Thursday, May 28, 2015

A wills & estates joke for a weekend smile

If you watch Downton Abbey, you'll get it.

Is your ancestor Lizzie Ryan from Westmeath? You could inherit $788,000

A woman named Kathleen Hilda Ryan, aged 83, recently died in the UK, leaving an estate of $788,000 USD (about 500,000 UK pounds). Mrs. Ryan's death has caused quite a fuss because she died leaving no will, and no living relatives that anyone knows of. However, Mrs. Ryan had an aunt, Lizzie Ryan, who its believed may have emigrated to New York many years ago. The search is on for Lizzie Ryan's family, as they would be entitled to inherit Kathleen Ryan's estate. There is a story about it in that you can read by clicking here.

This isn't as rare as you might think. My mother inherited a very small amount of money from a deceased relative in England. I still don't really know how that person was related to us or why she didn't leave a will, but I do know that an awful lot of time, effort, and money was spent tracking down relatives in other countries.

Perhaps a person with no living relatives isn't really sure what to do about his or her estate, and can't really think of why they'd want to make a will. Some may even be under the impression that the government will automatically claim the estate, though this won't happen unless extensive searching reveals that absolutely no relatives at all can be found.

An excellent idea for those who don't have to worry about looking after a spouse or children is to think of a charity, university, or non-profit group that would be thrilled to receive a financial boost. A teacher might want to set up a scholarship for deserving students. An animal-lover might want to donate to shelters. Someone who lost a loved one to a particular disease might want to contribute to research to help combat that disease. On a local level, there are women's shelters, libraries, museums, food banks, children's hospitals, addictions centres, and many other worthy places. In addition, there are numerous groups who help across the globe to relieve poverty and suffering.

A client of mine whose estate is in the multi-millions of dollars decided to leave a huge amount of money to public libraries and children's literacy programs. He based his decision on the fact that he hadn't learned to read properly when he was young, and felt that had been a severe disadvantage during his lifetime. Charitable gifts such as this one can be very personal thank-yous.

For ideas about groups or causes, check out the Canadian Donor's Guide.

Alternatively, a person with no relatives may wish to leave some of all of his or her estate to a close friend whose own later years could be made more comfortable by some additional cash.

If you want a charity or friend to receive a gift, it's essential to make a will. No money will go where you want it to go if there isn't a will. It's definitely worth a conversation with an estate-planning lawyer to decide what to do with your estate when there is no obvious beneficiary. You could end up doing something that makes you feel wonderful about your contribution to others, and you could avoid a search like the one going on for Lizzie Ryan's family.

Estate Planning: Top 10 Mistakes

One of the most popular seminars that I present is called "10 Things Not to do in Estate Planning". While I'm talking, people in the audience laugh their heads off at the examples I give of people who have made silly mistakes, but afterwards I usually have at least a half dozen people waiting with anxious faces to tell me they've done the things I said they shouldn't do.

My point is that it's really easy to make mistakes with estate planning. Laws are complicated, there's too much wrong information on the internet, our friends and relatives are full of scare-stories and anecdotes, and lawyers are expensive. No wonder people make mistakes.

I'm attaching a really good article from that talks about ten common estate  planning mistakes. It covers some pretty important points. You may recognize some things that you've done, or are thinking about doing. Why not take a look? Click here to read it.

The problem with estate planning mistakes is that we don't know we've made them. Likely we'll never know if we don't discuss our planning with a lawyer. Unfortunately, that leaves our families to clean up the mess after we've gone. If you'd prefer not to leave a dispute or a tax problem behind, start by checking out this article.

Friday, May 22, 2015

BB King estate fight could get pretty ugly

It seems that yet another celebrity estate is headed for court. Apparently even though legendary blues artist B.B. King has only just passed away, his children are already fighting over control of  his estate. The National Post has a story about this, which you can read by clicking here.

Celebrity families are just like regular families, except that they have different assets to fight about, and their dirty laundry gets aired in public. The National Post story mentioned that Mr. King's business manager, LaVerne Toney, had also had power of attorney while Mr. King was alive, and that some of the kids accused him of stealing money and alienating family members. Sound familiar? It's a scenario we've all heard before. Many a person acting under power of attorney is accused of a dozen kinds of misbehaviour, sometimes with good cause and sometimes without. However, it seems to me that if Mr King had 11 children and still wanted someone outside of the family to have control over his assets, he probably had his reasons. He could probably predict that his kids were winding up for a brawl long before it happened.

It is still too early to tell how ugly and prolonged an estate battle in this case might be. However, it could be bad, considering that members of the family have already proven that they are quite willing to use the courts. Prior to Mr. King's death, some of the children unsuccessfully tried to have LaVerne Toney removed so that they could control the assets. When that didn't work, one of the daughters remarked that they had lost the battle but they hadn't lost the war.

Spoken like someone who thinks the estate is going to pick up all the lawyers' bills. Litigious people sometimes end up draining estates just to pay the lawyers and accountants, and unfortunately that could happen in this case. People have long since forgotten that the courts are supposed to be the last resort when other methods of working things out have failed.

The attached photo of B.B. King is credited to AP Photo.

If your spouse dies, leaves you nothing and gives it all to his kids, should you contest the will?

If your spouse dies and leaves you nothing and leaves everything to his/her kids from a previous marriage, should you contest the will? What if you're unwell and can't work? This is a question I hear frequently from many readers, with a thousand different fact situations. One reader put the question very succinctly, and I thought many of you would be interested in reading the answer. The question and my reply are as follows:

"My mother-in-law was widowed recently and was left no money to live on. She is physically unwell and we don't know if she should contest the will or not. Her stepchildren will receive money, but not her or her children (from a previous marriage) Any idea of what we should do?"

On the face of it, I would think your mother-in-law is a good candidate for a claim against her husband's estate. As a general rule, a person cannot leave his or her spouse out of their will completely, but the answer is not that simple.

A person CAN leave his/her spouse out of their will if:
a) the two of them signed a pre-nuptial agreement that specifically stated that each would not leave their estates to each other. Pre-nuptial agreements are not always iron-clad in these situations, but they are a good starting point.
b) the person gave assets to the spouse outside of the will, such as a life insurance policy, RRSP, or joint property that adequately provide for the spouse. Again, it's not iron-clad, but it's about as strong a case as the person could have.
c) the spouse left behind is independently wealthy and doesn't require anything from the deceased spouse's estate.

It appears from your question that none of these circumstances apply to your mother-in-law, and therefore it's probably a good idea for her to make a claim against the estate. This is not quite the same as contesting the will, because she wouldn't be trying to invalidate the whole thing; she would just be trying to get a share of the estate for herself before it's divided among the stepchildren. This type of claim is called "dependent's relief" and exists in every province and territory of Canada. It's done pretty frequently and most experienced estate lawyers have dealt with them numerous times.

It's possible for a spouse to get some of the estate, or all of it. The judge hearing the case would decide what is appropriate based on a number of factors. Some of those factors are:
- the length of the marriage.
- the value of the estate - in other words, how much is available to go around.
- the financial needs of the spouse who is claiming - this would include, for example, the fact that your mother-in-law is unwell, which probably means that she needs care and/or medications, and cannot earn a living.
- any competing claims - in other words, there may be other dependents who are trying to get a larger share of the estate, such as any of the stepchildren who are still minors, or who are disabled.

As a suggestion, your mother-in-law could hire a lawyer to write to the executor and advise that your mother-in-law is going to make a "dependent's relief" claim against the estate. If her case is as strong as it appears to be, the estate lawyer may suggest to the executor that he make a settlement offer. This would end up being cheaper and easier and quicker for the estate than going to court to fight it out. These days, beneficiaries are getting pretty sick of seeing their inheritance eaten up by court costs, and they just might be ok with settling it without a court battle.

It's not a good idea to wait too long. The executor should wait six months after probate before distributing the estate (because of your mother-in-law's right to claim) but it's better to get moving quickly to ensure estate assets don't disappear.

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