Today on Hull on Estates, David Morgan Smith and Nadia Harasymowycz discuss guardianship and capacity issues in circumstances where incapacity is a distinct possibility, but not currently the case.
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Click here for more information on Nadia Harasymowycz.
In the days prior to the evolution of the Internet, planning and administering an estate was relatively simple as the physical belongings of the deceased could be carefully sorted through, packaged, and divided according to the Deceased’s testamentary document or the applicable legislation.
In the days since the Internet has become a common household tool, planning and administering an estate has not been so easy. In a study commissioned by Remember A Charity, The Dying in a Digital Age, it was discovered that four in five people own digital assets, but only nine per cent have considered how these will be distributed upon their death.
According to the study, the nation’s digital music collection is worth an estimated £900 million alone.
Three quarters of those surveyed for the study indicated that their digital music and photo collections had strong sentimental value, while eight out of ten said their digital assets were financially valuable.
Rob Cope, director of Remember A Charity said: ”Bank accounts, music and photograph collections are increasingly stored online…meaning families will wave goodbye to a small fortune if details are not passed on.”
There is now an entire cyber existence that both the Deceased and Trustees need to turn their mind to when planning or administering an Estate. For instance, what will become of Facebook, Twitter, Flickr and PayPal accounts? One easy solution is to subscribe to a website called Legacy Locker. Legacy Locker was created in 2009 and it maintains a master list of user names and programs for online bank accounts, social networking sites and document repositories.
In the digital era, it is important that we consider and make arrangements for how our digital assets will be distributed, and for estate planners, it may be just as important that you consider including in your questionnaire or checklist, a question that forces a client to turn their mind to consider their digital assets.
Thank you for reading, and have a great weekend.
Rick Bickhram – Click here for more information on Rick Bickhram.
I am a big fan of the feel good test in my approach to success in law, business or anything else. It is not what people actually get that dictates success but how people feel about it at the end of the day. In a previous blog I commented that client satisfaction is based on this very principle, but what about our own success as lawyers? How those in the legal profession define success has many answers, depending on the individual and the area of law.
In this week’s edition of Canadian Lawyer Magazine 4Students you can see what some lawyers think of as the pros and cons of practising in a particular area. If you scroll way down, you’ll see pros and cons of practising in trusts & estates by Liza C. Sheard, of Evans Sweeny Bordin LLP in Hamilton, and by our very own Paul Trudelle at Hull & Hull LLP in Toronto.
A definite pro for any trusts and estates lawyer is that it is an intellectually fascinating and challenging area of law. The cons are based around the emotionally charged atmosphere we often encounter.
Work life balance is a very common buzz-word these days. Ultimately work-life balance comes from within and not from your job description. You must know yourself and integrate your talents, your passions and your responsibilities into each day to meet your constantly changing priority list.
I’m a firm believer that in order to be a success at anything you have to enjoy it – it has to mean something to you. As I celebrate my first anniversary in trusts & estates law, at the end of the day I feel pretty good. But I feel even better about getting up the next day to come in and do it all over again.
Thanks for reading all week and have a great weekend!
Sharon Davis – Click here for more information on Sharon Davis.
As we all know, it is not uncommon for any investor to occasionally experience a substantial decrease in the value of one of the stocks in his or her portfolio. But what if the investor is a trustee?
In light of the recent amendments to the Trustee Act which appear to embrace the modern portfolio theory, it will be interesting to see how the Court will utilize this theory to assess a trustee’s investment performance. Section 28 of the Trustee Act adopts an approach that is consistent with the modern portfolio theory. Under this section, a trustee is insulated from liability if “the conduct of the trustee, which led to the loss from the trust, conformed to a plan or strategy, for the investment of the trust property, comprising reasonable assessments of risk and return that a prudent investor could adopt under comparable circumstances”.
Under the “statutory legal list” approach, which I described yesterday, a trustee was limited to investing trust assets in authorized investments. However, with the development of the prudent investor rule, trustees are provided with a broader range of investment choices, which will likely increase their responsibility in determining an acceptable standard of care.
Presuming that a trustee is found liable for breaching the standard of care, section 29 of the Trustee Act permits a court to assess “the overall performance of the investments” when it is assessing damages. Based on the language of section 29, it appears that a trustee may be allowed to offset the loss of a bad investment against the gain of a good investment.
The trusts and estates bar will be watching with interest to see how the judicial consideration of the prudent investor rule evolves.
Happy Super Bowl Weekend! Go Patriots!
In my blog yesterday, I introduced the prudent investor rule as the standard of care for trustees when investing assets that are held in a trust. Today, I will address how a trustee’s investment performance may be assessed.
Prior to July 1999, trustees were required to make investments pursuant to the “statutory legal list” provided for in the Trustee Act. This had the effect of holding trustees accountable for each particular investment, rather then the investment portfolio as a whole. The principle was further illuminated by the anti-netting rule, which stated that a trustee, who committed a breach of trust, was not entitled to set off a gain in one transaction against a loss in another. However, through recent amendments to the Trustee Act, the statutory legal list was repealed and replaced with the Prudent Investor Rule.
The Prudent Investor Rule reflects the modern portfolio approach to investments, the emphasis being on the prudence of the portfolio as a whole as opposed to each particular component. This theory is captured in Section 27(5) of the Trustee Act. Section 27(5) requires “a trustee to consider … the role that each investment plays within the overall trust portfolio”. Furthermore, under section 27(6) “a trustee is required to diversify the investments of the trust property. It appears that under the modern portfolio approach, a trustee would not be breaching the standard of care, should he or she invest a substantial amount of trust assets into a single security. As described above, section 27(6) requires that the trustee consider diversifying the portfolio, which is necessary if the Prudent Investor Rule is to be followed. To conclude my topic, tomorrow I will consider the liability of a trustee with respect to the investment of trust assets.
Thanks for reading,
Not all Wills provide for an outright distribution to the beneficiaries. In some cases, the assets of an estate are held in trust over a period of time for the benefit of one or more beneficiaries, sometimes in succession. When a trustee administers a trust, he or she is entrusted to act for the benefit of others. As such, our common law and statutes impose standards that trustees must comply with when dealing with trust property.
With the recent plummet in the stock market, I believe many trustees are considering how the stock market losses have affected the trust investments and what action they should take in the circumstances.
Section 27 of the Trustee Act addresses the standard of care for trustees when investing assets held in a trust. Section 27(1) states, “in investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments”. Section 27(2) states that “a trustee may invest trust property in any form of property in which a prudent investor might invest”.
Section 27(1) and (2) outlines the prudent investor rule. When investing trust assets, a trustee must comply with the prudent investor rule to protect himself or herself from liability. Section 28 of the Trustee Act, emphasizes this point as it states that a Trustee will not be liable for losses arising from investments if the standard of the prudent investor is met. Nevertheless, the issue remains how does a trustee meet the “prudent investor” standard? In keeping with this theme, tomorrow I will address how a trustee’s investment performance may be assessed.
Thanks for reading, and have a great day!