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Wednesday, August 11, 2021

Be careful whose advice you take.

Today I met with a client to do some estate planning. Recently, the client had phoned her bank to ask some questions about using an Enduring Power of Attorney. Here is what she was told: "You can use the Enduring Power of Attorney to roll the RRSP [which had designated beneficiaries] into an estate account." I was horrified.

What complete crap that advice was. Why? 

1. If there is an estate account, the owner has died and therefore the POA is no longer valid. 

2. When an RRSP has a designated beneficiary, it doesn't go to the estate. 

3. A person acting under a POA cannot change a beneficiary designation by ignoring existing designations and just placing the funds elsewhere.

4. The word "roll" suggests a tax-free or tax-deferred movement of funds from one owner to another. If an RRSP goes into an estate, it is taxable.

In other words, every single part of that person's advice was absolutely incorrect. I should probably mention that the client had spoken with someone at the bank's call centre and not a qualified financial advisor. But that is exactly who clients reach when they call the bank with questions, isn't it? It is beyond belief that person works at the call centre of a major bank, giving out false information to dozens of people a day. How have the banks not been sued already? How many unsuspecting clients have ended up in legal hot water because they acted on legal advice from people who had no idea?

I know lots of bankers and plenty of them know plenty about estates. But they are not answering calls at the call centre; they are meeting clients one-on-one to give proper financial advice.

So what is the take-away here? Simply put, ask the right people when you need advice. If you want to know how to use legal documents, ask a lawyer. If you want to know how to invest money, ask a financial advisor (including the ones at the banks). If you want to know about tax, ask a tax accountant. 

And in every case, if the information doesn't seem right to you, get a second opinion. 


7 comments:

  1. Lynne
    Of interest..?
    https://www.mondaq.com/canada/wills-intestacy-estate-planning/1100686/why-integrity-is-so-important-in-providing-trust-and-estate-advice
    Webeye

    ReplyDelete
    Replies
    1. Webeye, what a great article that is. I hope everyone reads it.

      I agree with its main message that integrity is essential because of the impact our work has on our clients and even subsequent generations.

      I disagree slightly with one observation, that being that having integrity is seen by some as being incompatible with commercial success. Actually it's not so much that I disagree that people see it that way. But I disagree that commercial success does not depend on integrity. In our profession, a reputation for sharp practice or lack or ethics gets around. Lawyers refer clients to each other all the time for many reasons, and nobody will send a client to someone who has a bad ethical reputation. So in that way, opportunities to work on good files are restricted by lack of integrity.

      Lynne

      Delete
  2. My dad had a will named me trustee
    Named my son his sole beneficiary of his home and over $350 000 dollars, from his bank account the day after he died.
    I am livid and so hurt! My fathers home was sold right before he died.
    When it clearly states to be left to my side !

    I don’t know what recourse I may have.
    His estate was cleaned out and his will was probated and all this was kept from me.

    My number is +12498770211
    I live in Ontario Canada
    I’m doing my best to figure this all out, but what a slap in the face to find that there was a will.
    Someone mailed me the original will and death certificate anonymously. Because My self and my son have been taken advantage of!

    ReplyDelete
  3. Simply Sandy, it appears to me that you need some legal advice. It sounds somewhat complicated. The truth is out there, but to get to it costs money. All the best.
    Webeye

    ReplyDelete
  4. In all fairness to the bank employee, just remember that most people only hear/listen to/understand about 25% of what is said to them. Perhaps the client got some things muddled. Having said that, I agree that a bank employee is not the best person to get financial advice.

    ReplyDelete
    Replies
    1. Hi Jenn,
      You do have a point. A couple months ago I prepared an immediate POA for a client so she could give her daughter access to her bank accounts. This week she told me she had put her daughter on her accounts so the daughter could help her with banking. I said, but that's what your POA was for. She just said, Oh, I didn't know that. And I KNOW we talked about it. So yeah, sometimes people don't hear and/or remember and/or understand what they are told.

      Lynne

      Delete
  5. said to them [Jenn]

    I can attest to that. I was involved in an Estate Trial that did not go well. I requested a copy of the Court Trial Hearing at a cost of $2000. The Trial lasted 3 days. I was shocked at what I read , what I had not heard.
    You can imagine the stress. I also have a chronic back disability and stress points go there. I also found out that one's hearing is also greatly affected. I remember a Court Situation where I had trouble hearing the Judge. That is stress related. If your Lawyer is not working for you to properly resolve and settle then you are scre***.
    Webeye

    ReplyDelete

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