Sunday, August 30, 2015

You're invited to the Grand Opening of my new office

Not long ago, I said that I'd decided to go into business for myself. I'm now only about a week away from opening the doors! My new website has been launched, and I'd love it if you would click here to take a look at it. I hope that by launching this new office, I'll be much more accessible to everyone by phone and email Those in my home province of Newfoundland and Labrador will be able to just pop by any time.

We (my practice coordinator and I) are issuing a general invitation to join us at our Grand Opening open house on Friday, October 2. Click here for details. I'd love to see a few blog readers there. There won't be any Newfie Screech but we'll have some refreshments and pastries.

Tuesday, August 25, 2015

B.C. judge rules man has a right to half of $1.2-million Vancouver home he hasn’t lived in for 44 years

Way back in 1968, David and Sharon Johnston bought a house in Vancouver for about $37,000. They held the title to the property as tenants-in-common, each owning half. Within a few years, the marriage was in trouble and David moved out. The Johnstons never divorced, and they didn't take David's name off the title. Later, Sharon became involved with Ezra Lucas, who moved into the house with her and together they raised a son, Philip Lucas.

In 2009, Sharon passed away. By that time, the house was worth $1.2 million. Philip inherited Sharon's half of the house. In 2012, David petitioned the court for an order to sell the house, with the money to be divided between himself and Philip. Philip fought against the petition, saying that there had been a verbal agreement that David would drop all claim to the property if Sharon did not ask him for spousal support.

The judge ruled that David's claim was still valid and that the house must be sold. The judge said that the sale proceeds would be divided equally, except that Philip would get a credit for the mortgage payments his mother made after she and David separated.

This case is currently the subject of a story in the National Post, which you can read here. Anyone who would like to read the entire judgment of the court can read that here.

The headline of the National Post story is revealing. It says "B.C. judge rules man has a right to half of $1.2-million Vancouver home he hasn’t lived in for 44 years". To me, the wording of the headline seems to suggest that there is something outrageous about still having a right to a property you haven't lived in for a long time. However, let's not forget that during that 44 years, there were unlimited opportunities for a discussion about changing the title, but it was never done.

Nothing about this judgment surprises me. It's a really good illustration of the tendency of many people to simply ignore the law in favour of what's convenient or easy at the time, then to be surprised and possibly miffed when the law doesn't support what they want. In this case, the parties did not get divorced, even though they clearly did not intend to get back together. They didn't split up their matrimonial property.That's their own omission, but hardly unusual these days.

There was no separation agreement, either. As with a divorce, getting a separation agreement would have involved addressing how to divide their property. They both knew David's name was on the house, but nobody did anything about that. Your ownership of real estate doesn't disappear just because you don't live there. There was a suggestion that there had been a verbal agreement with respect to the title, but the court said there was no evidence of it. And as any lawyer could have told them, agreements with respect to the title to land must be in writing in any event.

Sharon and her second partner, Ezra Lucas, may have believed that their co-habitation created some right for Ezra to ownership of the house. That wasn't clear to me from reading the article. People in general are very misinformed about the rights of common-law spouses, so it's possible they thought they had it covered. However, Sharon didn't even make a will, so it appears that she was not particularly pro-active in dealing with legal matters.

It seems to me that when there is an asset worth $1.2 million dollars at stake, it's worth a few hundred dollars to talk to a lawyer about how to deal with that asset. Why leave such an important matter to chance? Ignoring the facts and simply hoping the law will go your way hasn't worked for very many people. It certainly didn't work for Sandra Johnson's estate, and her son paid the price.

The attached photo of the Johnston's house at 8286 Elliott Street accompanied the National Post article and is credited to Google Maps.

Monday, August 24, 2015

Yay, I nabbed second place in Mensa Canada Literary Contest 2015

Recently I entered the Mensa Canada Literary Contest 2015 and I am pleased and proud to announce that I won second place! I have no idea whether it will be published, but it was fun to write. It's my first piece of fiction, since as you readers know, I usually write non-fiction. Check out my official bragging rights in the photo.

Tuesday, August 18, 2015

Is it time to revive the old-fashioned practice of the Reading of the Will?

Most people have only seen a Reading of the Will in movies. That's because they are rarely held these days. I wonder if it's time to revive the practice?

A Reading of the Will is basically a meeting between the lawyer for an estate, the executor, the family members of the deceased, and anyone else who is named as a beneficiary under a will. The purpose of the meeting is to advise the beneficiaries and the surviving family members of who is inheriting what, and other terms of the will. This was an effective way of communicating information in an age when not everyone could read, and geographical distance was not easily covered. Today, those reasons are not particularly relevant, but perhaps new reasons have replaced them.

I believe it may be time to start holding Readings of the Will again. I say this in part because there is frequently so much distrust and animosity between executors and beneficiaries. One of the main sources of friction is the lack of information being directed to the beneficiaries. Lack of information always, without fail, leads to speculation and suspicion, whether warranted or not. This can often be prevented.

It seems to me that holding a Reading of the Will would provide useful information to all parties. Beneficiaries would find out who is going to inherit, and would have the chance to ask questions about things such as certain language in the will, or the terms of a trust that affects them. The executor would also find the meeting valuable, as he or she would set an open, direct tone for the estate right from the start. Not to mention that the executor would find out pretty quickly who -if anyone - is disappointed or outraged by the will and likely to start a challenge.

It also gives the lawyer the opportunity to direct all parties as to what is expected of them during the estate, and how long it is likely to take to wind it all up. This alone could forestall dozens of calls and emails to the executor.

These days, it seems that beneficiaries are cynical about executors, belligerent and annoying. Executors are secretive, defensive, and sometimes hostile. It saddens me, but I've talked to an awful lot of executors and beneficiaries in my time, and it's usually not a happy or trusting relationship. There is just no need for an estate to be conducted that way. People involved in an estate need to communicate better, right from the start. If they can't do that easily on their own, then they are smart to use tools such as a Reading of the Will to their advantage.

In the movies, a Reading of the Will is always dramatic, with some black-gowned person or other cursing and making threats. In real life, the Readings that I've directed have been quiet gatherings with some tears, but also with many honest moments of collective will to wrap things up without disputes or wrangling. Being gathered together like that reminds people that they are still a family. When my new practice opens next month, I'm going to offer my services for Readings, and take careful note of how my clients benefit from them. I hope that clients will opt to hold them, as a Reading of the Will is more likely to bring family members together than to set them against each other, and isn't that what they all need?

In the meantime, I've added a new poll to the top, right-hand corner of this blog that asks how you'd feel about a Reading of the Will, and I'd love it if you'd take the time to vote. If any readers of this blog would like to let us know about their experience with a Reading of the Will, I'd be pleased to hear your comments.


Monday, August 17, 2015

If you're the executor, walking away is going to make a mess - for you.

Being appointed as executor isn't always something we welcome. It's a lot of work and carries personal  liability if you do it wrong. But when you're in over your head, don't just walk away from it. Walking away doesn't absolve you of anything. Ask for help! You can hire a lawyer to advise you as to what needs to be done, or a trust company to actually do some of the work for you.

What's the wrong thing to do if you're put in charge of an estate? One really bad choice is simply to ignore it. This reader wrote to me recently to tell me her story. Anyone who is an executor, or who may be an executor one day, should read her note and my comments:

"A friend passed and named myself or my husband executor and also sole beneficiaries. The house had a secured LOC on it and we handed over the keys after telling bank no more payments would be made on LOC. I was initially executor and stepped down due to personal reasons. I have had a couple cheques come to me for the estate. I went to deposit them and was told by the bank that they drained the account and closed it 5 months after death? The bank had a copy of the will and death certificate .. now what do I do with these cheques I recently got?"

This type of letter concerns me. I see a fair number of estates where people have no idea what to do, never get legal advice, and just do whatever occurs to them at the time. This causes a number of legal tangles for the executors. I'm not saying they are bad people because most are not, just that they are doing a bad job on the estate.

As I read this letter, I found it impossible not to notice that it was full of vague or incorrect information. For example, "myself or my husband" could not have been named as executors. A will cannot say A or B is the executor. It has to say either that A and B are joint executors, or that A is the executor, and B is the alternate if A cannot finish the job. In other words, you didn't really understand who was appointed as executor, but took on the job anyway. Also, you mention that two people are "sole" beneficiaries, when "sole" means one. Does this mean that you were both named as beneficiaries, or you're just saying "we" instead of "I"? It makes a difference legally.

Even more concerning is the statement that you "stepped down due to personal reasons". Now, doing that wouldn't be the end of the world if it were done properly, but it appears that "stepping down" in this case simply meant that you didn't want to do it anymore so you didn't.

In law, there are only two  legal ways to step down from being the executor once you've started the job. One is to pass away. The other is to ask the court to dismiss you. Just deciding not to take care of it anymore doesn't mean that you have stepped down and it doesn't absolve you of your legal responsibility to the estate. You're not allowed to just walk away because being an executor and trustee is a fiduciary responsibility.

You didn't say that you just walked away, but I'm inferring that because it appears that no other executor was put into place. Not even your husband, who you said might also have been appointed by the will. You didn't mention passing of accounts, which the court would have required of you had you applied to step down. Your understanding of the will and the estate assets seems vague. These facts lead me to believe you just turned your back on your legal responsibility.

If the court hasn't formally dismissed you, you are still the executor. It doesn't matter whether you want to be or not; you simply are. You're still responsible for the debts of the estate. You're responsible for that bank account (are you really surprised it was closed, when you ignored it for 5 months and told the bank that you weren't going to deal with it?) and for the cheques that have arrived. The only reason nothing has hit the fan on this estate is that there are no other beneficiaries to complain about the way you're handling it.

While you may be safe from unhappy beneficiaries, you should be careful about paying the debts. As you have not legally "stepped down", you are still responsible for paying the debts. A creditor who has not been paid may well decide to come after the estate for payment. If you've wasted the estate, or failed to maximize it by simply handing over keys without even trying to sell the property, you may find yourself paying liabilities personally. In addition, Canada Revenue Agency may not be happy with you if you have failed to file tax returns for the deceased or for the estate (if there are any). If CRA assesses penalties or interest on unpaid taxes, you  may end paying those yourself, too.

You've made a mess of this. The question you asked is what you should do with the cheques  you've received. The answer is that as the executor, you need to open an executor's account, deposit them, and pay the estate debts and taxes. Once the debts are paid, distribute any remaining funds according to the will.

However, you really should have asked a few questions months ago. Since you really didn't know what to do, you should have asked a lawyer. You may get away with this mess just because there is nobody to complain, but only if you're lucky.

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