We're growing! Welcome to two new team members

I'm pleased to announce two new members of our office team at Butler Wills and Estates Consulting Services!

Welcome to Gregory Noseworthy, BA, JD, Student-at-Law.
 Greg recently graduated from the University of New Brunswick with a Juris Doctorate and is completing his articles under the guidance of Lynne Butler. During his studies, Greg participated in many moot courts and was on the Dean's List at Memorial University. Greg also regularly volunteers in the community and has completed internships with various organizations. He will be participating in the Bar Admission course in October and will become a full-fledged lawyer next year.

Welcome to Matthew Delaney, Office Support.
Matt is currently working on completing his Bachelor of Commerce degree at Memorial University and holds an Advanced Diploma in Nautical Science from the Marine Institute. He provides support to all areas of the office on a daily basis and is prepared to assist clients however possible. 

We are very excited to be growing again, and to work with such great people.

The child who hasn't bothered talking to Mom in years claims an equal share of Mom's estate

In my work, this is a familiar scenario. One child stays at home to look after an aging parent. Another child does not. When the parent passes away with no will, the child who hasn't bothered much with the elderly parent in recent years comes home and wants his or her equal share of the estate. This often leaves the child who has spent months or years as a caregiver feeling resentful. A reader recently wrote to me with a similar story. Here is the question and my response:

"My grandmother passed away  and she had no will. She had 2 daughters. My mom was living with her for the last 11 years, taking care of her while my aunt had no contact with her mother. Now my aunt decided to take over everything and wants to sell the house but my mom doesn't. She wants to stay because all my grandmother wanted was for the house to stay in the family. So my aunt wants my mother to start paying rent. Is there something we could do? My aunt was never there nor did she talk to my grandmother while my mother took care of her and stayed by her side until the end."

I don't think you are particularly going to like my answer.

I often hear stories such as this one in which it's suggested that the person who was good,  compassionate or attentive deserves to have more say in what happens to the deceased's assets, or even deserves to get more of the estate. When there is no will in place, none of that matters. The law looks at the two daughters as having an equal relationship with their mother.

In a case like your grandmother's where there is no living spouse and there are children, the children share the estate equally. If your grandmother wanted to acknowledge her close relationship with your mother, she should have made a will in which she divided the estate in some other way. There is no law that says  you have to be nice to your parents to inherit; if there was, plenty of people would find themselves disinherited. You don't have to deserve your inheritance; you just have to have a certain legal relationship.

When a person does not make a will, he or she is choosing to go with the division set down by law.

Similarly, if your grandmother wanted the house to go to someone in particular, she should have made a will. Otherwise the house is part of her estate and must be divided equally between her children. Her wish that the house "stay in the family" has no legal weight because she didn't express that in a will. Even if every single  person in the family heard her say it, the law says that if she doesn't make a will and she lets the house fall into the estate then she is choosing to have the house divided among her children.

When you ask if there is something you can do, it seems that you are asking whether there is a way for your mom to make your aunt go away and stop bothering her about the house. Whether that can be achieved depends on a couple of factors. If there are enough assets in your grandmother's estate that your aunt can get those assets while your mom keeps the house, then certainly that can work. I mean by this that each of them would get an equal dollar value even though one gets real estate while the other gets cash or other assets. There is no need to sell the house itself if other things are available to give your aunt her half of the estate.

If the house is pretty much the whole estate, your mom is going to have to realize that your aunt has as much right to it as she does. The house now belongs to the estate, so it makes sense for your mother to pay rent. She is living in a house she does not own. Whether your grandmother let her live there for free doesn't matter anymore; there is a new owner now. The rent would be paid, expenses (such as repairs, property tax, fire insurance) would then be taken out of that, and the net amount divided between the two beneficiaries.

Another option is to have the house valuated, then buy out your aunt's half.

If your mother made a significant financial investment in the house, there may be a further option. Perhaps your mother paid for improvements or renovations. Perhaps she paid your grandmother for groceries or utilities to the extent that your grandmother could not have afforded to keep the house without her help. If there is a strong case like this, perhaps your mother would be successful on a claim for unjust enrichment. This refers to the idea that if your mother hadn't paid what she did, there would be no house for anyone to inherit, and therefore it's unfair for your aunt to get half. I'm not suggesting that such a claim would be easy, because it wouldn't. Whether a claim like this is a good idea I couldn't say; it would depend heavily on facts I don't have.

There was no mention of a mortgage in your note so I have answered in a way that relates to a house that was fully owned by your grandmother and not mortgaged.

Either your mother or your aunt (or both) are going to have to apply to the court to be appointed as administrator of your grandmother's estate. They cannot deal with the title to the house without doing so.

Sharing the caring

An important document for anyone planning for their future care is a healthcare directive which appoints someone to make decisions for you about your health, long-term care, end-of-life treatment, and more if you are not able to make those decisions for yourself any longer. Across Canada, this document is called a Power of Attorney for Personal Care, a Healthcare Proxy, a Personal Directive, and Advance Directive, or an Advance Healthcare Directive.

I  meet with several clients each week who want these documents. One of the major decisions these clients must make is the choice of person or people to be their substitute decision maker. Some are very comfortable appointing family members or close friends, but not everyone has relatives who are willing and able. Others are not particularly comfortable in naming their relatives for various reasons. Who do they choose? How can they gain some peace of mind that decisions will be made properly?

There is a group in Ontario who is helping to fill the gap. I recently read an article by Audrey Miller of Elder Caring Inc. that I found very interesting. I know Ms. Miller a little bit and I'm aware of her standing and reputation in the elder care field, so I am comfortable recommending her article. Click here to read an article called Sharing the Caring. In this article, Ms. Miller talks about the idea of a group of friends sharing the caring for each other.

The Elder Care Group is not someone who would be appointed as a substitute decision maker. They will, however, help people who are appointed as such to make decisions, find resources, research care options and facilities, and generally act as support and guidance. There is nothing worse than having to make a potentially life-changing decision for someone else when you feel alone and unprepared. This group offers some valuable help.

Check out the article and see whether this resource is something you or your family could use.

Lack of inheritance tax is making inequality worse, think-tank study suggests

A group called the Canadian Centre for Policy Alternatives (CCPA) has been looking at the question of inheritance tax. Specifically, they have noticed that Canada is the only G7 country without an inheritance tax and they suggest that perhaps we should have one. The idea is that a tax on big inheritances would help even out the disparity between the financial "haves" and "have-nots" in Canada. The additional funds generated by this tax on the wealthy would allow the country to provide services with less pressure on those of more modest means.

The spokesperson for the CCPA says that the real target of an inheritance tax, if one were ever to be implemented, would be the super-rich who did not earn or build their wealth - in other words they did not work for it, create a business that earned it, or even wisely manage and grow a modest fortune into a large one - but simply inherited it. To read a story about the CCPA's views on why we should have inheritance tax, click  here.

Right now, the tax situation for an estate is (this is not an exhaustive study but it hits the high points):
- There is no percentage that goes straight to the federal government on all estates;
- Beneficiaries do not pay tax on what they inherit from an estate;
- Beneficiaries do not pay tax on life insurance proceeds;
- Passing on one home/property (up to a maximum amount of land) is tax exempt;
- Real estate over and above that first property is subject to capital gains tax only if it has increased in value; only 50% of the gain is taxable;
- Farmland can be exempt from capital gains tax as long as the new owners/family members will be farming as well (and other restrictions are met);
- Shares in privately owned companies are subject to capital gains tax if they have increased in value, and again only half of the gain is taxable. This can be deferred by rolling the shares over to a spouse;
- Every individual is entitled to a capital gains exemption of $800,000 for their lifetime that can be applied to shares of a small business, farming, fishing operations, etc;
- Funds in an RRSP or RRIF are subject to income tax of up to 40% of the funds but this can be deferred by rolling the RRSP or RRIF over to a spouse;
- The provinces take a probate fee or estate tax only if the will passes through the probate court, or if there is no will and someone applies to be appointed as administrator of the estate.

Every few years the subject of a possible inheritance tax gets tossed around a bit. I've certainly heard the topic raised once or twice before. So far, the Canadian government does not appear to be seriously considering the idea.

What do you think? Is it a good idea to slap an inheritance tax on the very wealthy? How wealthy  is "very wealthy"?  Or are estates taxed enough already?

How much money do you receive if a loved one is killed in an accident?

This is a topic I don't think I've covered before on this blog, mostly because it involves a type of litigation that I typically send out to other lawyers. However, the question of how much money (we lawyers refer to the amount as "quantum") is involved is a relevant question to family members left behind.

Loved ones left behind might be struggling financially due to the loss of the deceased's income. A small business might be in danger of folding without the deceased there to do the work. There are many such situations in which the family of a person who died a "wrongful death" might consider taking legal action to recover some money. The potential amount of the lawsuit is an important factor for the simple reason that in any legal action you have to weigh the potential benefit against the potential cost.

Recently I read an article in www.advocatedaily.com in which an injury lawyer laid out the three sources of money that become available when someone is killed in an accident. Click here to read the article ("Wrongful death Part 2"), which interviews Toronto lawyer Alison Burrison, The article is specific to Ontario so some of the material is going to be different in other provinces, but this should give you a good idea of where to start.