Saturday, December 13, 2014

20 Free Tax Secrets for Canadians

I'm about to download this free book called "20 Free Tax Secrets for Canadians" by Allan Madan, and I thought it might be of interest to some of you readers as well. If so, click here to read more about this book and/or download it. It's pretty short - under 4,000 words - but what sold me is that one of the reviews describes the writing style as "conversational". In other words, those of us who are not CPAs can understand it.

Thursday, December 11, 2014

Updated table of intestacy for Alberta Probate Kit

Those of you who are using my book, The Alberta Probate and Administration Kit, are probably aware that parts of it needed updating because of changes to the law since the book came out. One of the things that needed updating is the table that shows how to distribute an estate in Alberta where there is no valid will. I've created a new, detailed table describing how the estate is to be distributed, and you'll see I've added it to this blog. There is a new tab near the top of the page that contains the updated table. Or, click here to go to the updated table.

If you are looking for other updates, please remember that the downloadable kit that comes with your book contains a link to updates provided by way of the publishers.

Monday, December 8, 2014

The executor is going to sell an asset and give the proceeds to non-beneficiaries. What do I do?

What would you do if, while waiting to receive your inheritance, you found out that the executor planned to sell an asset and give the money to someone who isn't a beneficiary? A reader who is in that situation wrote to me recently. His letter and my response are below:

"I am one of three beneficiaries. I recently learned that the safe contents (coins) will be appraised and sold this week by the trustee (who is also one of the beneficiaries) and the monies distributed among the grandchildren, who are not beneficiaries. I don't know what to do."

I'm assuming that  your concern here is not so much the sale of the coin collection, but the unauthorized distribution of the sale proceeds. You cannot stop the executor from selling any specific estate asset for a fair price, though of course you can suggest that you receive the coins as part of your share if they are of interest to you.

If the grandchildren are not beneficiaries of the estate, then they should not be receiving anything from the estate. But before we get into what you can do about it, let's take a moment to look at what could be happening to cause this situation. I always tell people that before they start talking about lawsuits, they have to be absolutely certain of the facts.

In particular, I want to ensure that you have read the will and are positive that the grandchildren are not entitled to receive anything. Does the will give the executor any discretion to deal with household or personal goods? For example, sometimes wills say that executors can distribute personal items as they see fit, or among family members as they see fit. If there is wording like that in this will, the executor is within his or her rights to include the grandchildren.

There is an incredible range of wills out there. Not all of them deal separately with household and personal items, though I wish they all did. Make sure you check the exact wording of the will and understand how it works in this case.

It's also possible that the executor doesn't realize that he or she is not allowed to give anything to the grandchildren. Let's face it, most executors only act as executors once, and some either don't get legal advice, don't listen to the advice, or don't really understand it. This certainly wouldn't be the first executor who mistakenly thought it was up to them to "make things fair", even if it meant ignoring parts of the will. Have you raised your concerns with the executor and received an explanation as to why the grandchildren are receiving these funds?

Assuming that you have checked the will and you are certain that the grandchildren are not supposed to be beneficiaries, you have to decide how firmly you want to dig in your heels on the issue. You should start by discussing the matter with the executor and making it clear that you object to the distribution to the grandchildren. If the executor doesn't respond by confirming that he or she will not make the distribution to them, follow up your verbal discussion with a letter stating  your objection. In the letter, tell the executor that you will take the legal action necessary to prevent the distribution.

At this point, most executors will talk to a lawyer to find out why they cannot give anything to the grandchildren. Some will decide to follow the rules once they are aware of them, and hopefully this executor is one of them. One possibility open to the executor, if he or she feels strongly about giving something to the grandkids, is to ask all of the beneficiaries to agree to the gift in writing. Basically this would mean each of you receiving a little less from the estate in order to share with the grandchildren.

Sometimes beneficiaries don't mind agreeing to receiving less, but in other cases they don't agree because they want to honour the wishes of the deceased as they were set out in the will. You don't have to agree if you don't want to, and you don't have to explain your decision.

If the executor proceeds with giving funds to the grandchildren without the written consent of all three beneficiaries, you only have one option left, and that is taking the executor to court. There is a range of orders the court can make. Most typically, the court would require that the executor repay the estate out of his or her own funds, or that the executor's fee be reduced by the amount that was improperly paid out.

When I say that you have to decide how far you want to dig in your heels, I mean that you have to decide whether you want to go through a lawsuit because of the distribution of the sale of the coins. I understand that it's not just about the money; the executor is trying to get away with something he or she has no legal right to do. Lawsuits are expensive and can be really ugly, so try everything else you can before resorting to that.

Rudolph the Red Nosed Reindeer … He’ll Go Down in (Estate Royalty) History!

There is a show on TV called "About a Boy", based on the movie of the same name, in which a character lives a job-free, stress-free, millionaire existence. His source of apparently unlimited income is a song - or more correctly, the royalties from a hugely popular song. As it turns out, significant royalty payments aren't always fictitious.

What happens to those royalties when the owner of them dies, but the song is still being played thousands of times each Christmas? A song familiar to many of us is "Rudolph, the Red-Nosed Reindeer", which generates hefty revenues each year. A recent article by Toronto lawyer Ian Hull talked about the estate of Johnny Marks, the author of the song.

Mr. Hull reminded us that all artists - including musicians and authors - should make specific provisions in their wills to deal with royalties. As with any assets, there must be clear instructions for the distribution after the owner's death. Otherwise, there is a risk that family members will end up in court to clarify ownership.Click here to read the article.

In addition, writers and artists should consider appointing a special executor with specific powers to deal with creative endeavours and their royalties.

This photo of Rudolph is the cover of a Little Golden Book, adapted by Rick Bunsen and illustrated by Arkadia, published 2000.

Sunday, December 7, 2014

NHL player files for bankruptcy after his parents abuse power of attorney

In my line of work, kids taking financial advantage of parents is an everyday occurrence. But parents taking advantage of wealthy children, not so much. The recent case of Jack Johnson of the Columbus Blue Jackets, however, shows that anyone can be taken advantage of by people they trust.

The Columbus Dispatch recently ran a story describing in detail how Johnson's parents, to whom he had entrusted the $18 million he has earned so far as a hockey player, spent, stole, borrowed, and lied their way through Johnson's entire fortune. Even much of his future income has already been spoken for. Click here to read the story.

Though the facts may be a reversal of what is commonly seen, the moral of this sad, shocking tale is the same - be careful who you trust with your money. Family members may seem to be the natural choice, but they can be absolutely the wrong people. No matter who you put in charge, when things seem off, trust your gut and investigate. What is worse - possibly offending someone by asking questions, or risking that everything you own will be gone?

Most likely, the actions taken by Johnson's parents will turn out to be illegal, but does that really help him? Even if they are found to be criminally responsible, the money will still be gone.

The attached photo of Jack Johnson accompanied the article in The Dispatch and is credited to Chris Russell/Dispatch.

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