Most Canadians are not aware of the tax benefits of charitable giving in their wills

I saw a Scotiabank news release today that contains some interesting facts. One in five people with a written will plan to leave some portion of their estate to charity. I find that number to be higher than I experienced in my own law practice, but perhaps it includes people who direct funds to charity if an individual beneficiary does not live to accept the inheritance.

Only about 40% of Canadians are aware of the tax benefits of leaving a charitable gift in their wills. This make sense to me. For example, the results show that Canadians who are over 55 are more aware of tax breaks than younger Canadians. This is no doubt because the 55+ group tends to go to seminars and talk more with financial advisors.

You don't have to be extremely wealthy to generate tax benefits through charitable gifts in your will. Next time you talk to your lawyer or financial advisor, why not ask about whether you could benefit?

To see more from this press release, click here.

Eyes wide open - should you accept that executor appointment?

I'm attaching a link to a post by Ontario lawyer Corina Weigl, who blogs at www.allaboutestates.ca. In her article, Ms. Weigl talks about the fact that many executors and court-appointed administrators take on the assigned role without even thinking about what they are getting into. It's an interesting read, and should remind all of us that acting as an executor is a bigger job than most people realize. Click here to read the article and find out what you should consider before you take on the role of executor.

I blogged about this same question myself a while ago. Click here to read my list of things to think about before accepting an executor appointment.

Beneficiaries got nothing when executor used the house for security - and lost it

There is a new case from the Ontario Court of Appeal this month that I believe holds a really valuable lesson for beneficiaries. It's the case of DiMichele v. DiMichele. The facts, briefly, are that Mrs. DiMichele died in 1996, leaving her son,  Antonio, as her executor. She left her estate among her three children.

One of Mrs. DiMichele's other kids, Roberto, lived in the house after his mother died. The executor did nothing about the estate, and neither of the other two beneficiaries bothered to try to get him to do anything. In 2002, Antonio was involved in some personal (non-estate) litigation and put up the entire house, rather than the 1/3 he was supposed to inherit, as security. In 2010 he lost the case and the winning party applied to the court to take the house.

Antonio lost, and appealed to the Court of Appeal. However, the court said that as an executor, Antonio had the right to grant the mortgage on the entire property, based on the laws of property in Ontario. This is because at the Land Titles Office, Antonio's name was on the property. This was the case, even though Antonio has misrepresented himself as the owner rather than the executor. The court ruled that the party suing Antonio was entitled to take the house. The beneficiaries lost out.

To read a report of the case that contains more of the facts, and more details about why the judge made this decision, click here to go to a story at www.lawtimesnews.com.

I hope you can see where I am going with this in terms of lessons learned by the beneficiaries. The three beneficiaries lost the largest asset in their mother's estate. Roberto lost his home. This could not have happened had they not let so many years pass without making some effort to force the executor to sell or transfer the house.

There is no evidence that either of the other two beneficiaries said or did anything to induce Antonio to get on with the estate in the six years before he put the house up for security. If he had proved himself to be reluctant or slow, they could have relied on the courts to hurry him along, or even to remove him as executor if necessary. This case shows that beneficiaries need to stand up for themselves.

Now the question remains as to whether there is anything the beneficiaries can do against Antonio for the loss of the estate. Perhaps the current court ruling will make that more difficult. And even if they were to succeed, it doesn't sound as if Antonio has two nickels to rub together, never mind enough money to pay out his siblings.

Executor is charging the beneficiaries to live in the house they inherited

Does your will contain trusts that affect your children? Are those trusts complete and clear enough to avoid problems? Have you really thought through how it's all supposed to work after you're gone? I received a note from two young people whose parents passed away, and who are now dealing with the executor on their own. Their question and my response are below. Parents, think about whether these could be your kids looking for help with your estate.

"My brother and I have have lost both our parents. Our mother and father were divorced so we lived with our mother in the family home. 5 years ago our mother passed away and she left a family friend as executor as my brother and I were only 13 and 15. Our father moved back in to care for us but last month he passed away. We are now 18 and 20 and the executor wants to charge us $1600 a month to live in our own home we inherited. Is this legal?"

To know where you stand in this situation, you must have more information. You must get a copy of the will. In particular, you need to find out whether the house is being held in trust for you and your brother. If it is, you also need to know how long the trust is supposed to continue, and whether the trust contains any terms that deal with mortgage or expenses. You need to know whether there are other assets also held in trust that can be used to pay the mortgage, pay for insurance, and cover maintenance. Find out whether the mortgage was life insured.

Finally, you need to know what is supposed to happen with the house once the trust ends. The most likely answer is that the house is supposed to be transferred to you and your brother, but it's not a good idea to assume that.

All of these factors will affect the answer to your question. You could, for example, find out that the trust says that either of the children who has attained the age of majority must pay rent until the end of the trust if he or she lives in the house. I personally have never seen a clause like that, but it's possible. More likely, the trust might say that the beneficiaries are responsible for all costs while they live there, but even that might only be the case if there is no estate money to pay for the mortgage or upkeep.

If there are no trust terms allowing the executor to charge you, he should not be doing so. If there is no money in the estate to maintain the house, the executor has the option to approach the court to ask that the trust be collapsed.

I strongly suspect there is a trust in place for two reasons. One is that the executor hasn't simply transferred the property to you already. The second is that it's common for parents who make a will while their children are minors to try to make sure the kids will be able to stay in the home as long as possible. Your mother was probably trying to ensure that you two would have a roof over your heads.

One other important factor is whether you live in a province where the age of majority is 18. I am assuming that you do simply because you don't mention a guardian, only an executor. If you and your brother are adults and the trust allows it, you could ask the executor to transfer the property to you. Keep in mind that once the house belongs to you and your brother, you two will be responsible for all expenses yourself. You will also have to make joint decisions with your brother about mortgaging, selling, taking tenants, insurance, and maintenance.

It would probably be a good idea to take a copy of the will, as well as any other documents you have concerning your mother's estate to an experienced estates lawyer to find out exactly where you stand. Find out how the terms of the trust will affect you and your brother, and for how long. I'm afraid there is no simple answer to your question without all of the additional information I've mentioned here, so your first step is to find out more.

Resource for executors trying to locate a life insurance policy

I'm always in favour of any tools that make an executor's job easier or better. There is a new tool available as of this month: MIB Solutions Inc has a policy locator service that identifies life insurance application information from 450 insurance companies in Canada and the USA. Though the service itself is not new, they now have an online form that can be used, making it much easier to access.

If you think this might be of assistance to you, click here to read an article from www.providencejournal.com to find out what you can expect from the service, and to access the link to the service.

I haven't had a chance to use this online form as it is brand new this week, but if anyone tries it, I'd love to hear some feedback about it.