Sunday, September 28, 2014

Joan Rivers teaches lesson about termination of life support

Lawyers and other advisors who work in estate planning will always urge their clients to set up three main planning documents. Those are the will, the Power of Attorney (dealing with property and finances) and a Health Care Directive. Some clients need more, of course, such as a family trust or an estate freeze, but all of us need at least the three main planning documents.

I often find that people feel the health care directive (also known as Personal Directive or Health Care Proxy) to be the least important of the three documents. They generally feel that they are too young and/or too healthy to need one yet. I find this to be false logic, as I firmly believe that health care directives are not just for older people. Anyone can be the victim of an accident.

In any event, I would like to emphasize the importance of having a health care directive in place as an essential part of everyone's estate planning. Recently I read a very good article on The Probate Lawyer Blog that I'd like to share with you. It talks about the late Joan Rivers, and how her forethought in estate planning saved her daughter the pain, expense, and delay of having to go to court to obtain the right to follow her mother's end-of-life wishes. Click here to read it.

The attached photo of Joan Rivers accompanied the article at

How much can the trustee of a Henson Trust be paid?

Thousands of Canadians have been named as the trustee of wills and by extension, the trusts set up in those wills. For many, this may include a Henson Trust. This is a type of trust that is created to set aside funds for a disabled person to provide for that person's financial future. Henson trusts are used in every province other than Alberta.

Since most trustees are thrust into the job without prior training, finding reliable information about the mechanics of the job is essential. I'm attaching a link to a new blog post by Ottawa lawyer Donna Neff that will help answer one very important question - that of how much the trustee is to be paid for looking after the trust. Click here to read it.

Calculating the right amount is important because the trustee carries a lot of responsibility and risk for looking after a large sum of money and applying it correctly according to the terms of the trust. It's also important to explain the fees to others, such as the people who will inherit the remainder of the trust once the disabled person passes away.

Note that Ms. Neff's post is specifically about Ontario. The same principles will apply in other provinces, though the legislation might well be different. If you live outside of Ontario, you  might want to ask a local trusts lawyer for additional information.

Sunday, September 21, 2014

Estate planning mistakes women make

Not long ago, I was asked by a reporter to describe some estate planning mistakes women make. As a rule, I don't find a huge difference between the mistakes made by men and those made by women in terms of estate planning when both partners are alive. However, something that is indisputably true is that there are more widows out there than widowers. Therefore, women are in a somewhat different position than are men. Women are most often the ones who pass the estate not to a spouse, but to the children.

This means that women are more likely to be the person who needs care under a Power of Attorney, and more likely to be the one potentially subject to influence by greedy individuals. In today's post, I'm going to mention some estate planning mistakes women make when married, as well as some they make while their spouses are still alive. I think some of you readers will see yourselves in this post!

Here are some estate planning mistakes that I believe women make when they are widowed:

1. A woman will often add her children to her bank and investment accounts as joint account holders. The problem is that the desired outcome - to give someone access to help her with the banking - is not achieved. Instead she creates a joint account, which gives the children ownership. Money disappears, and because the other person has been made a joint owner, it’s legal for that person to take it. A better solution is for the woman to use a power of attorney document.

2. Similarly, a woman will sometimes put one of her kids’ names on her home. This is usually a home-made estate planning step that is taken because it’s believed that putting a child’s name on the house will avoid having to put the house through probate. The problems are numerous. The house is at extreme risk while the woman is alive, as it could be lost to the child’s divorce, business failure, bankruptcy, or law suit.  Upon the woman's passing, there is no certainty around what will happen with the title. It has been the law in Canada since 2007 that a property held in this way is to be held in trust for the estate so the avoidance of probate will likely not be successful in any event. Finally, disputes erupt among the kids about what is supposed to happen to the house, and just as importantly, the contents of the house. A better solution is to  leave the house in her own name and deal with it in her will.

3. Even worse, a woman will sometimes put all of her kids’ names on her home. This is done partly to avoid probate, but mostly because for some reason, parents think it’s a way of treating the kids equally.  The problems with this idea include all of the same problems as #2 above, and more. It’s impossible for three, four, or more adults and their families to occupy the home, or to agree on when to sell it, or to agree on a selling price. Also, typically one of the kids will move in on the grounds that it is his/her house now and refuse to co-operate with anyone in terms of selling, paying rent, distributing household goods, etc. A better solution is to leave the entire estate (not just the house) among the children, with flexibility in the will that allows one of the kids to buy the home out of their share if desired.

4. A woman usually refuses to believe that her kids would be anything less than scrupulously honest, meticulous, and hard-working if named as executor.  Mothers are completely blind when it comes to their kids. The problem is that women tend to name their children (particularly their sons) to be executors and/or powers of attorney despite the fact that the child might have a gambling addiction, a drug problem, a string of bankruptcies, has never worked and still lives at home with Mom at age 45, or other significant problems. Money disappears.  Items disappear from the estate. The child treats the estate as his or her own pocket money. Beneficiaries don’t get what they are supposed to get. There is often a lawsuit by other beneficiaries. A better solution is to name an executor who is not a family member, or name one of the kids who is better suited to the job.

This is not to say that women only make estate planning mistakes once they are widowed. Far from it. The following are some estate planning mistakes that women make while their husbands are still alive:

5. A widespread and serious error is assuming that a common law wife has the same rights as a married wife when her husband passes away. People are led by television programs and widespread misinformation to believe that common law is the same as being married, including when the husband dies. Unfortunately, this is completely false. Women find out on the death of their husbands that they no longer own their home, that they don’t get half of everything, and in some cases get absolutely nothing. Each province has its own laws regarding inheritance so in some places common law wives are safe, but it’s a mistake not to know where you stand. A better solution is to talk to an experienced estate planning lawyer. If the husband won’t attend, the woman should go on her own.

6. In today's modern landscape of blended, single parent, and same-sex parent families, many women do not understanding the rights of their children upon the death of the mother or the father. People in general think of their children as only the children who  are in their immediate household or family. The problem is that the word “children” – whether in a will or under intestacy law - includes biological children, whether legitimate or illegitimate, but not step-children. It includes children that you have adopted, but not a child of yours who was adopted by someone else. Whether or not there is a relationship with the child is immaterial. In blended families, this frequently leads to only some of the children in a household receiving an inheritance on the death of the father, or even none of the kids in the house getting anything (because they were never adopted by the father) while an unknown illegitimate child gets everything.  This may leave the woman in an impoverished or reduced financial condition, not to mention bitter as hell. A better solution is for both parents to have wills made by an experienced lawyer, and those wills need to spell out which children are to inherit.

7. Women may fail to clarify the terms of any loans made to one of her kids. The problem is that loans to the kids are almost never documented. On the death of the parent, 100% of the kids who have received loans will say the deal was that they didn't have to repay it. If the executor is one of the other kids, there will be a dispute between them. The law requires the executor to collect any and all debts of the estate, and a loan to one of the kids is a receivable that needs to be collected. Even if the loan is characterized as a gift, this doesn't solve the problem because a gift to a child is considered in law to be a repayable advance on their inheritance. A better solution is to give instructions in the will about what to do with the money loaned or given to the child.

8. It it also a mistake to assume that because she is married, her husband will get everything even if she doesn't have a will, and vice versa. The problem is that wives assume that on the death of their spouses, they will “get everything” but that is not true unless the husband has a will that says so. Wives will receive any property or money that is jointly held. They will also receive any funds in which they are specified as a beneficiary, such as life insurance or RRSP/RRIF. However, if the husband owns anything in his own name (a business, cabin, vehicles, bank account, boat) and does not have a will, the items in his own name must be split with his children. A better solution is for both spouses to have solid wills that look after each other properly.

Sunday, September 14, 2014

How the rich die - bizarre celebrity last wills and testaments

Here's a bit of light reading for the weekend. Click here to read an article from that gives a short list of what they consider bizarre wills and estates. The attached picture accompanied the article mentioned.

Thursday, September 11, 2014

Doctors impose DNR order, ignore family's pleas, leading to patient's death

You might be aware that recently doctors in Toronto did not assist Douglas DeGuerre, an elderly man who was having a heart attack, with the result that Mr. DeGuerre died. He was very sick with heart disease, diabetes, and other conditions, and had just undergone double leg amputation. Although Mr. DeGuerre's daughter was present and begged the medical staff at the hospital to save her father, they said that a Do Not Resuscitate (DNR) order had been put in place for her father and refused to take action.

If you would like more facts and background than the brief summary I've provided, click here to go to the article in the National Post that originally reported the story.

The story is causing quite a stir among doctors, but also among lawyers who prepare health care directives for their clients. It's my understanding from reading this story that the man's daughter was properly appointed as his substitute decision-maker (otherwise known as health care proxy, power of attorney for personal care, or health care agent). Therefore she was authorized and empowered to give directions regarding her father's health care. The doctors' failure to provide emergency care to Mr. DeGuerre appears to be directly contradictory to current law.

As lawyers, we need to know that when we describe to a client the legal effect of a document they are signing, we are telling them accurately what to expect. It's concerning to us that a medical board would impose a DNR order that directly opposes the instructions given by a substitute decision-maker. We cannot assist our clients to meet upcoming challenges if we don't have confidence that the legal system is being upheld.

The question at the core of all of the controversy is who gets to decide whether life-saving measures are taken with respect to any given patient - the doctors or the substitute decision-maker. The doctors are not the enemy; we all just need to know how to work together on these issues.

Now the daughter is seeking disciplinary action against the doctors. Her initial complaints to the College of Physicians and Surgeons, the regulatory body that oversees doctors, were dismissed. She appealed this to the Health Professions Review and Appeal Board, who, in a rare move, disagreed with the College and ordered that disciplinary hearings be re-opened.It has also instructed the College to ensure that its policies are updated and fine-tuned to accord with current law and court rulings.

My heart goes out to Mr. DeGuerre's family, but also my thanks, as this sad case might be the catalyst for positive change for all of us.

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