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Friday, March 16, 2018

Executors and charities disputing how to use $2 million donation

Frankly, a lot of estate disputes are unnecessary. If people would use their heads rather than their emotions, we could avoid a lot of the trouble surrounding estates. Here is a case in point. Robert Clark of Kingston, Ontario, died in 2016. In his will he left several million dollars to charities, including 2 million to the Canadian Cancer Foundation. One million has already been paid to them, with the rest soon to be paid.

Mr. Clark's executors, meanwhile, were moved by a video asking for donations specifically for pancreatic cancer. They asked the Cancer Foundation to apply the funds from Mr. Clark's will to that cause. However, using the funds that way is not what the will says. The Cancer Foundation has refused the idea of directing most or all of the funds to pancreatic cancer, stating that it is going to follow the wishes of the deceased to the letter.

The executors have followed the current trend of complaining publicly by taking this story to the newspaper. Click here to read a detailed article in the National Post.

The article contains quotes from the executors stating that the deceased "would have wanted" to direct his funds this way. But the fact is, he didn't. He could have put whatever he wanted in his will and he did not direct that his money go to pancreatic cancer. He stated his wishes whether his executors like it or not.

Executors do not have the right to change the deceased's will. Their job is to carry out the will to the letter. It will be a real shame if these executors persist all the way to court, where the estate funds will be wasted on legal fees rather than going to the charity.

If these executors want to benefit a specific charity or cause, let them use their own money.

Tuesday, March 13, 2018

What happens if the estate is not paid out within the "Executor's Year"?

I have blogged before about the so-called "Executor's Year", a common-law concept that says an executor should have wound up an estate within a year. Most of the time, beneficiaries of estates are content with using that concept as a guideline and are not too upset if there are small delays caused by events that the executor could not control.

But what happens when a year is exceeded by quite a bit and the beneficiaries have not been paid? Not all beneficiaries are okay with waiting for their inheritance.

This is where another legal concept, this one called "The Rule of Convenience" comes in. This rule says that if specific gifts (as opposed to residuary gifts) are not paid within a year, the beneficiary will earn interest on that specific gift. The interest starts running once the year is up and continues until the gift is paid.

I have recently read a very good blog post from that discusses a recent case from Ontario in which both of these concepts were discussed. Click here to read the blog post. I highly recommend it for executors who have been slow getting the estate finished. Here are the facts as set out in the blog post:

"The deceased died in October 2013.  In his last will, the deceased appointed his three children (a son and two daughters) as the co-estate trustees of his estate.  He left each of his two daughters specific legacies of $530,000.  The deceased left the residue of his estate to his son.

After their father’s death, the sisters challenged his last will.  The will challenge settled in August 2016, finding that the father’s last will was valid.  The sisters were paid their respective $530,000 legacies in October 2016 (2 years after the first anniversary of their father’s death).  The sisters resigned as estate trustees.  They also claimed that they were owed interest at 5% per year on their respective legacies commencing on the first anniversary of their father’s death."

Anybody else find it overwhelmingly greedy of these sisters to claim that the estate took too long when (a) they were the executors and (b) they were the ones challenging the will and therefore causing the delay? The greed of some people just continues to astonish me. In any event, the judge denied their application for interest. Of course, the sisters appealed that decision.

The Ontario Court of Appeal allowed them to get the 5% interest per year on their inheritance. The court said that the sisters were entitled to their will challenge and that neither the sisters nor the brother should be rewarded or penalized by the passage of time. I'm having a bit of a hard time with that one, given that the interest amounting to more than $100,000 is coming right out of the residue that the brother would otherwise inherit.

In any event, what we can take away from this case is that the courts are prepared to stick to the Rule of Convenience.

If anyone wishes to read the case in full, it is called Rivard v. Morris and can be read here.

Friday, March 9, 2018

Should you use a trust company as your executor?

Having worked in a leading trust company for 7 years, I am pretty well versed on how a trust company can help when named as executor and trustee of an estate. I am definitely a fan of using a trust company in the right circumstances.

In any discussion about using a trust company, the first question most people ask is about the cost.

The reality of the situation is that a trust company does not and cannot charge more for its executor services than any other executor would charge. They never go over 5%. Don't forget that a trust company is an office full of experienced trust officers and investment professionals who have been through the estate scenario dozens, if not hundreds, of times. Your brother-in-law or aunt or kids can charge the same amount in executor fees even though they have no experience at it.

I came across a very good article at that talks about naming a trust company (also known as a corporate trustee) to handle your estate. It's definitely worth a read if you're thinking about using a trust company. Click here to read it.

Tuesday, March 6, 2018

Cinderella's Trust Fund: serious legal information powered by nursery rhymes and fairy tales

We talk about pretty serious topics here most days, but it doesn't all have to be gloomy. If you like your wills and estates information with a bit of light-heartedness, take a look at my book called "Cinderella's Trust Fund". It contains tons of information about estate planning, trusts, joint property, choosing an executor, powers of attorney, blended families, and much more. The fun part is that interspersed with the text are nursery rhymes and fairy tales that illustrate the points being made. From Baa Baa Intestate Sheep to Beauty and the Bequest, the stories you know and love are re-told from an estate lawyer's point of view. Here's an example:

There was an old woman who lived in a shoe.
She had several children, but she knew what to do.
She couldn’t put all of them on the title,
Since costs were important but harmony was vital.
“I’ll treat you all fairly in my will,” she said,
“Sell my house and split the funds after I’m dead.”

and here's another:

Old King Cole was a merry old soul
 And a merry old soul was he;
 He called for his pipe, and he called for his bowl
 And he called for his lawyers three.

 Every lawyer had a quill,
 And a parchment to write on, had he;
 Oh there's none so smart, to get a start
 Like King Cole and his lawyers three.

He talked of wills and heirs for hours,
And a wonderful talk had he,
They made a will; it’s valid still
For Cole and his children three.

Some of the tales used in the book are Cinderella, Baa Baa Black Sheep, Little Red Riding Hood, Humpty Dumpty, Five Little Monkeys Jumping on the Bed, The Emperor's New Clothes, Old King Cole, The Old Woman Who Lived in a Shoe, Beauty and the Beast, Puss in Boots, Sleeping Beauty, and London Bridge is Falling Down.

Who knew that reading about wills and estates could actually be fun? Click here for more information or to purchase this book. And enjoy!

Monday, March 5, 2018

I believe there are assets missing from the list I received from the executor. Now what?

The flow of information from an estate is usually problematic. In the case of this reader who contacted me with a question, there is communication between the executor and the beneficiary but at this point it seems insufficient. I believe this scenario will sound familiar to a lot of readers. Here are his question and my comments:

"This Christmas my father passed away. Last week his girlfriend contacted me to inform me that I am a beneficiary of his will. I emailed her and asked for a copy. What arrived was a photocopy of notary public's stamp listing myself as a beneficiary. With a typed out listing of account amounts of cash only assets and a listing of monies needed for bills. But nothing else, not a car, home, investments.. etc. I don't feel this is correct at all and have no idea where to find facts.. any advice?"

I expect that you didn't get a list of all assets for the simple reason that they are not in your father's estate. They may exist but it's possible that he held his car and house jointly with his girlfriend. It's also possible that his investments were held in an RRSP in which he named her as his beneficiary. This is certainly how most couples set things up in order to protect each other. If these assets have a joint owner or a named beneficiary, they are not in the estate and are not covered by the will. There is a lot going on behind the scenes of most estates.

You haven't said whether your father's girlfriend lived with him as a common law spouse. In many provinces (but not all) the existence of a common law relationship creates rights for the spouse who outlives his or her partner. This might explain why an asset such as the house was not in the estate.

As you are a beneficiary, you were right to ask for a copy of the will. You are entitled to that. It sounds as though you are a residuary beneficiary, that is, a person who is receiving a share of the whole estate as opposed to receiving a specific item or dollar amount.

Your status as a residuary beneficiary entitles you to information such as the list you received of funds needed to pay bills. This was given to you because your share of the estate will be calculated as assets minus debts, divided among the beneficiaries. My impression based on what you've said so far is that the girlfriend is the executor and she is doing what she should be doing. She has notified you of your standing, sent you a copy of the will, and has provided a preliminary assessment of what the expenses will be. So far that sounds right to me.

There is nothing wrong with having questions about specific assets. As a residuary beneficiary, you are entitled to ask the executor for this information. However, rather than asking her a general question such as "This doesn't feel right. What else is there?", ask specific questions. Ask whose name was on the house and whether it was jointly owned. Ask whether the investments were in an RRSP and if so, who was the named beneficiary.

A lot of beneficiaries don't feel comfortable asking these questions because they think it makes them sound grasping or greedy. But I encourage you to remember that as the residuary beneficiaries named by your father it is both your right and your responsibility to ensure that the will is properly carried out.

On any estate, your first source of information is the executor. See how much information you can obtain there, and do your best to keep the lines of communication open. If you approach it as fact-finding and not challenging, everyone will be happier in the end.

If you cannot find what you are looking for that way, there are not many places you can look. With privacy laws being what they are, it's not easy to just reach out and grab information about someone's finances. Here are a couple of ideas:

1. Do a search at the probate court nearest where your father lived to see whether the girlfriend has filed for probate of his will. Search on your father's name and date of death. If she has filed for probate you will be able to obtain all of the estate information including an inventory of what was in the estate when your father passed away. Remember, however, that not every will needs to be probated so if you don't find anything, it is not conclusive.

2. Do a search at the land titles office or land registry in your father's province. You will need the address of the property for that. You will be looking for a transaction that identifies the ownership of the house and how it is held (e.g. joint ownership, sole ownership, etc).

You will not be able to obtain information from the banks, insurance companies, or Canada Revenue Agency. They simply will not discuss your father's private information with anyone but the executor.

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