging the validity of the will brought a motion to remove the drafting lawyer as the lawyer of record for the propounder of the will, alleging they were in a conflict of interest. The court ultimately agreed that the drafting lawyer was in a conflict of interest, and ordered that the drafting lawyer be removed as the lawyer of record. In coming to such a conclusion, the court states:
“There is a significant likelihood of a real conflict arising. Counsel for the estate is propounding a Will prepared by his office. The preparation and execution of Wills are legal services, reserved to those who are properly licensed to practise law. Counsel’s ability to objectively and independently assess the evidence will necessarily be affected by his interest in having his firm’s legal services found to have been properly provided.” [emphasis added]
Decisions such as Dale v. Prentice suggest that a lawyer may be unable to represent any party in a will challenge for a will that was prepared by their office as they may be in a conflict of interest. Should the circumstance arise where the drafting lawyer is retained to assist with the administration of the estate, and subsequent to being retained someone challenges the validity of the Will, it may be in the best interest of all parties for the drafting lawyer to indicate that they are no longer able to act in the matter due to the potential conflict, and suggest to their clients that they retain a new lawyer to represent them in the will challenge.
Thank you for reading.
As an avid Seinfeld fan, I recently watched the episode where Elaine Benes kept on eating submarine sandwiches just so she could collect enough points to earn a free sub. Spoiler alert: Elaine lost the loyalty card before redeeming the free sub. Unfortunately, many estates fail to take advantage of these rewards and end up just like Elaine.
It is estimated that in the US alone, three trillion frequent flyer miles are given annually. Notwithstanding this dizzying number of points, in Ontario there is no law addressing if, and how, points can be transferred upon death. Airlines are left to create their own procedure and standards.
There is a helpful resource, here, which sets out the policies of the major US frequent flyer programs in plain english. The CBC offers similar information for Canadian frequent flyer programs here. While some airlines permit the transfer of points, many discount their value. Some even refuse to allow there to be a transfer altogether.
As discussed in my previous blog, Anthony Bourdain included his frequent flyer miles in his will. Given the suspected value of these points, this estate planning decision makes sense.
In considering an estate plan, a testator should, first, decide whether to choose airlines based on the ability to transfer points. Second, if a testator has amassed significant points, and they are transferrable, make sure to include them in a will.
Find this blog interesting, please consider these other related blogs:
For all that is known about chef Anthony Bourdain’s colourful lifestyle, the estate plan he left behind is surprisingly comprehensive.
Bourdain’s Will leaves the residue of his estate to his minor daughter, Ariane. The residue has been valued at approximately $1.2 million, and consists of savings, cash, brokerage accounts, personal property, and intangible property including royalties and residuals. In the event that Bourdain survived his daughter, the residue was to pass to his daughter’s nanny.
Bourdain appointed his estranged wife as estate trustee. This makes sense given that Ariane is the daughter of the marriage and that the mother will likely have her daughter’s best interests in mind while the estate is administered. Bourdain was also mindful to include in his Will other assets – personal and household effects, including frequent flyer miles. Given the amount of travelling Bourdain did, it was shrewd of him to specifically include this in his Will.
A separate trust was also settled, apparently containing most of his wealth. Again, his estranged wife is named as trustee, with Ariane as beneficiary receiving money from the trust when she turns 25, 30, and 35. Presumably, Bourdain settled a trust to avoid the payment of taxes and the publicity associated with probate – another sign of a well thought out estate plan.
While so many celebrities succumb to poor estate planning, it is refreshing that in addition to teaching us about cooking, travelling, eating, and so much more, Bourdain also taught us about the importance of a thorough estate plan.
Find this blog interesting, please consider these other related blogs:
If you have a will, you’re one of a minority of Canadians who have taken that crucial step in the estate planning process. A recent survey revealed that 51% of adult Canadians don’t have a will – and only 35% say that they have a will that’s up-to-date.
So, if you have one, you’re ahead of the game – and that’s great news. But what about the up-to-date part? In the same way a paint job on your home needs touching up after a few years, your will and estate plan needs a regular review as well. The issue with your estate plan is that, unlike the scratches and chips on your painted walls, the gaps and cracks that form aren’t obvious unless you take the time to review it.
Mind the estate planning gaps
Here are three common estate planning gaps that may have formed without you even realizing it:
- Location of assets and will aren’t known: A critical part of any estate plan is a list and location of your key assets (such as bank and investment accounts, insurance policies, and the original copy of your will). Yes, assets do indeed go missing. Don’t assume your family knows where to look, especially if any of your financial accounts have changed. Make a list and give it to those who will be handling your estate. And be sure to update the list if there are any account or asset changes.
- Family members haven’t read your will: At the 2013 Berkshire Hathaway annual general meeting, famed investor Warren Buffet turned estate planner when he was asked a question about his own estate.
“Your children are going to read the will some day … It’s crazy for them to read it after you’re dead for the first time. You’re not in a position to answer questions – unless the Ouija board really works.”
In many cases, family disputes don’t arise until after death, and the element of surprise often plays a big factor. So, make sure you communicate your estate plan to your family during your lifetime. Ouija boards are notoriously unreliable.
- Your life situation has changed: There are many life changes that should always be reviewed through the lens of your will and estate plan. For example, if one of your adult children becomes divorced, you may need to take steps to ensure that estate assets go to any grandchildren, and not your child’s ex-spouse. Or if you buy a winter getaway, you may need special provisions in your will, or a second will, for property you own outside of Canada.
Time for an estate planning touch up? There’s no better time than now.
Thanks for reading … Enjoy your day!
Climate change remains a leading topic of concern – and most of us have at least some awareness of our environmental footprint. Many of us have undertaken actions to reduce it, from energy-efficient light bulbs, to low flush toilets, to hybrid cars.
It’s not a stretch to take green concerns beyond our own lifetimes to our estate plans, because there are actions we can take today in planning that can make an environmental difference after we’re gone.
Here are three actions to consider if “going green” is a meaningful direction for you.
Keep your funeral small
Balancing interests is important, and your funeral or memorial service should reflect your wishes and also the needs of the friends and family you leave behind. But from a green perspective, smaller is better. It means fewer resources used, and less travel taken. It’s a small difference in the scheme of things, but by focusing less on the “show” and more on meeting the grieving needs of those closest to you, a small funeral can be an important symbolic gesture of “less is more.”
Donate to make a difference
One obvious way of supporting green initiatives through your estate plan is by donating to a charity whose mission relates to environmental concerns or sustainability.
A charitable gift at death is more than just a show of generosity and a nice tax break. It provides a powerful example to others of what you value – and can encourage your friends and loved ones to support the same cause, or another one like it.
For that reason, a gift to a charity made through your will should take some thought. There are thousands of organizations to choose from, with varying levels of administrative efficiency and expertise in putting donated money to good use. So, do your homework to ensure that your money – and the money of others who may donate in your name – will be effectively used to further the cause you’re close to.
Use your body for good
If you’re looking for the “leading edge” of alternative, here’s a concept worth considering: turn your body (after death) into a tree by using a biodegradable burial pod. You can read all about the concept here.
If that idea is a little too out there, the Green Burial Council certifies funeral homes, cemeteries, and product providers in North America on green standards relating to burials. By using products and service providers that are certified green, you can help ensure that your passing is a greener one.
Thank you for reading and enjoy the rest of your day.
We all love a good story. Places like Hollywood were built on that premise. And while there are thousands of great stories built around things like love, war, superheroes, and disasters, there are a surprising number of great stories built around an area you likely would never have considered for bedtime reading: estate planning.
Yes, you read that right. When you think about it, it’s not that surprising. When it comes to leading families, estate planning involves the planning and allocation of enormous wealth, and, in many cases, successful businesses.
Add in the human dynamic – from greed, jealousy, incompetence, and hatred to caring, generosity, kindness, and love – and there are many interesting stories out there.
And they don’t all end well. Take International Management Group (IMG) and Mark McCormack. Starting in 1960, McCormack built his sports agency into a powerhouse, representing the world’s top golfers – Arnold Palmer, Jack Nicklaus, Tiger Woods – as well as top players from many other sports.
Just as IMG had set up financing for a huge expansion in 2003, Mark McCormack died suddenly of a heart attack at age 72. Even though his sons were involved in the business, and his second wife inherited the shares, there was no true succession planning in place. Sadly, with a huge leadership vacuum and high debt, his widow was forced to sell to a buyout firm and the family lost a business more than 40 years in the making.
Contrast that with the story of Milton Hershey, of the chocolate bar fame. At age 61, and in good health, he transferred virtually all his wealth and company shares into a trust for the benefit of a school for underprivileged children. More than 70 years after his death, his company has expanded worldwide, the trust still owns the company, and his humanitarian vision for business and community is thriving.
Motivate your planning – read some stories
Creaghan McConnell Group – a firm of professionals in Toronto who help leading Canadian families and their advisors find and design their future ownership and financial security strategies – have written up these family stories and others on their website. The stories aren’t long, but they’re a fascinating read, and provide insights into how good planning can make a huge difference to future generations: http://www.cmgpartners.ca/cmg-insights-grid/
Thank you for reading.
As estate litigators with decades of experience, we’ve seen it all when it comes to estate disputes. Our firm has dealt with thousands of cases and family situations. Not surprisingly, we’re often asked if there’s a bulletproof will that’s beyond challenge. Is there a way to guarantee that a will can’t be successfully attacked and your wishes thwarted?
The truth is a simple one: there is no 100% certain solution. However, while you can’t get a coat of armor for your will, you can build some thick layers of protection that can greatly reduce the chances of it being successfully challenged. Here are three ways you can help prevent will disputes:
- Make sure your planning is current
Times change, family situations can change, family wealth can change. In so many cases, a will drafted 20 years ago will not accurately reflect the true wishes of a testator or the true expectations of beneficiaries. But we’ve seen those situations time and time again – and that’s when conflicts occur.
Here’s your first layer of protection: make sure you will and estate plan are up-to-date and reflect your current situation and wishes. It sounds obvious, but it’s a trap many fall into. To get it right, you need advice from a lawyer or advisor with a deep understanding of your assets and your family situation. It’s worth the time, effort, and expense to ensure you capture your current wishes and situation in your planning.
- Talk it out
The most obvious step to take is often the most difficult to execute: talk to your family. Let them know your plans, listen to their concerns, explain your reasons, and adjust your planning as needed to minimize the chances of dispute after you’re gone. Even if you can’t resolve family conflicts entirely, your clear communication of your wishes – and your willingness to listen to the concerns of family members – will go a long way to minimizing a challenge to your will.
- Add a “no contest” clause to your will
This is truly a band aid solution, as it doesn’t address the true cause of conflict or attempt to resolve it. But in cases where you suspect that a challenge to your estate plans will be launched, adding a “no contest” clause to your will can be effective in thwarting it. With a no contest clause, when a beneficiary contests a will, it invalidates their inheritance, and the assets are distributed as though the beneficiary predeceased the testator. Such a clause has typically been upheld as enforceable by courts in Canada. However, there are exceptions, and great care and expert advice is needed when adding this provision to your will.
We discuss a few different angles of these issues in this article and Hull & Hull TV episode: http://www.huffingtonpost.ca/suzana-popovicmontag/family-will-conflict_b_3676914.html
Thank you for reading.