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Saturday, February 12, 2011

Distributing an elderly parent's estate before her death

A reader recently asked this question that I think will interest many of you:

My 93-year-old mother wishes the bulk of her estate to be distributed before she dies. The intent would be to reserve funds to take care of her needs until her death. What is the best way of going about this? (The reader also mentioned that there is a power of attorney and a will in place).

Because this question doesn't tell me much detail, my comments are necessarily going to be general. The answer to your question hinges on the issue of your mother's mental capacity. Any adult of any age is entitled to give away her assets, so long as she understands the consequences of it and is not being forced or influenced to give them away. Anyone carrying out a request like this must make sure that this issue is resolved before he or she takes any steps at all.

Do you know why your Mom wants to distribute her estate now rather than after she passes away? Is she worried about disputes among the kids? Is there one of the kids in need of money, and this is her way of helping that child out while "keeping it fair"? Does she just want everything to be orderly? Are there issues that might complicate things, such as un-repaid loans to some of the children? There might be another way of addressing her concerns without taking the irrevocable step of divesting herself of the bulk of her money.

Did the idea of the early distribution come from one of the people who would receive a share of your Mom's assets? If so, you have to wonder how much she really wants to distribute her estate, as opposed to how much she wants to please that person.

You mentioned that there is a Power of Attorney in place but you didn't say whether it was in effect so that someone was actually taking steps to work with it. This also makes a difference. The fact that there is a Power of Attorney being used doesn't automatically mean that your Mom is unable to understand and express a wish like this. It does mean though that the person acting under the Power of Attorney has to be very careful. Provincial laws governing the actions of trustees/attorneys say that a person acting under a Power of Attorney is not allowed to benefit from being the attorney by taking money for himself/herself.

The person acting under the Power of Attorney should look at your mother's will to see whether the current proposal upsets the plans set out in the will. If the distribution your Mom wants now is different from the distribution she has set out in the will, it would be a very good idea to find out why. You want to make sure that nobody is forcing, threatening or otherwise pressuring your Mom to make a change in their favour.

Most people do not have all of their assets lying around in liquid form, so items would have to be sold or cashed in before they could be distributed. Make sure that you understand any tax consequences to your Mom of selling or redeeming assets.

Because there are infinite combinations of various types of assets (bank accounts, RRIFS, GICs, bonds, real estate, etc), it would be impossible for me to know how your Mom has things set up. If most of the assets are in one bank, you could have a meeting with your Mom, her banker, the person acting under the Power of Attorney and perhaps others of the kids. You could get down to specific assets that way. Don't be afraid to ask your personal banking officer for this kind of meeting. This idea also works if your Mom has assets in several places but uses a financial advisor or planner; he or she could attend the meeting rather than the banker.


  1. I recently had an aunt who died and a month before she died she had her husband sign over his share of the estate to her. She then proceeded to have a will written that did not include the husband. The husband is living in a government run senior's home and everything he owned is being sold off and distributed to those listed in the will. Shouldn't the martial property act have protected his rights once she died?

  2. what should you do if the items from an estate that you are listed on as a beneficiary are being auctioned off but some of the bigger household items from the estate are not listed in the household items to be auctioned?

  3. I purchased your book "how executors avoid personal liability" I was hoping there would be a release form for the beneficiaries to sign. Is there somewhere I can find one?

    1. Hi Fran,
      It depends partly on where you live. There is no standard release form that suits everyone. In some provinces they are mandated by law. In most they are not mandated so the lawyers in each province make up releases that do the job.



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