Saturday, March 28, 2015

Why would someone buy your business?

I always enjoy estate planning with business owners, as there are always a few interesting issues to resolve and some worthwhile challenges to overcome in the process. For business owners, estate planning can take much longer than it does for non-owners. The question of what to do with the existing business is front and centre.

For those business owners who are not planning to pass the company on to others in their family, selling the business is an attractive option. However, arriving at the right sale price is really tricky. I recently came across an article on that makes a good point. It says that business owners shouldn't be asking "who will buy my business?"; they should be asking "why would someone buy my business?" In other words, what are they willing to pay for, and why?

Click here to read the article. It will give you some good ideas about what to focus on if you're considering selling.

Tuesday, March 24, 2015

Panel to discuss prevention of abuse of Enduring Power of Attorney

Anyone who is in the St. John's area and who has questions or concerns about Enduring Powers of Attorney might be interested in this event that is happening tonight. I'm participating in a panel that is going to explore issues around Enduring Powers of Attorney with particular focus on what changes need to be made in order to address the abuse of these documents.

The official poster says:
"A power of attorney is a good tool, but not without its pitfalls. A panel of local experts will present an overview of some of the broad medical, legal, financial, and social issues associated with the use of these documents.  The panelists will present some important considerations and raise questions to generate critical thinking. The presentation will be followed by a Question and Answer session and is open to the public."

The moderator of the event is Dr. Gail Wideman of the School of Social Work, MUN

The panelists are:
- Barry Fleming, QC, the Citizens' Representative
- Dr. Susan Mercer, MUN
- John Goodland, Deputy Public Trustee
- Lynne Butler, Wills and Estates Consultant, Lawyer, Author

The event is happening at the Fairfield (Marriott) at 199 Kenmount Road, from 7:00 - 9:00 p.m.

Friday, March 20, 2015

How can the executor get away with that?

You're the beneficiary of an estate, and you just know that something is wrong. It's been months - or years - and the estate isn't settled yet. The executor, who seems to be living extravagantly these days, won't answer any questions and in fact becomes belligerent when you try to get information.

How is he getting away with that?

This problem exists because not only do most executors not know what they heck they are doing, but most beneficiaries don't know what the executor is supposed to do either. A dishonest executor soon learns that he can get away with almost anything he wants because nobody is watching.

There isn't any government, public or police department supervising executors. It's up to the residuary beneficiaries to monitor and enforce what the executor is doing.

One of the ways that executors deflect questions from beneficiaries is to threaten to sue the beneficiaries. Apparently this works as a deterrent, but I don't see why. After all, what could the executor sue the beneficiary for? For asking questions that the beneficiary has not just a right but an obligation to ask? For trying to enforce what's in a valid, legal will? That's a bluff I'd be prepared to call.

Some beneficiaries recognize this bluster by the executor as aggression designed to keep the beneficiaries from finding out what's really going on, and know that they should hire a lawyer to push the matter. The problem is they don't want to further deplete their inheritance with legal fees. Unfortunately, if they don't hire a lawyer to stop the bleeding, there isn't going to be any inheritance left at all.

One of the ways to cover legal fees when beneficiaries are required to use the courts to enforce a will is to take the legal fees out of the money that would otherwise have been paid to the executor as an executor's fee. If the executor really is as bad as the beneficiaries believe, the court is likely going to be prepared to order that the executor forego his fee. This could mean that the executor has to repay funds to the estate.

If an executor is found to have committed theft of assets of the estate or caused financial loss to the estate through carelessness or extravagance, there can be further penalties. These might include orders to produce an accounting, being removed as an executor or, in the case of theft, even jail time.

So what can a beneficiary do?

Keep in mind that most estates are wrapped up within a year. We normally refer to that concept as "the executor's year". If that amount of time has passed, you have a right to press for distribution of the estate.

Make requests (e.g. for accounting) in writing. Start off with a friendly, co-operative tone for your first request but don't be afraid to be business-like and set deadlines if your first request is ignored.

Understand that enforcing the will doesn't make you greedy. You are making sure that what the deceased wanted to happen is happening. You are entitled to that inheritance from the deceased; the executor isn't giving you anything from his own money.

Consider holding a family or group meeting to allow the executor to prepare and present materials to the group. Perhaps this even needs to be a mediation if communication has already broken down. Make it clear to the executor that you are giving him every chance to co-operate before taking things further.

If all else fails, hire a lawyer. Make sure that the lawyer is a specialist in wills and estates. Pool together with other beneficiaries if possible to collaborate on fees and present a united front to the executor.

This woman has a plan to take care of your dog - or your donkey - after you die

Many pet owners find it stressful to think about what will happen to their animals after the owners have passed away. I've written many wills over the years that address where the animal(s) should go, how much money is allocated for their care, and sometimes special instructions. Most of the time, those special instructions include a wish that the pet not be euthanized unless it is medically necessary to do so.

Not all pet owners make arrangements, though. According to an article in, as many as 500,000 animals a  year go into shelters after the death of their owners, and many of these animals are euthanized. (It's an American article, so the numbers are no doubt less in Canada).

Now there is a woman in Texas named Vicki Cooper who has a plan I've never heard of before. She owns a farm, on which she runs a sanctuary for pets whose owners have passed away. She accepts dogs, donkeys, llamas, cows, horses, pigs, goats and mules, all of whom can live out the rest of their natural lives on the farm.

The care isn't free, of course. There is a registration fee of $1,000 for the first pet, and $500 per each additional pet. Also, any animals who go to this farm must be accompanied by a fee set by the business owner based on the expected lifespan of the animal. The fee can be anywhere from $118,000 for a 10-year-old dog to $400,000 for a donkey.

Ms. Cooper has come up with an idea for funding the pet's care: she suggests that pet owners take out a life insurance policy that  names her farm as the beneficiary. I can see how that plan might appeal to people, in that it allows them to pay only a small monthly premium to generate enough funds to pay for the pet's lifetime of care. However, it occurs to me that an owner could buy a policy for, say, $250,000 because their dog is only 5 years old. But then when the owner dies, perhaps the dog is 18 years old. The farm then gets enough money to look after a dog for 15 years but only has to look after it for two or three years. It would make more sense to me to make the policy payable to the pet owner's estate, then calculate the fee payable at that time.

If you'd like to know more about this idea, which I think will catch on, click here to read the Huffington Post article.

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