Sunday, April 13, 2014

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.


Monday, April 7, 2014

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.

Friday, April 4, 2014

Gloria Vanderbilt fortune not going to son Anderson Cooper

In a brief article at www.csmonitor.com, CNN news anchor Anderson Cooper talks about his family's wealth. His mother, Gloria Vanderbilt, is apparently worth $200 million, and has told him that he is not going to inherit that money. And he is fine with that. Click here to read the story.

In the article, Mr. Cooper states that inheriting a lot of money can result in a person having no real initiative or ambition. This is a belief that I've encountered numerous times with some of my wealthier clients, and is certainly not limited to celebrity parents. Granted, not many people have $200 million to pass to their kids, but clients are concerned about the same effect happening with a lesser amount.

Do you ever think about the effect it will have on your children when they inherit (or don't inherit) your estate? Do you ever suspect there could be negative effects? It's certainly a lively discussion with parents when this topic comes up.

The attached photo of Anderson Cooper accompanied the article in www.csmonitor.com and is credited to Chris Pizzello/Invision/AP

Wednesday, April 2, 2014

Toronto police arrest 2 for elder abuse, fraud

CBC News is carrying a story about Norma Marshall, a 94-year-old woman who alleges that Vera Nunes and her husband defrauded her of her life savings. It appears that Mrs. Nunes gained entry into Mrs. Marshall's life as a housekeeper, then moved her family, uninvited, into Mrs. Marshall's house, took her possessions, and drained Mrs. Marshall's bank account.  Click here to read the story at www.cbc.ca.

Mrs. Marshall is not the one who called the police. They were called when the prescription delivery person, Firoz Jogiat, saw Mrs. Nunes' husband at Mrs. Marshall's house and realized something was wrong. I don't know Mr. Jogiat, but he has my eternal gratitude for keeping an eye on his elderly customer, and caring enough to stand up for her.

This type of crime that preys on trusting, helpless, elderly people disgusts me, as it should everyone. We all have aging parents, relatives, or neighbours, and we should all make an effort to ensure they are never left helpless and alone. In this particular case, Mrs. Marshall did not dare to complain to anyone, and Mr. Jogiat realized that she seemed afraid. We should all pay attention to our elderly loved ones in this way, so that we can hear what is not being said.

The police suspect that Mrs. Nunes and her husband have victimized others as well. I am so glad these two vultures have been caught.

The attached photo of Mrs. Marshall accompanied the article on www.cbc.ca.

Tuesday, April 1, 2014

RDSP: A path to prosperity

There is a new article on www.moneysense.ca that is more or less a primer on Registered Disability Saavings Plans (RDSPs). According to the article, even though about 500,000 Canadians are eligible to have an RDSP, only about 78,000 have opened them. This may be a missed opportunity.

If you have a disabled child or sibling, you really should read this article to find out more about RDSPs. Click here to read it. When doing estate planning for a family with a disabled person, our team always discusses RDSPs with our clients to ensure that they have considered all aspects of providing for the future of their loved one.

The article is extensive, and covers everything from who can own an RDSP, through how much money can be put into it, to how to take the money out again. If you think that it's not worth opening one because you don't have much money to contribute to it, please think again. You might be surprised at how even a small amount can grow in one of these plans.

If you want to know more after you read the article, talk to your banker.

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