Things to consider when appointing an estate trustee

Looking to appoint an estate trustee (executor) for your estate?  Here are a few things to consider when making this important decision:

Wordcloud TrustAre they capable?

There is no getting around it – this is a lot of work.  Does your chosen estate trustee have the ability to deal with lawyers, financial institutions, insurance companies, and government agencies such as the CRA?  Can they determine the necessary questions to ask?  Are they able to complete lengthy and sometimes complex forms?  Are they organized and capable of keeping detailed and accurate records?  What are their communications skills like?  They will be dealing with potentially complex matters and will need to communicate information to family members and loved ones.  These can be delicate maters.  All of this being said, it is crucial to appoint someone you trust.  Ability is important, but trust is essential.

Are they willing?

Ask them!  You do not want this important responsibility to come as a surprise to the person you have chosen to carry out this extremely important task.  A very important point – please make sure that the trustee knows where to find all relevant paperwork (copies of will, insurance policies, information on accounts, necessary passwords, etc.).  Delays happen when documentation cannot be found, causing additional stress to family members at an already difficult time.

Do they have the time?

Estate administration can easily take up to a year (or longer) and can be like having a part time job.  Make sure to choose someone who has the time to dedicate to dealing with your legal and financial affairs.

Is one enough?

No.  You should have an alternate trustee, in case the estate trustee you have designated pre-deceases you or is unable to carry out the necessary duties when the time comes.  You may want to appoint two trustees, who can work together as a team – perhaps with complimentary skill sets.

Does it have to be a family member or friend?

Not at all.  In fact, it may sometimes be easier to appoint estate professionals.  Complex estate matters or potential family conflict may mean that it is best to avoid having a loved one as an estate trustee.  If you do name a family member or friend, they may decide to hire a lawyer or estate professional to deal with the administration of your estate.  Such professionals would be paid from compensation due to the estate trustee for their work from the estate.

Does it matter where they live?

For ease of estate administration, it will certainly be helpful if the estate trustee lives reasonably close to you, making it easier to deal with your assets.

If a person appoints a non-resident of Canada as estate trustee, there are likely to be tax consequences.  As a rule, an estate is tax resident wherever the estate trustee happens to reside.  For example, if you appoint your child who lives in Florida, your estate will be governed by the income tax laws of the United States.   If the estate trustee decides to move to another country, this could also trigger some tax consequences.  Tax affairs are complicated and can be expensive, and it is best to call in experts to assist when required.

In short, it’s best to pick someone who is close by and plans to remain a resident of Canada.

Heather Austin-Skaret is a Partner at Mann Lawyers LLP and can be reached at 613-369-0356 or at Heather.Austin-Skaret@mannlawyers.com.

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Are your affairs in order? A few resolutions to help you out…

As we ring in a new year, many of us make a number of resolutions: do more exercise, lose weight, less screen time and more books, etc.  Another goal to consider – get your legal affairs in order.  We will go into more detail in future blog posts, but here are some goals to add to your 2018 resolutions.

Make a Hanging file folder labeled with Estate Plan will (or if you have one – well done! – ensure that it is up-to-date).

According to a 2012 LawPro survey, 56% of Canadians don’t have a will.  Don’t be one of those Canadians!  What happens if you die without a will?  The Succession Law Reform Act – not you – will determine who your beneficiaries will be.  You won’t decide who your trustee (executor) is or who gets your treasured heirlooms, and you may miss out on some beneficial tax planning opportunities.  What you may do is create confusion and conflict, generate extra expense, legal work and unnecessary delays.  This can be avoided if you have a will.

Do some advance care planning and ensure you have adequate powers of attorney in place. 

A power of attorney is a legal document whereby you appoint someone to make decisions on your behalf while you are still alive.  You are likely to want to decide who that person will be, and if you have a power of attorney in place, this will happen.  There are two kinds: one for personal care (living will) allows you to appoint someone to make decisions regarding matters such as hygiene, shelter, food and medical care when you are deemed unable to do so.  The one for property grants someone the power to take care of your financial/legal matters (except making a will) either while you are capable or when you are not capable (you get to decide).  Again, you are likely to want to determine who this person is who is making important decisions on your behalf, so be proactive and ensure that your affairs are handled according to your wishes.

Make lists – and ensure that someone knows where they are and that they are secure.

Bank accounts, passwords, investments, real estate holdings, insurance policies – does someone know where these things are and how to access them?  Do you know where they are and how to access them?  What about your on-line presence – social media accounts, blogs, etc.?  Can someone access those?  Consider starting the new year out by gathering all of this important information, ensuring it is updated, and letting someone know where the information can be found.

Just a few resolutions to add to your list, ones that will be appreciated by your loved ones.  Happy New Year!

Heather Austin-Skaret is a Partner at Mann Lawyers LLP and can be reached at 613-369-0356 or at Heather.Austin-Skaret@mannlawyers.com.

 

Estate Issues to Consider When Separating

If you are separating from your spouse, you should review your estate plan with your lawyer and consider what adjustments should be made in light of changing family dynamics.  Below you will find a list of general steps to consider, but you should always obtain legal advice regarding your particular family and financial situation.

Update your will

While marriage revokes a will, separation does not.  Absent an agreement which contains an estate release, if your spouse is a beneficiary of your will, separation will not prevent your spouse from taking under your will.  Your spouse may alwills-estatesso be named as your estate trustee (executor) in your will, which you may wish to change in the event of separation.

If you don’t have a will in place, and you die without a will, your spouse is entitled to share in your estate under the Succession Law Reform Act.

Keep in mind that, unless equalization and support issues have been resolved by way of a signed Separation Agreement or court order, your spouse may still be able to make a claim for equalization from your estate, or make a claim for dependant’s relief, which is akin to spousal support.  Notwithstanding this, it is still important to review your will and make changes to indicate your wishes and update estate trustee appointments.

Update Powers of Attorney

In the event of a separation, you should review any Powers of Attorney you have made to determine if any changes are required.  If you do not have Powers of Attorney in place, you should prepare Powers of Attorney for Property and Personal Care to ensure if something happens to you, you have the right individual making decisions on your behalf.

Change Beneficiary Designations

You may have life insurance, RRSPs or other assets that have designated beneficiaries.  Review these designations to determine if any changes are required.  If you have minor children, you will need to ensure there are trust provisions in place if they are going to receive funds in trust for their benefit.

Sever Joint Tenancy

Property held by joint tenancy will pass by right of survivorship to the co-owner(s).  If you own property as joint tenants with your spouse, you should consider whether you want to sever the joint tenancy to prevent the property passing by right of survivorship on death.

This is not intended to be an exhaustive list but rather information about some of the most common estate planning considerations on separation.  If you are in the midst of separating, speak to your lawyer about your estate planning documents and any changes you should be making.

Please note that the above is not legal advice, and is only meant to provide you with general information. If you have questions about separation or estate planning, please do not hesitate to contact one of the lawyers in our Family Law or Wills and Estate departments at 613-722-1500.

“Mutual Wills vs. Reciprocal Wills” When is a will more than a will?

There is much ado these days concerning disappointed children suing a step-parent who has inherited the estate of the children’s parent, leaving the children ‘high and dry’.  Can such a law suit succeed?  Well, as a lawyer will usually tell a client “It depends”.  A will can be set aside based on the maker of the will not having capacity at the time of his/her making of the will, or based on the maker of the will being unduly influenced or coerced into putting terms in a will that he/she, left to his/her own devices, would never have included.

However, there have been successful arguments made in court that the terms of a will can be set aside on the basis of contract – yes, contract.  So how does a will become a contract?  Well, under circumstances where a couple makes a will with a lawyer, each will mirroring the other will, arguments have been made that each member of the couple has contracted with the other not to change the will at any time after the making of the will.

When a couple makes a mirror will, each member of the couple has provisions as to what happens when the survivor of them dies, and those provisions are the same – so, for example in a second marriage, where each spouse has children from a previous marriage, the mirror will might provide that, upon the death of the survivor, the total estate of the survivor will get split between the children of each of the spouses.  The argument made in court is that, at the time of the drafting of the mirror wills, there was an implied contract that the survivor could not change his/her will to cut out the children of the first of them to die.

In order for such a contract to be found to exist, courts will usually look for outside evidence, other than simply the existence of mirror wills, to support the argument for a contract to exist.  In order to create clarity in estate planning, it remains important, for couples who are preparing an estate plan, to give consideration to whether it is their intention to bind each other to the terms of the wills that they jointly prepare.

Islamic Wills in Ontario

“It is the duty of a Muslim who has anything to bequeath not to let two nights pass without writing a Will about it.” (Sahih al-Bukhari)

A Will is a document which says what you want done with your wealth (property, possessions, belongings) after you die.

In Ontario, anyone over 18 years old can prepare a Will provided the person does not suffer from any mental impairment.  Although is it not compulsory in Ontario to have a Will, it is highly recommended as the consequences of not having a Will may affect the distribution of your wealth.

An Islamic Will is similar to a traditional Will but the instructions regarding the distribution of your wealth are based on the principles of Islam.  In other words, a Muslim who wishes to fulfill his religious obligations will be guided by the law of inheritance provided for in the Holy Qur’an.  Surat An-Nisaa’ establishes fixed distribution requirements.  Further clarifications can also be found in several ahadith (traditions of the Prophet pbuh).

Islamic Wills are valid and enforceable provided that the requirements set out in the Ontario Succession Law Reform Act have been satisfied, subject only to laws which can be used to challenge any Will, Islamic or otherwise.  If the Will was properly executed (signed and witnessed), was not prepared under pressure or the testator (the person who has made the will) was not intimidated nor influenced, the instructions given in the Will should be enforceable.

However, there are instances where Courts may not enforce the Will, for example, if the distribution does not properly look after the needs of a person who was a dependent of the deceased or if the surviving spouse elects to receive his or her entitlements provided for under Section 5 of the Family Law Act.

In Ontario, if a person dies without a Will, Islamic or otherwise, his or her property will be divided according to the rules set out in the Succession Law Reform Act.  From an Islamic perspective, your surviving relatives may not receive the shares specified for them in Islam.

As a result of the serious financial and religious consequences involved upon the death of a person, every Muslim should prepare a Will. Knowing that your wealth will be distributed as you intended will give you peace of mind.

Should you require more information or assistance regarding Wills and/or estate planning or you want to make sure that your estate is distributed according to your wishes, please call 613-722-1500 and ask for Ted Mann or Karine Devost and they will be happy to assist.

 

Why piece meal planning is dangerous!

I have recently been asked to prepare wills for an older couple who have several properties, various investments and two adult children. The real properties include both the matrimonial home, cottages and investment properties. I always ask the client how title is held and then I ask them to provide me with a copy of the deed so I can cross reference what the client believes to be the case with what the provincial records show.

How title is held is important because of the manner in which ownership interests pass on death.  There are several different ways in which people can own title to real property.

First, as joint tenants – two or more people may own property as joint tenants – when one joint tenant dies the other joint tenant is entitled to register a survivorship application and remove the deceased joint tenant’s name from title.  This process happens outside of the terms of any will and without the need of filing for a certificate of appointment of estate trustee and paying probate fees.  The refernce to joint tenants must be reflected on the deed.

Second, two or more people may own real property as  tenants in common – when one tenant in common dies their interest does not pass to the other tenant in common. The deceased tenant in common’s will dictates to whom the interest in the property will pass. In all but the rarest of cases title held by one person alone, or as a tenant in common, will require the estate trustee of the estate of the deceased to  file a court application to obtain a certificate of appointment of estate trustee in order to deal with the deceased’s interest in the real property.  This means the estate will need to pay the application fees and legal fees to obtain the certificate.  The certificate will be required before the estate trustee may sell or transfer the property, even to a beneficiary in the deceased’s will.

Each of my clients believed they respectively held title to an investment property with each of their children as joint tenants so that the ownership would pass to the adult child when the parent died.   When I researched the title records I discovered that the property that Dad owned with his daughter was held as joint tenants but the deed the Mother held with her son was as tenants in common.  As a result on Mom’s death there would be needless delay and extra expense that she would not have anticipated.

Finding out how title was held at the drafting state allowed us to suggest a solution to the problem.  It is a relatively simple fix while both parties are still living and competent. We prepared and registered a deed from Mom and Son to Mom and Son, as JOINT TENANTS.  This is done for estate planning purposes and is exempt from land transfer tax. If this situation had not been corrected and if Mom died believing the property was held as joint tenants then the Court application and filing and legal fees would have needed to be paid and there would have been unnecessary delay in transferring title.

Lesson learned – when you decide to make your will, check ownership of assets.

When is a Will not a Will?

There is a massive transfer of wealth currently happening in the province, and across the country, from the baby boomer generation to their children and grandchildren.  And everyone has a hand out wanting a piece of that pie.  As a result, there have been a significant number of law suits generated challenging the validity or enforceability of a will left by a deceased.  There are, however, only a limited number of circumstances under which a will can be challenged. The most commonly used challenges are:

  1. Improper Execution:  A will that has not been properly signed and witnessed as provided in the laws of Ontario is invalid, and can be set aside in a court of law.
  2. Undue Influence: A will can be set aside if a person or group of persons have pressured, intimidated or otherwise influenced the deceased in the preparation of his/her will.
  3. Against Public Policy: A provision in a will that is found by a court to be against public policy will be found to be invalid.  A recent example of the application of this principle can be found in the case of Spence v. BMO.  That case involved a father and two daughters.  The father had had no relationship with one of the daughters, and was very close to and had provided money to the other daughter.  That daughter told her father at one point that she was living with a man of a race different from theirs, and was going to have a baby with him.  The father, upon being advised of this, stopped his communication with that daughter, and changed his will, cutting out that daughter entirely and leaving his estate to the first daughter from whom he had been estranged.  The court set aside Mr. Spence’s will as being void as against public policy.  Although this case is under appeal, there is judicial authority in earlier cases for this principle, and estate planning lawyers are now delving more closely into motivations behind wills to reduce the likelihood of a challenge on this basis.
  4. Family Law Act: A spouse, instead of taking his/her inheritance arising from a will within six months of the date of death, may elect instead for an equalization of net family property under the Family Law Act, a complex calculation that evens out the value of the assets of each spouse accumulated during the marriage.
  5. Dependant’s Relief: A person who is the dependent of a deceased can challenge a will, to the extent that the will doesn’t adequately provide for that dependent.

It is our responsibility to advise our clients with regard to their estate planning needs to do our best to create an estate plan that can survive a challenge on any of the above grounds.

Ted Mann is the managing partner with Mann Lawyers LLP, a full service law firm in Ottawa’s Hintonburg area. Should you require more information or assistance regarding wills and/or estate planning, please call 613.722.1500 and ask for Ted Mann, Heather Austin-Skaret, Ashley Maksimovic or Mitchell Besner and they would be happy to assist.

DISCLAIMER: This article provides general information and should not be construed as legal advice or establish a solicitor-client relationship by way of the information contained herein. You should seek qualified legal advice before acting on any of the information provided herein.