How old should your executor be?

Something that I talk about a lot on this blog is the choice of executor. It's an absolutely crucial decision. You must have someone who is willing and able to do the job the way you need it to be done. Many of my clients, when having their wills made, indicate to me that they have a good candidate in mind but are not sure whether the person's age makes them a poor choice.

This could be because they want their parents to be their executors but they are concerned that it could be too much for the parents once they reach a certain age. Other clients would like to name their children but wonder whether the children are too young to take on such responsibility.

I've recently read a very good article by Ontario lawyer Susannah Roth that specifically discusses how to deal with the question of your executor's age. She has some good, practical ideas that some of you will no doubt find very useful in your own planning. Click here to read the article.

While age is not the only factor in choosing an executor, it's something that should always be considered.

My husband has an illegitimate child. Does he have a claim against my husband's estate?

I am often asked by clients and readers of this blog about how children born out of wedlock affect the estate planning of the biological parent. I was recently asked an interesting question along those lines by a reader and I've decided to share it here because I think it brings up a scenario that is familiar to many people. Here is the question and my response:

My husband and I, both in our 80s, have recently made our wills leaving everything to each other and then equally to our children. My husband has a son from an affair while we were married. The son lives in another country and we are in Canada. The son appears to be well educated with a good profession. He has tried to make contact with my husband. Must he be mentioned in our will? Could he contest his father's will and would that interfere with my inheritance if my husband dies first?

As with most questions about how laws apply to real people, the answer isn't just a simple yes or no. At least, not without several more details.

You have not said whether the son was adopted by anyone else. I am thinking of a step-father who might have adopted him upon marrying the boy's mother. If the son was adopted by anyone else, he would legally no longer be the child of your husband and there would simply be no question of the son  having any right at all to inherit anything from your husband. Since the fact of adoption was not included in your question, I am going to proceed as if there was no adoption.

The law does not distinguish between legitimate and illegitimate children when it comes to a right to inherit. So, we start off with the premise that the illegitimate son is of equal legal status with the children of your marriage. The fact that there doesn't seem to be a relationship between father and son, at least not that you've described, doesn't automatically mean anything though it could be relevant when combined with other facts.

Then we look at whether the son would be able to leverage his biological relationship into a claim against the estate. He is not a minor. He is not a post-secondary student. He is not disabled. He is not financially dependent upon your husband. These facts mean that he is not a person who would automatically have the right to contest the will based on the idea of dependency. This is a big question out of the way, since the courts tend to be sympathetic to dependents who are left out of wills and who are struggling because of it.

Having excluded that possibility, we then look at whether there would be any other right to contest the will. I note that although I have not identified your province in order to protect your privacy, you are not in British Columbia where the laws that allow children to contest their parents' wills are somewhat different than the test of the country. In Canada, parents are not required to leave their estates to their adult, financially independent children, either equally or at all. We do have a strong tradition of doing so, and this is usually what our children expect us to do. But parents have the right to leave their estates where they choose, within some restrictions.

It is not necessary for your husband to mention the son in his will. A misconception that I hear often is that if you leave a person a dollar in your will, he can't sue you. Well, that's nonsense of course, but the grain of truth behind it is that if you leave someone a small gift in your will, it shows that they weren't left out accidentally (say, by a typo or the lawyer not recording a name, etc).Your husband may choose to leave something to the son. He might also choose to state in his will that he is aware of the son but isn't leaving him anything because he doesn't have a relationship with him. It achieves the same thing.

From what you've told me, I do not believe that the son would have any claim against your husband's estate that would succeed in court. Obviously I can't guarantee that he wouldn't try, since I am approached regularly by people who want to contest wills for no reason other than they are ticked off.

POA horror stories can sometimes be prevented

Is there anything more disheartening than siblings fighting bitterly over who gets to manage the parents' money, with everyone accusing each other of theft and bullying, and the parent turned into a mere pawn in the struggle?

Unfortunately, it happens a lot more than most people would believe. There are numerous factors that go into the perfect storm of a lawsuit over an Enduring Power of Attorney: a parent with diminished mental capacity, sibling rivalries, poorly drafted (or worse, home-made) documents, and that one greedy person who doesn't mind poking the bear no matter how badly people get mauled.

Another factor is the general lack of understanding among the population about what the POA document allows them to do. Many don't see anything but their name, and take it as blanket authority to take, use, keep, or spend the parent's funds. Most of the time, the parent's lawyer who drafted the document hasn't helped the situation, since the document itself may be full of legalese, or clause after clause of inapplicable boilerplate language that everyone ignores.

I suggest that everyone who hires a lawyer to prepare a POA should insist that the document be readable and understandable by non-lawyers. They should refuse to accept words and phrases they don't understand. They need documents that they can explain, and that their son or daughter can refer to as an actual guide to what they are supposed to be doing. No legalese. No run-on sentences with hundreds of words.

The documents I draft for my clients are intended to be used by lay people, not just lawyers. After this many years in the business, I've heard my share of belligerent bullies demanding to know where the document says they can't live rent-free in Mom's house or use Mom's money to build a swimming pool or buy them a car. So now I make documents that make it clear.

I also provide a "Do and Don't" tipsheet with every POA. It is meant to be used by the person who acts under the POA document and I suggest to my clients that it be given to that person. It's a small thing for me to do, but can have a huge impact on how someone behaves when using a POA. For one thing, they've got an actual guide in their hands that could prevent errors, and for another, they won't be able to wiggle out of trouble later by saying "I didn't know that wasn't allowed." Giving out this tip sheet is a practice I suggest all lawyers start following.

And now, just to illustrate just how bad things can get between siblings who are arguing over a parent's POA, check out this article from the Ottawa Business Journal. It tells a couple of stories about families who have basically destroyed themselves by fighting over who gets control of their parents' finances. In one case, while the siblings all fought about who should have control of their 92-year-old mother, one son got her to write a cheque for $50,000 while another helped himself to $350,000 to buy himself a house with a pool.

No document is going to prevent a truly greedy, dishonest person from trying to steal from his own mother. But a properly drafted document can provide transparency and keep everyone in the loop so that it's harder to get away with theft or fraud. It can say that when one of the kids takes money (or can't explain where it went), he or she loses that much off his or her inheritance. It can appoint a neutral third party POA who won't allow anyone to get their hands on the money improperly.

You wouldn't think that parents would have to protect themselves from their own children, but statistics show that they do.

Nova Scotia court protects testamentary autonomy

There are interesting things happening in the Nova Scotia courts. Their Supreme Court has become the first court in Canada to determine that testamentary autonomy is a constitutionally-protected right.

What does that mean for your average testator making his or her will in Nova Scotia? It means protection of the right to dispose of his or her estate as he or she sees fit. More specifically, it means that wills that leave out adult, non-dependent children are no longer open to challenge on the ground of not including that child.

The case I'm talking about is Lawen Estate v Nova Scotia (Attorney General). It came about as a result of the will of Jack Lawen. He had three daughters and a son, all adults and all independent of their father. Mr. Lawen left $50,000 to two of his daughters, the residue of the estate to his son, and nothing to his third daughter. The will was contested on the grounds that it did not adequately support some of the beneficiaries.

All provinces in Canada have laws that allow a dependent of a deceased to contest a will if the dependent is not adequately provided for in the will. In almost every province, the definition of "dependent" includes a spouse, a minor child, and an adult child who is financially dependent on the deceased. The law is designed to ensure that someone who depends on the testator would not be left penniless and vulnerable. Nova Scotia's law is a bit different, in that it does not say that an adult child must be financially dependent. This left open the question of whether an adult child who was not in any way dependent on her father could bring a claim that her father had not adequately provided for her. If she could, since there was no actual or economic obligation by the father, it would have to be seen as a moral obligation.

This is an important distinction for testators. If moral obligations to persons to whom you have no legal obligations were to be upheld, you would lose much of your freedom to leave your estate to whomever you wish. Anyone who felt you "owed them" might have a right to contest your will. We all acknowledge that there are some rules about who you have to look after in your will, but adding more rules would chip away at testamentary freedom.

The section of the law that contained that definition of "dependent" was challenged as being against our Charter of Rights because it impaired a person's right to leave his estate where he chooses. But is testamentary freedom a constitutional right? The court said that it is.

The end result is that the judge struck down the sections of Nova Scotia's law that says a dependent includes non-dependent adult children. These sections were held to be inconsistent with Canada's constitution, that they infringe on testamentary autonomy, and that they violate the right to liberty guaranteed by section 7 of the Charter.

This will mean a big change in the law of inheritance in Nova Scotia. It brings that province's law more in line with what the rest of the country is doing about dependents. 

How can a trustee quit?

Most individuals acting as executors and trustees get on with the job as best they can, with no illusions that it's supposed to be fun. I'm sure the majority have the occasional day when they wish they could just drop the whole thing and walk away. For some, though, the job becomes intolerable and they eventually determine they simply cannot continue to be the trustee. An executor - just like any other trustee - cannot just walk away once they've started the job; they need court permission to withdraw. If you do simply walk away from a trust without being properly released, you are attracting personal liability.

Getting that court permission is not guaranteed just because you don't want to do it anymore. A judge doesn't have to grant your request if he or she doesn't think it's a good idea. A  new case from Ontario called Pierce v. Zock has given some useful insights on what the court wants to know when considering this type of application.

In this case, two of Mr. Zock's four children were trustees of a trust that included the family's small farm. The trust was set up in Mr. Zock's will as a Henson trust, which means one that may provide financial assistance to a person who is disabled and is receiving government disability benefits. The person in question was Stephen, a third child of Mr. Zock. He lived at the farm, and most of the land was leased to a neighbour to cultivate. The will directed that if Stephen was not able to live independently and keep up with repairs, the farm should be sold.

After operating the trust for some time, the two trustees approached the court saying they both wanted to resign. They said that their relationship with Stephen had deteriorated badly, that he was belligerent, physically violent, demanding money, that he would not consent to a decent offer to purchase the farm, and that he would not maintain the property in which he lived. They also asked for an order that the farm be sold because it was not being maintained according to the terms of the trust.

The court refused their request for two reasons. One is that they did not present enough evidence to support their claims, and the other was that they did not present alternatives for someone to take over the trust.

Testimony by the parties themselves is evidence. However, the testimony of one party is usually met by denials and counter-accusations by the other side. This case was no different in this regard. Stephen denied pretty much everything his siblings said. The judge wanted additional evidence to clarify these issues that were in dispute. In particular, he said he would have liked to see a medical report establishing that Stephen was (as alleged by the trustees) mentally ill, and an appraisal or evaluation of the property stating whether or not it was as neglected as they were alleging.

The judge noted that a person cannot be forced to be a trustee if he or she doesn't want to do it. A judge can remove trustees as long as there is some arrangement for the administration of the trust. The applicants in this case didn't suggest an alternative trustee. They had asked the Public Trustee, who declined. The estate wasn't large enough to justify the involvement of a trust company. However, there was risk involved in leaving the trust without an administrator. Someone had to manage the income and the lease agreement. The judge allowed only one of the trustees to step down (after passing her accounts, of course). He said that the second trustee would continue on for another year, at which time the court would look at the issue again.

The judge was sympathetic to the difficulties the trustees encountered in dealing with Stephen. To try to make the job a bit easier, the judge made a number of orders about payment of expenses, legal costs, contact between Stephen and the trustee, and inspection of the property.

The trustees' request to sell the property was not issued either. This was again due to a lack of evidence. The judge said that without any appraisal or anything showing the state of the property, the conditions set out by the trust hadn't been met.

I find this case informative for anyone thinking about doing this type of application. Personally, I find it highly surprising that any lawyer would ask for the sale of a property because of lack of maintenance without actually bringing proof of lack of maintenance. But I don't know what went on behind the scenes; perhaps the trustees couldn't pay for an appraisal or didn't agree it was necessary, but in any event, it was a key element missing from their application.

Bottom line: if you're asking the court to remove you as a trustee - prove your case!