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Thursday, May 6, 2021

Why do people ask me to work for free?

I need to rant for a moment. 

Twice this week, people who have asked me to do work for them have then complained about receiving a bill, both saying "I didn't realize I would have to pay for it". The first one was a phone consultation about probate. The client asked me to get the original will from another lawyer, who was refusing to release it. I got the will, after a bit of a struggle. I billed the client, who seemed surprised that I'd bill for that. The second one, also on the phone, was a consultation about Letters of Administration. It was a 45-minute discussion, during which I was asked to verify facts by way of Land Registry search. I did that. Again, I billed the client. This one said "I didn't expressly agree to pay you".

Seriously? Who calls a law firm, spends time with the lawyer, asks for tasks to be done, and thinks it's all free?

Do these people receive services from the dentist or the hairdresser or the mechanic or the insurance company for free?

Do they go into stores and think they can just take stuff if they don't "expressly agree" to pay for it?

Both of these people WILL pay me eventually. That's not the point. I'm just frustrated that my time and my staff's time is being wasted on arguing about it. 

Now you see why lawyers ask for retainers. When I do valuable work for people, I don't want to be messed around with "I didn't know I had to pay you". 

Okay. Enough about that. I've cleared the air, now on with my day.

Tuesday, May 4, 2021

A seminar about how to be an executor.

I've been asked a number of times to give a seminar about how to be an executor, and I'm seriously considering doing that. It's hard to find reliable local information, as many, many clients and readers have told me over the years. I have presented this kind of seminar, pre-Covid, in my office in small groups, but given the current conditions, a future seminar would have to be online. 

At this point, I'm testing the waters to see whether a seminar like this would be of interest to readers of this blog. I'm thinking of a seminar for non-lawyers that would be useful for anyone who is currently an executor or who is appointed in a will to be an executor in the future. It would be an hour long. The focus would be on issues such as whether the will needs to be probated, which assets go on the inventory, whether someone can renounce, what to do with joint assets, how to do an accounting, and how to get a release. Practical things. These are early days so the agenda will change depending on the feedback I get.

Currently, when we hold this seminar in-office, we provide attendees with quite a bit of written material, such as a checklist of duties, record-keeping forms, a release form, and a copy of the power point. I would anticipate providing all of those materials in electronic form to attendees.

I'm exploring various seminar platforms to see if I can find one that will allow for attendees to ask questions during the seminar. 

Because it's online, I will make sure that the content is relevant to attendees from all provinces. 

Given the materials and the time commitment, I would charge $100 for the seminar. 

What do you think? Would this interest you? Let me know in the comments. Also let me know of suggestions for specific issues within the general "Executor How-To" topic. What would you want to chat about to make acting as an executor a bit easier? I'm here to listen, and to design a seminar that would be truly helpful to first-time executors.

Sunday, May 2, 2021

No, acting under a POA does not allow you to change a beneficiary designation, even if it matches the will

I'm always glad that people ask a question before going ahead and trying to take steps that end up being a problem. This reader is asking about a step that I hear about often, which is a person under a Power of Attorney attempting to change a beneficiary designation on behalf of the incapacitated owner of a registered financial instrument. In fact, I have just last week concluded a lawsuit which began because a person acting under a POA tried to do exactly that with both an insurance policy and a RRIF. The bank and the insurance company both stopped her, but it soon turned into a big schmozzle and I was hired by the person who was the beneficiary named by the incapacitated owner. I honestly don't think she was a bad person; she just didn't realize the limit of her legal authority.

Here's the question:

"If the POA has moved from spouse to child - due to spouse's passing - can the child POA update the benefiary - which still lists the deceased spouse - to the division amongst all children that is written in/ supported by the will?"

The short answer is: absolutely not!

Your obligation under the POA is to keep things running, maximize the estate, and safeguard the finances of the person you are looking after. You don't have the right to change his or her plans as set out on a life insurance policy, LIRA, RRSP, RRIF, or any other policy or plan on which the person has made a designation. When the named beneficiary is deceased, the proceeds will be paid into the owner's estate.

You mention that the will leaves the estate to the children and therefore it may seem that you are simply updating the designations to match the will. But you do not have the legal authority to do that. 

Beyond the question of authority, there is also the fact that leaving money under a beneficiary designation and leaving it under a will do not always have the same outcome. You may think you are "matching the will" but that may not be the case. Let me give you an example. 

Let's say a Mom has a RRIF that leaves money to five children. There is also a will that says the estate is divided among five children, and if one of the five should predecease Mom, that person's share of the estate goes to that predeceased person's children. Very common situation.

Now let's say that one of the five predeceases the Mom. Now the RRIF goes among the four surviving children. There is nothing to give the children of the child who passed away because the RRIF is paid directly by the bank and is not controlled by the will. There is unlikely to be anything on the RRIF itself that gives a gift over to grandchildren. Instead of each child getting 20% of the RRIF, each gets 25% of it. However, the tax for the RRIF comes out of the estate, so it reduces the inheritance for ALL beneficiaries, including Mom's grandchildren who did not get a share of the RRIF but who will share in whatever is left in the estate.

If that same money was not in the RRIF but was in the estate, the share of the predeceased child would take the portion that their parent would have received. The tax still comes out of the estate, but at least they will receive part of the RRIF money. In addition, the will can control the age at which beneficiaries inherit so that they don't get a cheque for the full amount on the day they reach the age of majority.

Also consider that if a beneficiary receives RRSP or RRIF money but there isn't enough in the estate to pay the tax, CRA will pursue the individual beneficiary for the tax. This is quite a different scenario than leaving a taxable instrument to the estate, which does not involve the beneficiaries in personal tax liablity.

So you see, changing a beneficiary designation changes more than you think. 

Sunday, April 25, 2021

This clause does not mean what the executor thinks it means

I don't like to be too tough on the average executor because most of them by far are just decent people trying to do a job that is thankless and confusing. However, when it comes to someone who is just plain selfish or greedy and who mistreats an estate because they think they have the legal power to do so, I'd honestly like to shake them. This reader sent me a note about an executor like that:

"for all purposes contained in this my willi give my trustee the following powers, to postpone the conversionof my estateor any parts or parts thereof, for such length of time as my tustee might think best" Does this mean they dont have to pay put anything to the beneficiaries at all? My husband is entitled to one thrid of the estate and his sister was appointed sole executor and trustee. She told him "They left everything to her" and she is giving him a third of the house as a goodness of her heart and he should be lucky to receive that. SHe is currently living in the house. Although the will states he is entitled to one third of the estate she only valued the house. Not the contents or bank accounts and told him he should be lucky. He is confused by her actions and her accounts. Is this right?

None of that sounds right to me. I believe that this is a case of an executor having no bloody clue what she is doing. Either she hasn't hired a lawyer for help with the estate or she is completely ignoring what her lawyer said (yes, that happens).

Since you quoted directly from the will, I assume that you have a copy and you know for sure that your husband is supposed to receive a third of the estate. 

Apparently the sister thinks that being the executor means that she gets everything. It could be that she is reading language in the will that says something like "I give my trustee my estate on the following trusts" but never got past the "I give my trsutee my estate" part. I have run into executors before who actually do think they have the right to decide who gets what, despite what the will says.

If the will gives your husband a third, then it has nothing to do with the goodness of the sister's heart. She is legally obligated to give him a third, after debts and expenses are paid.

The clause that you quoted has been raised before by executors who are clueless about what it means. Anyone looking for an excuse to mess with the distribution of an estate seems to fixate on that clause for some reason. All it says is that an executor can try to be smart about selling or cashing in assets to take advantage of good market conditions and other factors so that everything isn't sold at fire sale prices. Nothing more. No, it does not give an executor the right to decide a beneficiary doesn't get anything. 

Has the sister filed an inventory at the court as part of the probate process? This is always required either immediately upon applying for probate or shortly after that. You are right that the estate includes not just the house but the accounts, vehicles, insurance, household contents, and everything else that your mother-in-law owned. Things that would not be included would be anything that has a direct beneficiary designation such as a life insurance policy or RRSP that is left to a particular person.

You need to take the copy of the will to an estates lawyer (and get someone with lots of experience, not someone who just dabbles in it) and ask for help. The idea is not necessarily to sue the sister, but just to keep her in line. If the sister doesn't start doing what she is supposed to do, she is going to find her inheritance eaten up in legal fees.

Yes, you need a will. Here's an example of why.

I recently read this article on one of the many legal blogs I love to read. It's entitled "Do I Need a Will?", a question that we lawyers hear constantly. Check out the article by Ontario lawyer David Wagner of the firm Wagner Sidlofsky by clicking here. I particularly like this article because of the example it gave for how, without a will, your estate could be distributed in a way that you simply would not want. In this case, the applicants to the court were the children of a common-law partner the deceased had split up with 30 years ago. How's that for an unexpected turn of events?

Though this article specifically mentions Ontario law, the same principles apply across the country. If you don't want a strange outcome, a fight, delays, or for your hard-earned money to be eaten up by legal fees while everything gets straightened out, then see an experienced will-planning lawyer and get it done.

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