Risky (Estate Planning) Business: Joint Tenancies May Expose Assets to Third Party Creditor Claims

I know that a lot of you parents out there have added one or more of your children's names to your home or cabin. I keep warning you about it but you keep doing it, because it's easy and inexpensive, and nobody really believes that the bad stuff is going to happen to them. There is a new case from BC that illustrates exactly the risk I keep mentioning.

I read about the case on a blog published by a Vancouver law firm called Alexander Holburn Beaudin + Lang. Click here to read their analysis of the case in more detail than I am giving here.

The case involves Tina Gully, who added her son, Steven, as a joint owner of her home. She did this as part of her estate planning, at the time she did her will. She confirmed in the will that she intended for Steven to own the property after she passed away. Steven was unaware that his name had been put on the property. Unfortunately, Steven owned a business that ran into trouble and ended up with a judgment against it and against Steven. The creditor put a lien against Steven's half of the house.

When Ms. Gully found out about this, she did her best to head off the damage. She made a new will leaving Steven out. She severed the joint tenancy of her home. She then asked the court for a declaration that Steven was actually holding half the house in a resulting trust so that it could be passed to her grandchildren. It didn't work.

The court decided that Ms. Gully had given Steven half the house when she put him on title. She couldn't say that she hadn't gifted it just because his half was now subject to his debts. What was done, was done.

I hope parents who are adding children (or others) to the title of their homes will see that these things happen even when the children intend no harm to the parent. Sometimes circumstances cannot be controlled. Once you add a person to your title, you have given legal rights and responsibilities to that person. This case shows that the court will protect the legal rights of others, including creditors, who are entitled to rely on the legal position you create when you add a joint tenant.

The case is called Gully v. Gully and can be read in its entirety by clicking here.

Sister fights to stop brother from inheriting from their parents after he killed them

Sometimes estates intersect with some pretty upsetting facts. I've come across a story from Australia that shows what happens when estate law meets criminal law. The legal questions are interesting, but they are more than that; they're upsetting and challenging because they deal with families and strong emotions.

In December 2014, 46-year-old Scott Settree got into an argument with his parents over a bottle of wine he had consumed without permission. He became upset and fatally shot both of his parents. He was charged with their murders but was eventually found not guilty because of mental illness. The judge said that there was no question Scott had killed his parents, but was suffering from a schizophrenic delusion at the time of the killing.

This is where estate law rules come in. In Australia, as in Canada, a person who is found guilty of killing someone is barred from inheriting from the victim's estate. I think the logic behind that rule is pretty plain.

In Scott Settree's case, he was found not guilty because of mental illness. This means he was found not to have known that what he did was wrong. The rule that would bar a killer from inheriting from his victim didn't apply to Scott even though everyone knew what he did, because he didn't have the mental ability to understand his actions. Read more about this story by clicking here.

This is already a complex question, but the added issue is that Scott has a sister, Wendy. She was devastated by the loss of her parents and the fact that her own brother was their killer. Then she had to deal with sharing the parents' estate with Scott. Wendy did not agree that Scott should be able to receive an inheritance under the circumstances and fought the law in court. She was mostly successful, but was told to keep $50,000 from each parent's estate in trust for him.

Now Wendy is trying to have the law that allows a person who is found not guilty of a murder because of mental illness changed so that others in Scott's situation cannot benefit from the situation.

There are some serious questions and issues here. The first that comes to mind is whether it's acceptable for a person who clearly killed someone to be allowed to inherit from the victim because he didn't appreciate the consequences of his actions. Does that appear to be a reward for behaviour that otherwise would be condemned? Whose acceptance is needed here? Generally the law relies on "community standards" and "reasonable people". Is this a situation where the distress of the family should override the rights of the accused killer? How important are the optics of the situation in terms of the public feeling that justice is being done?

And what about the mentally ill person? If he no longer has parents to support  him and he is not able to earn a living due to his mental illness, how does he live? Does he collect welfare and live on public money? Is that a better outcome than allowing him to receive his inheritance so that he could live without public support? Should someone be appointed to handle his inheritance for him?

Deciding what is right in a complex situation with so many variables is not easy. Wendy's campaign focuses on the issue that the verdict found her brother "not guilty" due to mental illness. She wants the wording changed so that his actions are acknowledged, even if he is not held criminally liable. She is having some effect and the Attorney-General of New South Wales is said to be addressing her issue. It will be interesting to see what they come up with.

Thanks for your votes for 2018 Best Legal Blog - we made the top ten!

Thanks to everyone who voted for us in the Expert Institute's Top Legal Blog 2018 contest. We wanted to make the top ten, and we did. We came 7th in the Niche and Specialty section! We're really proud of that result, given that we were running against huge American blogs.

Remember to post only on threads with fewer than 200 comments

It's time to remind readers that I welcome your questions and comments, but this platform only supports 200 comments per post. I guess they didn't expect us to have so much to say about wills and estates! In any event, if you post on a thread that already has 200 or more comments, I can't see the comment, or I can only see a line or two of it and it doesn't show up on the blog. This means I can't answer it in the usual way. When I see that a post is at its limit, I put on this notice, in red:

PLEASE NOTE: The maximum number of comments this system will allow is 200, and this post now has more than 200 comments. IF YOU POST ON THIS THREAD, I WILL NOT BE ABLE TO SEE OR RESPOND TO YOUR COMMENT. Please feel free to ask your question on any thread with less than 200 posts.

So if you see that, please go to any other thread and post your question or comment.

Occasionally I receive notes from very frustrated people asking why I haven't answered their question, and often (not always) this is the reason why.

Man digs up Dad's grave to argue with him

For my last post of 2018, I've found a real winner. Yesterday a man named Michael May was found by police digging up a grave. He told the police (and later, a reporter) that he was digging up his father so that he could argue with him. I swear I'm not making this up! Here is the link for you to read more details about this story.

For his efforts, Mr. May was charged with violating graves, public intoxication, and marijuana possession. He was taken to jail in Lincoln County, KY. The grave he was digging was probably not actually his father's, as it happens. Police have not yet confirmed the identity of the person whose grave was being dug.

The reason this story caught my eye (other than the fact that arguing with a corpse is a somewhat unusual behaviour) is that it seems to me that this is what might happen to people who refuse to make wills even when their families ask them to. "What do I care what happens after I'm gone? I'll be dead!" says the stubborn, intestate person, usually followed by a hearty laugh at his or her own cleverness. It's true that many people are content to leave a big mess behind when they pass on for their children or spouse to sort out. I have no idea of what Michael May wanted to argue about with his father, but I do know that I see an awful lot of people who are angry that their parents won't make wills.

A refusal to make a will causes arguments and recriminations while the intestate person is alive and often results in bitter disputes, family break-ups, and huge financial losses after the person passes away. Perhaps Michael May just wanted to have the last word.

The attached photo of Michael May accompanied this news story at www.huffingtonpost.ca and is credited to Lincoln County Jail.