An estate-planning new year's resolution

The turn of the new year certainly feels like a new beginning for many folks, and is traditionally the time we vow to stop smoking or start exercising. I have a suggestion for a different resolution. Why not resolve to review (and if necessary re-vamp) your estate plan? Some Sunday afternoon in the next few months, take out your documents and read them over. Ask yourself whether they still do what you what you want them to do.  Think about what has changed since you last did your Will - have you married? divorced? been widowed? had children or grandchildren? moved to a new province? retired? inherited money? Is your executor still ready, able and willing to act on your behalf? Do you have power of attorney and health care directives in place?

At the new year, we usually resolve to do something that we think will improve our lives or the lives of those around us. Reviewing your estate planning every few years will give those around you an enormous gift, as your documents will be there to guide them during emotionally challenging times.

If you own a vacation home in the USA, read this

You may or may not know that the estate tax in the US has been in limbo this last year due to a re-vamping of their tax system. It has caused uncertainty for advisors and consumers alike, but now the Americans have got their new system in place for 2011. This column in today's Financial Post talks about how the new estate tax will affect Canadians who own property in the US when they pass away. Click here to read it.

For a Great Deal, Try an Estate Sale

If you've ever wanted to know more about estate sales, or are considering holding one, now is your chance to learn more. The link below goes to a blog post by Toronto lawyer Megan Connolly, and in it she references several websites and facts that you might find interesting. I've been to several estate sales around rural Alberta where farm equipment, tools, machinery and household items were sold. They are extremely well-attended sales, and they can work just as well in an urban setting.

For a Great Deal, Try an Estate Sale

When moving seems impossible

Have you or your parent considered hiring a professional "senior mover" to help with the sale of your parent's home and the move to a new place? This story from the New York Times describes one family's experience with doing so, and gives several interesting facts. Click here to read it. This is an American story and I've encountered several senior movers in the USA, but are there many in Canada? If so, I'd like to know about them, so hopefully they'll leave a comment here or send me an email.

Donating securities: the gift that gives back

This article from the Globe and Mail describes the significant tax advantages to be gained by donating stocks and shares to a charity, instead of cashing in the stocks and donating the cash. Click here to read it.

Although the article doesn't go into estate planning, giving securities rather than cash works with wills as well. You can use your will to instruct your executor to make charitable donations of securities rather than cash, assuming the appropriate securites are still in the estate at the time. It's worth talking about with your estate planner.

Duties of court-appointed trustee for an incapacitated adult

If you're considering becoming a trustee for an aging parent who is losing capacity or for another adult who is mentally challenged, you maybe wondering what you're getting into. In this post, I'm referring to an adult who has not prepared a Power of Attorney but has lost capacity and must have someone appointed by the court to look after their affairs.

A trustee is put in charge of money or property, or both. You are not in charge of personal decisions such health, medical or living arrangements unless you are appointed as a guardian. These roles are known by different names across the country (wouldn't it be convenient if we all called things the same?), but every province and territory has a process for appointing someone for an incapacitated adult. In some provinces, trusteeship and guardianship are rolled into one.

The role of trustee is often defined by what you can't do, but what is it that you are supposed to do? Here are the basics:

1.  You must act on behalf of the incapacitated adult at all times, even if it means going against your own interests. Be realistic - can you do that? If it's in the adult's best interest to sell the lake cottage but you've always had your heart set on inheriting it, can you still do what's best for them?

2. You must become familiar with all of the adult's assets and organize them in a way that maximizes and protects them. For example, would all of that cash lying around in a bank account be better off in an investment account? Should that vacant house be rented out, sold, renovated? Are assets properly insured? Are credit cards and debit cards secure?

3.  You must maximize sources of income, such as public and private pensions, investments, interest, GST rebates, and rental income.

4.  You must pay the adult's bills. This includes daily living expenses such as accommodation, transportation, medicine, food, clothing, insurance, cable, telephone, heat etc. It also includes occasional expenses such as furniture, vacations, home renovations, in-home care, or medical supplies such as a wheelchair. While you want to ensure that an adult is living within his or her means, you also want to make sure that an adult who can afford a nicer lifestyle has that lifestyle. Don't cheap out on the adult's accommodation or care in order to save more for an inheritance.

5.  You must protect the adult from financial predators, whether those are door-to-door scammers or family members constantly asking for money.

6.  You must ask for financial advice from a professional planner or advisor unless you are trained in that area yourself, as you are responsible for losses due to recklessness or foolishness.

7.  You must keep detailed, accurate records of all financial transactions.

8.  You must apply to the court for a review of your trusteeship or passing of accounts if the court order appointing you directs you to do that.

9.  You must see that the adult's income tax returns are completed each year.

10.  You must work with the adult to determine how much money he or she needs for discretionary spending, how much he or she can safely handle, and the best way for him or her to do that. For example, should he or she have a debit card? A credit card? Cash on a weekly basis?

11.  You must work with anyone appointed as a guardian to ensure that arrangements being made by the guardian are within the financial means of the incapacitated adult.

12.  If the adult passes away, you must stop acting on behalf of the adult. You must provide your financial records to the executor. You must pass possession of all assets to the executor.

13.  You must remember that it's not your money!

Walt Disney heirs embroiled in ugly family feud

Estate disputes happen to everyone, rich or not, famous or not. Famous families just get more press coverage. Hopefully their unfortunate problems can at least help the rest of us avoid our own estate lawsuits. Click here to read this new post about the Disney family estate.

My parent wants me to hold on to the house while they "try out" a care facility

Many people who are dealing with that time of transition during which an aging parent moves out of his or her home into long term care will recognize this scenario. The parent agrees - either reluctantly or otherwise - that he or she can't live alone any longer. A suitable long-term care facility has been located. Now comes the time to move. Your parent balks, and instructs you on no uncertain terms not to sell her home because she might want to move back into it.

Now what?

First of all, realize that this situation is common. It's not just your parent who feels this way and it doesn't mean that you're doing anything wrong. In fact, the majority of seniors that I've encountered at this stage of transition want to hang on to their home as an escape route.

Secondly, understand that for your parent, this could be unbelievably frightening. Your parent is leaving his familiar home, neighbours, shops, sights and sounds. That is stressful enough, but then there is also the fear of what lies ahead. Many parents wonder if they'll be mistreated, forgotten or overly regulated. They feel vulnerable and powerless. This is where they are comforted by the thought that if it's as bad as they think, they can leave and just go back home.

What can you do? While there is no guidebook that's going to work for everyone, here are some ideas:

1.  Show compassion and patience. Try to understand how frightening or disorienting this might be for your parent. Acknowledge his or her feelings and let them talk about them. Stay upbeat.

2.  Explore all options for living arrangements. If your parent is adamantly opposed to living in a facility, look at options such as living with you or one of your siblings, or finding home-care assistance that will allow your parent to stay in his or her home longer. The most suitable option for any individual is always a mix of family dynamics, finances, geography and the specific physical and mental shortcomings experienced by your parent. Your parent should have input into the choice, as long as he or she is capable of doing so.

3.  Assuming that a facility is the best - or only - option, check out the facility thoroughly and let your parent know that you are doing so. Unless your parent's condition requires you to act hastily, take your time. Let them know that you are being careful and thorough on their behalf.

4.  Bring your parent to the facility for a walk-through before moving day. Let your parent see the place, meet some staff and generally have a look around. Get answers to your parent's questions.

5.  Some facilities (usually the higher end, expensive ones) allow seniors to try out the facility by staying over for a few nights before commiting to living there. If at all possible, take advantage of this and stay in close contact with your parent during the try-out. Most, however, do not allow a try-out period as they simply don't have the room or the staff.

6.  Agree with your parent that you'll hang on to the house for a set period as long as they agree to give the facility a real chance. There's no point to this if the parent just suffers through it, counting the hours until he comes home. It has to be a genuine try. Finances will usually dictate that this period must be short, as few seniors can afford to pay for full-time care and keep an empty house.

You must realize that #6 above is not always possible. Some aging individuals are not able to live alone for safety reasons. There is no point in telling someone who can't live alone that he or she can come home if they don't like the facility, because they simply can't. It isn't fair to trick them into moving, so be honest and gently but firmly explain why it's the only option.

7.  During the move-in period, set up a communication plan with your parent. For example, will you drop by each morning at 10:00? Will your siblings call each evening at 7:00? Will you come by for lunch? Make sure your parent knows when to expect to hear from you (or other relatives) so that he or she doesn't feel abandoned. Also ensure that your parent knows she can call you AT ANY TIME if she is abused or frightened or confused and make sure that you respond to any calls of that kind. It may take a bit of time for your parent to become oriented and comfortable.

8.  Help your parent choose and transport some cherished things from home to take to the facility, such as framed photos, favourite books, bedding, decorative items, radio or CD player, craft projects in progress, or small pieces of furniture (e.g. lamp, footstool, bedside table).

9.  Get to know the names of some of the staff at the facility so that you can have conversations with your parent about the people they interact with every day.

10.  When the house is going to be sold, give your parent an opportunity to decide who gets what personal and household items.

My experience has been that many seniors are afraid to make the change to facility living, but that many find that their fears were exaggerated. They actually like living there and their sense of relief is wonderful to see. Once a week or two has passed and the senior knows his way around and knows the staff, his comfort level increases immensely. I've heard a number of seniors report back that now they always have someone to play cards with, or they enjoy watching their favourite tv shows with the other residents, etc.

Emotionally, this is a tough transition for the senior and for his or her children.

True family business succession planning should be considered a never-ending story

This link goes to an article that talks about how business succession planning is not a one-time event but should be part of the daily life of a business. I completely agree with that concept. This isn't the best-written article I've read lately, but the ideas it contains are definitely worth reading. Click here to see the article.

Empowering caregivers

I'm attaching a link to a blog written by Chris Cooper, who has a really interesting and unique business that provides comprehensive assessments and planning for seniors and their families. The blog post includes a radio interview of Chris by Susan Baida, co-founder of eCareDiary. Click here to see the post and listen to the radio interview.

Metro Vancouver's seniors population set to skyrocket: communities grapple with housing dilemma

This article from the Vancouver Sun talks about how the growing senior population is bringing about the need for creative housing solutions. Sounds like the BC towns mentioned here are brainstorming, but I still find their solutions limited. Click here to read the article.

Merry Christmas to all readers

When traditions must change

This article from a blog called The New Old Age discusses how the focus and traditions surrounding events such as Christmas have to change when an aging parent is suffering from dementia. Click here to read it.

An estate planning checklist (or, Stop Going Out in a Blizzard in Nothing But Your Boots)

What's the difference between estate planning and getting a Will made? It's approximately the same difference as going out in the middle of a -40 Alberta blizzard wearing a parka, mitts and boots, versus going out into that same freezing weather wearing nothing but the boots. The parts that are covered will be fine. The uncovered bits, not so much.

The elements of an estate plan, pared down to their essence, are:

1. A Will. Important issues are the choice of executor, the choice of a guardian for minor children, distribution of your assets to your beneficiaries according to your wishes, and the inclusion of powers for the executors and trustees.

2. A Continuing, Enduring or Durable Power of Attorney. Important issues are the choice of attorney to represent you, how or when the document is to come into effect, and controls on the attorney. May include addressing immediate needs due to incapacity.

3. A Health Care Directive. Again important is the choice of agent to represent you, and the clear expression of your wishes. For older individuals, may include discussion of various supported living arrangements to address limitations.

4. Title to various properties. Important decisions are joint ownership and tenancy in common, right of survivorship, tax effects, potential disputes, and effect on overall estate plan.

5. Insurance coverage. Major issues are ensuring liquidity to cover tax liability, creating new wealth for distribution and keeping up with changing lifestyle insurance needs.

6.  Beneficiary designations. Tax savings are important. Also important are obligations to a spouse, the impact on the overall estate plan and creditor-proofing. Affects RRSP, RRIF, TFSA, ESOP, LIRA, DRIP, pension and life insurance.

7. Business succession planning. Important issues are choice of family successor, other possible exit strategies, tax planning, future income and timing. Should tie in with shareholder's or buy-sell agreement and company-owned life insurance.

8. Tax planning. Looking for ways to minimize taxes and maximize funds for distribution in the estate.

9. Trusts. Important issues are income-splitting for tax purposes, protection of handicapped adults, protection of children, and preserving assets to be inherited by a beneficiary at a later date.

10. Charitable giving. Important issues are giving back to the community, creating lasting legacies and creating tax credit.

11. Retirement planning. Includes discussion of dissipation or sale of current assets, business succession timelines, planning for incapacity and changing insurance needs.

12. RESP. Appoint a successor director of the plan.

13. Family dynamics. All of the items on this list are discussed in the light of the roles, abilities, shortcomings and personality of the various members of the family. Issues that may crop up are subsequent marriages, children from different marriages, separation agreements, divorce, common law arrangements, illegitimate children, disabled children, children vying for a place in the family business, belligerent or overbearing children, disputes between spouses or children, estranged family members, greedy or untrustworthy family members, and children with addictions.

As you can see, the items listed here overlap and loop back to each other. The idea is to make sure that everything works effectively together to achieve your goals. So use this checklist for your own planning and stop going out in just your boots.

Can a person have more than one Power of Attorney document at a time?

In this post I'm not talking about having more than one person acting as attorney under one Power of Attorney document. I'm talking about having two documents at the same time, each of which appoints a different attorney to look after things. Having two documents at once is not the usual way of doing things, partly because having more than one can create confusion, and partly because it simply isn't needed by most people.

However, in some circumstances, a person might want more than one document at a time. This is legal. But I have to warn you that if you're one of those people who never tells the lawyer the whole story and doles out snippets of information on a need-to-know basis, this idea isn't for you. Having more than one Power of Attorney can only work where the drafting lawyer knows the whole picture and can set up your documents accordingly.

For example, if you have a Power of Attorney in place right now, take a look at the first line. It says that the document revokes all other Powers of Attorney that you've made. How is that going to work if your drafting lawyer doesn't know there is another Power of Attorney out there that is not intended to be revoked? And of course there are larger issues too, the most problematic of them being which property is to be controlled by which attorney.

The wording of the documents is crucial in order for them to be effective. I don't recommend trying to prepare these on your own without a lawyer to help.

A person who owns a business may want and need multiple Powers of Attorney. By using more than one, the business owner can appoint one person (likely a business partner) to look after just business assets and a separate person (likely a spouse or adult child) to look after personal and family assets.

A person might also have multiple Powers of Attorney if he or she owns property in more than one geographical jurisdiction. For example, we have a number of clients who own homes in Arizona, Florida or Mexico. A Power of Attorney made in a Canadian province and governed by our laws is generally not recognized in other countries so it's necessary to have a separate document made there.

For most of us, having one document that appoints a first choice of attorney and an alternate choice is sufficient for our needs. If you think you might need more than one, talk to your estate planning lawyer.

Your Christmas present to me, and vice versa

Today I notice that the hit counter here on Estate Law Canada is about to turn over 50,000. I'll consider your continued readership as my Christmas present from the blogosphere, as it means a lot to me. I hope you find my posts to be informative, useful and entertaining. I hope that you find gems of needed information and ideas among the links and resources I dig up and post. Keep your comments and email questions coming and I'll continue to answer as many as I can.

I'd like to give a gift to you in return. The first person who emails me asking for a copy of my book "Estate Planning Through Family Meetings (Without Breaking up the Family)" will receive one free of cost. And the first person who emails me asking for a copy of my book "Succession Planning Kit for Canadian Business" will receive a copy of that free of cost. Please don't ask for both because I want to send books to two people. I'll send you the books personally. The email address is estatelawcanada@gmail.com. Make sure you include a mailing address!

Happy holidays!

Old Fogey Email Users

This post is from a blogger who calls herself Crabby Old Lady. In it, she talks about a story in which she was criticized for being old-fashioned. One of the old-fashioned habits held against her in the story is that she likes to use email. Enjoy the article by clicking here. Even though I am not Crabby Old Lady, I too like using email and find it immensely useful at work, and I must admit that I am occasionally crabby.

Reviewing and reconsidering your estate plan - when and why?

Our friends over at All About Estates make a good point in this blog post - you have to re-examine your estate plan from time to time. The article recommends that you revisit it about every three to five years, but if you haven't looked at yours in years, don't feel badly about that. I regularly see people who make their first will when they start having children, and don't think about reviewing it until they start having grandchildren. Not that I think that's the best way to do things, but it's the way many people are. So, although I say not to feel badly about it, if your will is that old, PLEASE review it! Click here to read the article.

Elder Tech: what's important

Do you ever wonder what kind of technology might interest or entertain your aging parents? Do you believe that seniors can't or won't learn new applications or devices? You might be surprised. This article takes a fresh look at seniors and technology and has some good advice for those of us with a senior in our lives. Click here to read the article from the New York Times. The attached photo is from James Estrin/New York Times.

Pensions top the public agenda

This article is a commentary from the National Post's Tasha Kheiriddin that talks about the fact that pension reform is being debated and developed. Click here to read the article and be brought up to date. You have to love an article that starts with the line "it's official; seniors are hot".

Long term care homes a work in progress

This story in the National Post discusses the state of affairs in Ontario long term care facilities, and what the government plans to do about it. Some of the things mentioned here - such as facilities not receiving an inspection in 15 years - just make me shake my head. Click here to read the story.

Arriving at a co-executor's fee

You and the co-executor are just about ready to finish winding up the estate, and it's time to think about taking your fee. It sounds simple, but as with most things to do with estates, the rules are unfamiliar. Here are some ideas for getting it right, compensating both executors fairly and keeping the beneficiaries happy.

The will may contain instructions about the amount to be paid in executor's fees. It could say that the executor gets a stated dollar amount as a fee, or that the executor gets a percentage of the estate.  Both are acceptable approaches. If the will includes a clause like this but contains no other instructions, this means that the fee stated has to be divided between the executors. It does not mean that each executor gets the amount stated; they must share it.

This leads to an assumption among most people that the executor's fee must be divided equally. But if you've worked on an estate, you know that the work is rarely evenly divided between the two. Sometimes one lives further away than  the other, or one has more expertise than the other, or simply has more spare time to devote to the estate. Any or all of these factors should be taken into consideration. If one executor has done more than the other, the fee should reflect the division of labour.

However, don't forget that the fee is also intended to compensate for the risk of the personal liability of the executor, so even if you feel that you've done all the work, that doesn't remove the other co-executor from his or her liability and you'll still have to share.

Many wills don't say anything about the fee that is payable to executors. In that case, the co-executors would fall back on the amounts normally awarded in their province or territory, and would share that amount.

In addition to carrying out executor's duties, an executor might provide professional services to an estate. For example, an executor might be a realtor who sells the deceased's home, or might be an accountant who prepares tax returns for the estate. These services are over and above executor's fees. These are things that the executors would have to pay for anyway, and should pay the executor his or her normal rate for those services. The payment comes out of the estate, but not out of the executor's fees. Therefore an executor or co-executor should be paid for their professional services and receive an executor's fee.

RDSP as estate planning tool: worthwhile?

In this blog entry, Jasmine Sweatman looks at whether there is value in using an RDSP (registered disability savings plan) as an estate planning tool. I agree with what she has said, but have to point out to Alberta readers that we cannot use Henson trusts in Alberta. Click here to read the article.

Retirement a distant dream for many entrepreneurs

This is a really good article from the Globe and Mail that talks about how having a plan is necessary for an entrepreneur to retire. It has some good analysis that I think you'll find interesting. Click here to read the article.

Top ten posts of 2010

As 2010 closes, I'm looking back over the year on my blog. A year ago this blog was getting about 500 hits per month; now it gets that every day. I'm working hard to make sure that this blog lives up to your expectations and reflects what you want to read. Below is a list of the top ten posts of 2010 - the posts that you've read most often and in many cases, returned to more than once. I'm posting this partly for your ease of reference, but also because by looking at this list, I can be a better judge of what will be useful and interesting for you to read in 2011.

joint tenants and tenants in common

top 5 mistakes made by executors

Canada death taxes & inheritance taxes

can an executor distribute estate before clearance certificate?

what does probate really cost?

what are executor's duties?

capital gains and principal residence

chart of probate fees across Canada

how to get a tax clearance certificate

should an executor get a tax clearance certificate?

Does no reading of the will mean the executor is hiding something?

I am asked this question so often that I wonder where the idea of a reading of the will comes from. Many people tell me that they expect a formal gathering of the entire extended family with the lawyer at the head of the table, reading the will word for word to the assembled crowd. I have only seen a reading of the will in that form in the movies.

A reading of the will in the sense of a family gathering is not something that is usually done. You should not assume that because there is no reading of the will that the executor is hiding something.

If the executor wishes, he or she can arrange for a meeting of the beneficiaries of the will and the lawyer. Sometimes executors want this because they feel that the lawyer will be better able to answer the beneficiaries' questions about particular assets, probate or timelines, particularly if the executor is feeling overwhelmed. It's completely optional though. And you'll notice that I didn't say a "meeting of the family". I said a "meeting of the beneficiaries". They may not be the same people.

As hard as it may be to hear, if you are not a beneficiary of a will, you are not entitled to have a copy of the will or see the will or be told what is in it. Many a pointless estate fight has been fought over this point, simply because an individual can't or won't accept that he's not entitled to know what's in a will. This is especially true when the deceased person is a parent.

Having said that, I'm well aware that not all executors are as trustworthy or as honest as the deceased had hoped they'd be. If I felt that the executor of an estate in my family was lying to me or stealing assets, you'd better believe that I'd push the point about seeing the will. I'd be prepared to accept the estate lawyer's written assurance that I'm not named in the will. (And for those of you who are quite sure that a lawyer would lie in these circumstances, ask yourself why on earth a lawyer would be prepared to be disbarred over your mom or dad's estate).

If you're an executor wondering whether you should hold a reading of the will, consider it as one more tool in your executor's toolkit, and use it if you think it will help matters along.

Police help 95-year-old loner, his pension cheques uncashed

This story from the Vancouver Sun is both uplifting and enormously frustrating at the same time. It's heartwarming to see our police officers responding in such a humane manner (it's no surprise to me, as one of my brothers is a 20-year police officer, but it's not what people think the police do). On the other hand, all I can think about the poor fellow in this story is how vulnerable he is.

Police help 95-year-old loner, his pension cheques uncashed

A holiday treat: Let it Dough

This link goes to a funny, creative, visually entertaining holiday post by Christoph Neimann. It's one you'll want to share with everyone. Click here to see it. The photo I've attached is from this article, which I found at the New York Times website.

Mentors try to help families resolve conflicts over aging parents

This article from the Washington Post gives some ideas about how family mediators can help those families where the kids disagree about their aging parents. I wish more families were willing and able to access this kind of help, as the fall-out from family fighting can be truly terrible. Click here to read the article.

Empathy 101

The University of California at Berkeley has put a new program into place that matches first-year medical students with independent seniors. The idea is to teach the med students a thing or two about seniors and make them aware of their own stereotypes. Click here to read an article about the program in the New York Times.

Your first meeting with the estate lawyer - what to bring, what to expect

Many times an executor has come to his or her first meeting with me loaded down with a cardboard box (or two) crammed full of papers. The explanation is always that the executor didn't know what to bring, so he or she brought everything. That makes sense, but somehow it still ended up that I needed things the executor hadn't brought along. This post is intended to make that first meeting between an executor (or administrator) and the estate lawyer run a little more smoothly.

What to bring:

• paper and pen for taking notes
• 2 pieces of I.D.
• the original will
• a Death Certificate and/or Funeral Director's Statement of Death
• the deceased's I.D.
• the deceased's social insurance number
• the most recent statements from the deceased's bank accounts, investments, RRSPs, RRIFs, TFSAs, LIRAs, DRIPs, loans and lines of credit
• the deceased's last tax return
• if the deceased was paying child support, a copy of the order or agreement to pay the support
• copy of the deceased's life insurance policies
• names and addresses of all beneficiaries named in the will
• names and addresses of the deceased's spouse and children
• the birthdates of any beneficiaries who are minors
• copy of title to the deceased's real estate, or the tax notice for the property

What to talk about:

• a timeline for individual tasks, and for the estate as a whole
• what the lawyer is going to do for you
• which tasks you are going to do yourself
• who the lawyer represents and will speak with
• who is entitled to see a copy of the will
• any possible claims on the estate
• what to do about personal effects in the deceased's home
• what and when the lawyer will charge for fees and disbursements
• paying the lawyer from the estate
• any further paperwork the lawyer needs from you
• any immediate need for cash for the deceased's spouse
• payment of the funeral bill
• opening an executor's bank account
• any of the deceased's assets that are in danger of being lost or damaged
• what to do if the deceased's house is now vacant
• whether you will claim executor's compensation, and if so, when and how much

Make sure before you leave the lawyer's office that you are clear on exactly what you have to do next to keep the estate moving. Open a binder or accordion file to keep estate documents, lists and statements organized.

When to back away from a reverse mortgage

Here is a little sound advice from Kyle E. Krull, estate and financial planning lawyer, about the dangers of reverse mortgages. He doesn't say never to use them; he has some advice about how to use them properly. Click here to read the article.

What's in a (first) name?

Does it bother you when a nurse or doctor or other care provider automatically calls you by your first name? Would it bother you if you were 80 years old and the caregiver was 30, and you were in a situation in which you felt that your dignity and privacy were already diminished? This is the subject of this article in the New York Times. My own experience with seniors leads me to believe that many of them would prefer to be addressed by their surnames. I have a strict rule to call my clients Mr. or Mrs. or Ms, unless they tell me that they'd prefer otherwise. I'm pretty informal as a rule, and all of my clients call me by my first name - and I'm completely happy with that - but I think it's respectful for me to address them more formally.

Spousal rollover on death

If you're an executor wondering about dealing with assets that may be eligible for rollover to a spouse, read this article from All About Estates before making a decision.

Charitable donation tax credit

This article from Canadian Tax Resource Blog describes how to apply a charitable donation to your tax return. It talks about giving through assets other than cash, and how much of a deduction applies (including in the year of death where 100% is deductible). You can see by reading this article some of the ways in which charitable giving ties in with estate planning. And even though this is a tax article, it's easy to read! Click here to read it.

Three life-planning moves you should make right now

I was interviewed by Today's Parent Magazine about estate planning for families with young children. That article is in the January 2011 issue. Click here to read it.

30 ridiculous, fabulous, beyond-crazy gifts for the out-there senior in your life

This is probably the coolest list of gifts I have ever seen, and they are all great ideas for seniors! My favourite is #13. Check out the list here if you have a hard-to-shop-for senior in your life, or really anyone who might want a creative, unique gift. The attached photo (which is not #13 but I like it too) is from the article at Seniorsforliving.com.

Controlling finances in your 80s and 90s

For those of you who have been following my series of weekly estate-planning articles in the Globe and Mail (and I really do hope there are a few of you), today's instalment is the fourth and final article. Click here to read it. Each of the articles gave an overview of estate planning priorities and tips for an age range that covered about 20 years or so. Today's article is about those in their 80s and 90s, and talks quite a bit about using Enduring Powers of Attorney. If you have any feedback on the articles - anything you liked or anything you thought was missing - I'd love to hear it.

Seniors in prison will lose government benefits

Today's National Post reports that the federal government is about to pass a new law that states that seniors in federal prisons (and therefore serving at least two years' incarceration) are going to lose their government benefits. The logic behind it is that OAS and GIS are intended to cover the very basic needs of a senior, but while they are in prison their very basic needs of accommodation, food, heat etc are already being paid for out of public funds. The federal government is negotiating with the provinces to see whether they will follow suit for senior prisoners in provincial jails (usually serving less than two years). Click here to read the story.

Holiday charity scams

This article from Global Edmonton has several tips to help avoid being scammed by fraudulent fundraisers. Click here to read it.

What is undue influence?

It's well known that in order to make a valid will, a testator must have mental capacity. But that's not the only requirement; the testator must also make the will voluntarily. If the testator was forced by someone else to include certain gifts in his or her will that the testator didn't really want to include, this is called undue influence.

It means that the will is less a reflection of what the testator wants and more a reflection of what someone else wants.

This is one of the reasons that a beneficiary of a will and the spouse of a beneficiary of a will are not allowed to act as witnesses to a will (if they do, their gift is void though the will is valid). Disallowing them as witnesses reduces the opportunity for them to force the executor to sign a will that leaves the estate to them.

There are plenty of ways in which a person might influence a testator, particularly one who is sick, fearful or lonely. The person might use violence or threats, though the Canadian case law is very clear on the fact that undue influence can and does happen without threats or violence. It could involve making false promises, or simply pressuring without letting up. The courts have said that some amount of begging is ok though!

If undue influence has resulted in the testator making certain gifts in his will favour of the influencer, that amounts to grounds for challenging the will. A judge will not grant probate if he or she believes that the testator was coerced into making the will that way, even if the testator had mental capacity. This makes it clear that undue influence is a separate concept from general testamentary capacity.

Undue influence is certainly a common term when it comes to clients wanting to contest a will, but it's important to understand that the person saying that undue influence existed has to prove it. They can't simply demand that the executor or beneficiaries show there was lack of undue influence; the person attacking the will has the burden of proof. This is no easy task, particurly for wills that were made quite a long time before death. That undue influence exists must be proved on the balance of probabilities (the civil test) as opposed to beyond a reasonable doubt (the criminal test).

If you're considering challenging a will on the basis that someone coerced the testator into making the will this way, or changing his or her will, I recommend that you sit down with a lawyer who has done quite a bit of estate litigation. You should understand that this isn't an easy case to prove. Your legal fees aren't going to be covered by the estate.

Nominate your favourite Canadian law blog

Nominations are now open for the 2010 Canadian Law Blog Awards, also known as the CLawBies! Click here to read more about the awards and find out how to nominate your favourite blog (hint, hint). The deadline is December 28, 2010.

Warm wishes

My season's greetings to everyone!

Click here and remember, I'm a lawyer, I have a strange sense of humour.

Tax implications of owning a recreational property

In this article, lawyer Douglas Gray goes into some detail about taxation of persons who own recreational properties when those properties are sold or the owner passes away. Taxation is one of the biggest challenges for a family trying to complete its estate plan with a recreational property in the mix. There are other issues too, as I've blogged about before, but the taxes and their impact on your estate are definitely something you have to consider. Click here to read the article. And please, always make sure that you crunch YOUR numbers with your accountant before relying on general advice.

Succession management: good to talk about, hard to practice

This article from Business Standard talks about the need for business succession planning at all levels of an organization, not just the top. The author makes the point that this type of planning and development is often overlooked. To read the article, click here.

Trust services no longer just for the rich

The link below goes to a story in the Star (newspaper in Toronto) that talks about how trust companies provide estate services and how they are more affordable than people think. You probably know that I work in the trust company arm of Scotiabank so I have first-hand experience with this. I can vouch for pretty much everything that is said in this article. Click on the link below to read the story.

 

TheStar Trust services no longer just for the rich

 

I spend many hours a month doing seminars to tell people what we actually do in a trust company. Here are some examples of the services our customers want and need most often:

 

• acting as executor of a will when there is no suitable family member
• acting as a co-executor with an inexperienced or young executor
• working as an agent for the executor of a will after someone has passed away
• holding and paying out money in trust according to a bequest in a will
• holding and paying out money according to a family trust or royalty trust
• channeling assets into foundations for charitable giving
• acting as executor when family members aren't getting along
• estate planning (wills, powers of attorney, health care directives, family trusts etc)
• pulling together a team of estate planning experts including lawyers, accountants, insurance advisors, financial planners
• acting as trustee for a disabled adult under a court order
• acting as attorney appointed by a power of attorney
• completing tax returns for individuals and estates
• administering custodial accounts for seniors who need a bit of extra help with finances
• holding trust funds and making payouts (i.e. being "the office") for non-profits and charities

 

As you can see, it's a pretty diverse menu of activities, and we're pretty good at tailoring our services to fit what you need. I always tell people that we're approachable and hey, we've heard it all, so feel free to simply call up and ask whether your situation is something we can help with. You don't have to be a Scotiabank customer to call our trust office to chat.

Tax scheme too good to be true?

I found this article in the Financial Post to be truly interesting, particularly as it reveals the numbers of Canadians who are using (or WERE using) these donation schemes in the hopes of reducing taxes. It's a long article but very well done and informative. Please read the article here if you're thinking of going to a seminar to learn how to use tax shelters.

Loss of a leader

The link below goes to an excellent article in the Winnipeg Free Press about dealing with the sudden departure of the leader of a business. The departure could be due to death, accident, quitting or firing. I found the author's advice to be very useful and practical and I hope you will too. Click on the link below to read the article.

Loss of a leader You need strong succession plan in place - Winnipeg Free Press

To which assets does probate apply?

I'm often asked by would-be executors to clarify which of the deceased's assets are covered by a probate order and which are not. It would be easy, I suppose, if the answer were simply "all of them", but that's not the case.  The general rule is that the probate will cover everything that the deceased owns, with some exceptions.

One exception is an asset that is owned jointly with another person. Be careful here. Note that the fact that there are two or more names on an asset doesn't necessarily mean that it is jointly owned. When I mention "owned jointly" here, I am talking about true joint ownership with a right of survivorship. This is a legal relationship that is not proved by the fact that multiple names appear, as it is possible for those multiple owners to have other legal arrangements besides joint ownership.

Let's look at an example. If a husband and wife own a house together, they normally buy it in joint ownership with a right of survivorship. This is because the intention is that the house is the family home and when one of them dies, the surviving spouse will continue to own the house and live in it. If the husband, on the other hand, wants to buy a vacation property with his brother, they might decide to hold it as tenants in common. This is because each of them wants to be able to sell their half of the property, and to have their half of the property go to their wife or children should the husband pass away.

How do you know whether the deceased's asset with more than one owner was owned as joint owners or as tenants in common? Read the paperwork. If it's real estate or a mineral title, read the title. If it's an account or investment, read the name on the statement and if that doesn't tell you, call the bank or investment counsellor and ask.

So if you are an executor preparing an inventory of an estate, you do not include assets that were jointly owned with someone else. You do, however, include the deceased's half of an asset that was owned as tenants in common with someone else.

Another exception to the "include everything" rule is any asset with a named beneficiary. The assets you will see most often are RRSPs, RRIFs, pensions and life insurance policies. For example, if a deceased person owned a life insurance policy that he left directly to his daughter, you would not include that policy in the inventory because the money will go right to the daughter and never go into the estate.

An important aside note for estates in which there are RRSPs or RRIFs that are being left to an individual who is NOT the deceased's spouse: the estate has to pay the tax on these assets even though the assets don't fall into the estate. You have to include the tax as a debt of the estate on the inventory.

Are you ready for the exceptions to the exception? You DO include the named beneficiary asset if the asset says it is to go to "the estate" or "my estate". And you DO include the asset if the person named has already died (that would be the daughter in the example above).

Another exception is the RESP. That asset does name a person for whom the money is being held, but that person is not a true beneficiary. By this I mean that on the death of the deceased who owned an RESP, say for his son, the money does not go to the son. It stays in the estate and you do have to list it on the inventory as an asset.

If the deceased was part owner of a business, he or she might have a shareholder's agreement or buy-sell agreement that says the company will buy back the deceased's shares. You do still include those shares on the inventory of the deceased's estate.

As an executor, you have to do a fair amount of digging to find out everything you need to prepare the inventory, which is an important part of your application to the court to obtain probate. I've simplified the rules here as much as possible, but it's not always easy to apply the rules to individual assets on any given estate. If it's just too much for you, remember that you can always ask a lawyer or a trust company for help with the estate.

Video: Five Celebrity Tips to Reduce Family Estate Fights

I've always believed that looking at the public lives of the famous and beleaguered is a good way to learn what we ordinary folks should do with our own estate planning. Click here to go to a video by Andrew W. Mayoras, author of "Trial and Heirs: Famous Fortune Fights".

Succession plan pitfalls avoidable

This link goes to an entertaining and straightforward article in The Capital Press. It makes the point that death is not avoidable, but causing pain to your family through lack of planning is avoidable. I found the story told in this article to be completely believable, if not familiar, as I've heard clients say some of the things the author's clients said. Click here to read it.

When is a doctor's opinion on capacity required?

Lawyers who work in Wills and Estates are trained to test their clients for testamentary capacity, or the ability to understand and make a will. But we're not medical doctors. Sometimes the legal and the medical overlap and we need input from doctors about our clients. In this post I'll briefly touch on some of the situations in which lawyers will need or want a doctor's opinion of a client's mental capacity.

1.  At the time a will is signed:

Individuals must have the ability to understand the nature and effect of a will. Lawyers are careful to document their opinion of this ability at the time a will is signed. Mental capacity can be impaired by dementia, medications or illness, so those will be considered if they are present.

Lawyers don't request a doctor's opinion every time a will is signed, nor should they. However, there are times when the lawyer suspects ahead of time that the will of an elderly person might be opposed by someone in the family, and should strategically strengthen the client's case by getting a doctor's letter. Wills are often attacked on the basis that the testator didn't know what he or she was doing and the parties then have to try to reconstruct whether the testator had capacity at the time or not.

If, after the testator's death, the will is backed up by a memo from the lawyer and a letter from the doctor, both made on the day the will was signed and both saying that the testator did know what he or she was doing, the will is in a much stronger position.

This is usually easy to arrange because the client simply makes an appointment with his or her family doctor.

I don't know of any set form for the doctor to use. I've always requested a letter that the doctor can word any way he or she wants to, as long as it addresses the issue of capacity on a certain day. Most doctors have not charged my clients for this service, though I imagine that practice varies quite a bit.

2.  At the time a springing Power of Attorney or Health Care Directive is activated:

A Continuing (Enduring) Power of Attorney and a Health Care Directive are usually made while the donor is mentally healthy and set aside until they are needed, in other words when the donor loses mental capacity. The document will state who has to sign a declaration to activate it. The usual provision is that one doctor or two doctors must sign declarations, which must then be attched to the document itself. Once those declarations are attached, the person named under the Power of Attorney or Health Care Directive can start working on behalf of the donor.

The doctor has to examine the donor to make this declaration, which can be a problem if the donor isn't co-operative. And let's face it, not everyone is happy about having their decision-making rights taken away from them at any given point.

The declarations are usually very brief forms - not more than a paragraph - that simply contain a statement that the donor is not able to deal with his or her finances or medical decisions.

3.  At the time someone is applying to be the guardian and/or trustee for an adult:

An adult is presumed to be able to look after his or her own affairs unless it's proven otherwise. Therefore, when someone is applying to be the guardian and/or trustee for an adult, that person has to bring the court evidence that the adult's capacity is diminished. The evidence is given in the form of a medical doctor's assessment. In some jurisdictions, the assessment can be done by others as well, such as registered nurses and occupational therapists.

Again, there can be a problem with co-operation. Unlike the person who voluntarily signed a Power of Attorney and knew that one day the person might have to take over, a person who will have a guardian or trustee hasn't signed anything. They haven't usually agreed to anything.

The forms needed for an assessment for guardianship or trusteeship are set out in the legislation that applies in each province and territory. In many cases, it's a very lengthy, detailed document. Doctors and other caregivers will usually charge a fee for providing the assessment.

4.  When the court orders a capacity assessment:

Sometimes there is litigation in which the person's capacity is essential to the court's decision. For example, I once had a client in his mid 90s who was hospitalized for a broken bone. A social worker became concerned about releasing the fellow because he lived on his own. The hospital refused to release him until a guardian was appointed and this made it to court. We took the position that because he is as competent as the next person, he should be free to leave the hospital and live alone. The court wanted the opinion of a doctor. We won, but in the meantime my client had to see a geriatric specialist for a full capacity assessment (which he passed with flying colours). The assessment cost about $2,600 at the time, and was comprised of a full report with data and analysis.

Righting a will's (and a testator's) wrongs

Recently I posted about the Werbenuk Estate case in which a will that left everything to one child, leaving out the others, was overturned by the court. I speculated as to what would happen in Alberta, as our law is a bit different. Lawyers all over Canada are looking at the case and wondering what it will mean to our clients in the future. The folks at All About Estates have posted an article about how this case might affect things in Ontario. Click here to read it.

Hey seniors, time to review your will

As you know, over the last couple of weeks, the Globe and Mail has been carrying a series of articles that I wrote about estate planning at various stages of life. I've already provided links for beginning your planning in your 20s and 30s, and keeping up with changes in your 40s and 50s. Today's Globe and Mail has the third instalment, which talks about reviewing in your 60s and 70s to adjust to retirement, widowhood and possible incapacity. The final instalment will be in next week's edition. Click here to read today' article.  As always, let me know if you have any comments or questions. The attached photo is from the article.

RRSP contributions in the year of death

This article from tax advisor Derek de Gannes reveals how the executor can reduce tax in the year of death by contributing one last time to the deceased's RRSP. Tax savings ideas are always welcome! Click here to read the article.

Rudolph hits a snag... ouch...

Wow. Talk about childhood trauma.

If I die and my spouse remarries, who inherits the money?

This is a common question, and a real worry for some people. The question is most often asked by the parents of young children, though it's applicable to the parents of children of any age. The fear is that a married person will leave everything to his or her spouse, then the spouse will get married again and leave everything to that spouse. This would leave the children out in the cold.

For example, Bill and Mary are married. They make Wills leaving everything to each other, and when both are gone, divided among their kids. Bill dies. Mary inherits everything. Mary re-marries to Dan, and when she dies she leaves everything to Dan. It's possible - and believe me, it happens - that Dan's children could eventually get everything while Bill and Mary's children get nothing.

Why would someone in Mary's position leave everything to Dan, you ask? There are plenty of reasons. Mary might not realize that the Will she made while married to Bill was revoked by her remarriage and thinks she still has a Will leaving everything to her kids. Perhaps she meant to make a new Will "one day" and never got around to it. Maybe she thinks that Dan legally has to share her estate with her children. It's easy to misinterpret the law.

It could be that Mary trusts Dan to "do the right thing" by her children. One of the worst Wills I've ever seen was a one-paragraph Will done by a woman in her second marriage, who had an adult son by her first marriage. All her Will said was that she wasn't leaving anything directly to her son because she was sure her husband would look after him. Well, she was wrong. The husband, who had an estate of nearly $6,000,000, did nothing for the son. The son literally lived on the street after his mother passed away.

So what can you do about this to prevent it happening to your kids?

The following ideas are not things that you should put into effect without talking to your lawyer, who can help you sort out the legal and tax implications of your plans:
1.  Make a Will.
2.  Give part of your estate to your spouse and leave the other part of it directly to the children, even if this means you have to hold the kids' shares in trust for them for a while.
3.  Leave your estate in a spousal trust so that your spouse can use what is needed for his or her lifetime, but the estate in general will be held for the children after your spouse dies.
4.  Give your children some money while you're alive (assuming of course that you don't need that money to live on), perhaps in the form of a down payment on a house for them.
5.  If you set up a spousal trust or children's trust, appoint a trustee who is not your spouse or children.
6.  If you have an RESP for your children, appoint a successor owner of the plan.
7.  Make mutual Wills for you and your spouse, meaning that the Wills include a contract that neither of you will change your Wills after the other one dies. These are pretty rare and can cause a lot of other problems, but ask your lawyer about it if it interests you. (By the way, Wills made by a husband and wife that are the same except that they mirror each other's names are NOT mutual Wills. I've seen them called mutual Wills many times, even by those who should know better, but they aren't. With a Will like that, your spouse can make a new Will after you die).

Some of you are reading this post and are horrified. You're thinking that your spouse would never intentionally leave out the children, and youre probably right. But assuming you die later in life, and leave your spouse widowed, your spouse wouldn't be the first trusting senior to be taken advantage of.

Another reason not to be an executor

The link below goes to an article by the Toronto law firm of Hull & Hull. It discusses the outcome of a new case that the author of the article predicts will make people think twice before agreeing to act as the executor and trustee of an estate. To read the article, click on the link below.

Estate Trustees Beware!

Is AND better than DNR?

I've had a problem for a long time with the over-use and misuse of the DNR ("do not resuscitate") message found in health care directives. It's poorly understood by the public for one thing. And according to this article in the New York Times, there is no consistency in use between hospitals, doctors and nurses. A new phrase - "allow natural death" - is being proposed instead. Click here to read the article. Let me know what you think.

Links to real estate lawyers

I get a ton of questions on this blog that are about real estate. While some aspects of real estate law are applicable to my area of practice, which is estate planning, I don't claim expertise in the ins and outs of real estate law. However, I don't like your questions to go unanswered (feels kind of rude not to answer people!). So I've searched around for blogs of Canadian real estate lawyers who I hope will be better suited than I to help you out. Here are a couple of links:

BC Real Estate Law

Ontario Real Estate

Conducting an estate sale

Most executors have to deal with selling some personal or household items for an estate. As most executors are new at that  job, they may have questions about how to proceed. This post will explore ideas for selling those items properly, without short-changing the estate or getting the executor into trouble.

When talking about selling items, I'm assuming that the executor has already given away any specific items that were left to specific beneficiaries. Obviously if a Will or Memorandum of Personal Effects requests that an item be given to someone, that item isn't going to be sold unless the beneficiary has already passed away. Before you start selling anything, make sure that you have read the Will carefully, or your lawyer has done so on your behalf, so that you do not accidentally sell someone's inheritance.

The first step is to determine what you're dealing with. Is the deceased's home full of valuable artwork, antiques, jewelry or collections? Is it a rural property, with equipment, vehicles and tools? Is it your average home with regular furniture and possessions, but nothing of outstanding monetary value?

The majority of estates don't need a formal estate sale, and I'll get to more suitable options in a moment. For a home that is full of valuables, or a rural home with a lot of equipment, it just might be a good idea to hold an estate sale. The best way to do this is to contact an auction house in your province (look up "auction" on google or in the Yellow Pages). Try to give them an idea over the phone of what you're dealing with. For example, did the deceased leave a box full of antique jewelry? A set of eight original oil paintings? A rebuilt 1947 car?

If the auction house thinks that an estate sale is the way to go, they'll send someone out to take a look at the items. They will probably give you an estimate on what price could be expected, and set a general timeline for a sale. The sale might be conducted right from the deceased's home, or the items might be taken to the auction house for inclusion in a larger sale there. Make sure you get a detailed list and signed receipt for any items taken.

When using an auction house, be prepared for the fact that they will probably advertise the sale in the local paper (they don't use the deceased's name). Also, remember that they will take their pay out of the sale proceeds before handing the net amount to you.

As mentioned earlier, the majority of estates don't need to go through an estate sale. The executor will be responsible for finding other ways of selling the household and personal goods. Some common ways of doing this are:

- hold a garage sale
- sell goods privately to beneficiaries, family members, friends etc - remember to sell at fair market value
- advertise goods on eBay, in newspapers, etc.
- take unusual items (e.g. a hockey card collection) to a dealer
- sell to second-hand shops

There are always items that are not worth much money. These might be small appliances, used clothing, used books, used DVDs, etc. If family members don't want these items and the executor can't sell them, they can be donated to a charity such as Goodwill. If they are of little value, don't expect a charitable receipt.

The executor should keep careful records of items going out and money coming in. Remember that personal items are more likely to be the cause of a family fight than money or property. The executor should keep any bills of sale, receipts, inventories or charitable receipts.

All money generated from any of these sources should be deposited into the estate account. Rather than the executor taking out his expenses (such as shipping)  and depositing the rest, it is safer and more transparent to deposit all of the money and then make a separate payment to the executor for expenses.

Boomers feeling the financial pinch

I suppose it isn't news any more that a lot of retirement nest eggs were turned into omelettes over the last few years thanks to a volatile world economy. This article from the Globe and Mail gives some details about that, and gives what it calls the key to survival. Click here to read the article.

Watch out for scammers: protect your parent's money and assets

This blog post by Audrey Miller gives some ideas about helping to protect the seniors in our lives from telephone and other scammers, many of whom are targeting seniors during the holiday season. Click here to read the article.

Links to Office of Public Trustee

Do you ever wonder how the Office of the Public Trustee looks after the estates of deceased persons? Do you have questions about when they will become involved in an estate or how to go about getting them involved? If so, click on the link that corresponds to your province.

Alberta
British Columbia
Manitoba
New  Brunswick
Nova Scotia
NWT
Ontario
PEI
Quebec
Saskatchewan
Yukon

Estate Planning For Canadians

The link below goes to an article on Investopedia which talks about the basics of an estate plan, including tax planning. It talks about the three main documents that go into most people's estate planning. These are the three documents you see me blogging about all the time, but it's always good to see someone else's take on them. Click on the link below to read the article. You'll notice that the article has plenty of links to other good information as well.

Estate Planning For Canadians

Dying with debt: a dirty little retirement secret

This article from USA Today discusses how many Americans are not able to pay off their debts before they die, and how many don't seem to be too worried about it. The article has some really interesting statistics and even some helpful tips for seniors to help them avoid the situation. Click here to read it.

One of the points made in the article is that if the senior dies with debt, it eventually becomes the children's burden. The article is careful to point out that this does not mean that the children pay the debts; it means that the debts are paid from the senior's estate, leaving less for the children to inherit.

I guess I should have seen this coming

I know that mobile devices these days can help a person do everything from find a pizza restaurant to get a ride home after drinking too much. Mostly I don't have an opinion on these apps and am ok with people using whatever apps they like. But the latest one that I've heard about sets my lawyer alarm bells ringing. That would be the app for writing your Will on your phone. Yes, you heard me right. Click here to see the ad for the app.

To cover its butt, the manufacturer says that if you require "a more complex will" you should see a lawyer. The problem with this is that people don't know they require a more complex will. That's why they should see a lawyer to start with, to find out what is waiting to jump out at them. This app assumes that without legal advice, you know enough about the legalities surrounding your blended family, outstanding child support payments, illegitimate child, debts, shareholders agreement, life insurance, pension, RRSP designation, tax issues, business succession, family fights, choice of executor, handicapped child, challenges to your estate, etc etc to know that you don't need advice.

Preparing a will this way assumes that nothing more than filling in a few blanks is needed to make a strong will. If there is anyone out there naive enough to believe that, google "estate fight".

Laws across Canada require that your Will be written down, signed and witnessed. On paper, preferably. I admit that I haven't watched their instructional video, but I don't see anything on the app use page about printing the will, or signing it, or getting appropriate witnesses.

I guess I'll have to wait and see how this works out for people. 

Retiring some pension options

For those of you keeping an eye on what the Canadian governnment is doing about reforming the Canada Pension Plan, click here for an update.

Top Tax Tips for Year-End

This article from the Financial Post contains tax ideas for investors and business owners. Check it out by clicking here.

Business succession crisis looms, author says

I don't actually agree with a lot of what this author says about family businesses, but I'm posting the link here so that you can read the story for yourself and make up your own mind. The article is from the StarPhoenix. Click on the link below to read the article.

Business succession crisis looms, author says

I made the list!

Today I made it onto Rob Carrick's list of "best reading about money, the markets and more". Click here to see the whole list.

Q and A about powers of attorney

Lately I've had quite a few questions about Powers of Attorney so I'm going to cover a few of them in this post. To be clear, I'm talking about the Enduring or Continuing power of attorney that is signed in anticipation of the donor's loss of mental capacity.

Q: What happens to a Power of Attorney when the donor dies?
A:  When the donor dies, the Power of Attorney is cancelled. The attorney then has to hand over all financial documents and records to the executor of the estate (sometimes they are the same person). The attorney also has to account for what he has done as an attorney for the donor, which means he has to be able to explain and document changes in the donor's financial status that took place while the attorney was in charge of the finances.

Q: Can I cancel my old Power of Attorney and sign a new one?
A: Yes, as long as you have mental capacity to understand the meaning and the consequences of a Power of Attorney, you can sign a new one. Each new one revokes and replaces the older ones that went before, unless it is specifically drafted to allow more than one Power of Attorney to exist at the same time. This might be the case, for example, if a business owner wanted one document for business assets and a separate one for personal assets, and to have them both valid at the same time.

Q: Can a person using a Power of Attorney change the donor's beneficiary designations?
A:  This refers to the choices the donor made of beneficiary to receive his RRSP, RRIF, TFSA, pension, or life insurance before he or she lost mental capacity. The attorney acting under a Power of Attorney does not have the legal authority to change any of these. I posted about this once before, here.

Q:  What does "springing" mean?
A:  A "springing" Power of Attorney is one that is made in advance by the donor while he or she is mentally healthy. The document then sits, unused, until the donor loses mental capacity and the document is needed. It then "springs" into effect in the way described in the document itself. That usually means that a doctor (or two doctors) must sign a declaration saying that the donor is incapacitated.

Abatement: What to do if there are insufficient assets in the estate to follow the testator's wishes

This article from All About Estates discusses what can happen when there are not enough assets in the estate to pay out all the beneficiaries according to the Will. It also mentions how sometimes people bring this situation on themselves by doing home-made planning such as putting assets in joint names, without looking at the big picture. Click here to read the article.

Forget cash donations, give securities instead

This article from the Financial Post talks about the tax reasons behind giving securities instead of cash to your favourite charity. Click here to read it.

Can I hire a co-executor?

A question I received recently from a reader was "how do I hire a co-executor?" I took this to mean that the reader is acting as the executor on an estate and wants to hire someone to help him. The short answer to the question is that you can't hire a co-executor, but that doesn't mean that the executor can't hire some help.

The reason that an executor can't hire a "co-executor" is that the executor was chosen by the testator when the Will was made. Only those named in the Will can act as executors. An exception to this (there's always an exception, isn't there?) exists where a Will states that there always has to be a certain number of executors and if one dies or can't be an executor any more, the executors can name a replacement. This is relatively rare though.

If the reader who asked this question wants some help dealing with the estate, his best bet is to hire a trust company to act as his agent. This means that he is still the only executor and retains the rights and responsibilities of the executor, but there is someone else to do the leg work. In a situation like this, the trust company would take care of the sale of property, notifications, hiring a lawyer to apply for probate, pay the bills, arrange for tax returns to be done, etc. In other words, the trust company does everything that an executor would do, but the executor retains final say.

See my list of executor's duties here.

I've met a number of executors who want this kind of help because they are overwhelmed with the work it takes when they've already got a job and a family to take care of. Some executors want to delegate the work simply because the family situation is volatile and they want a neutral third party to take care of things.

Canada's major banks (Scotia, Royal, TD, BMO, CIBC, HSBC) have trust companies attached to them. You can get access to them either by finding their web page or by asking the staff in the branch where you bank to put you in touch with someone. You don't have to be a customer of a bank to use its trust company.

If the executor only wants help with certain tasks, he is entitled to hire professionals to help him. For example, he can hire a lawyer to apply for probate, a realtor to sell a house and an accountant to prepare tax returns. He might also hire a cleaning company to clean out a house, an auctioneer to sell household assets or a business broker to sell  a company. These days, most Wills specifically state that an executor can hire agents like this and pay them out of the estate, but this is permissible in any event.

How and when to set up an estate bank account

Most executors and administrators of estates will at some point set up a bank account for processing financial transactions on the estate. Even when an executor or administrator has hired a lawyer to apply to the court for probate or administration, he usually still has to set up an account. The alternative is to run all transactions through the lawyer's trust account, which becomes expensive.

When the account is opened will depend largely on whether you are an executor (i.e. appointed by a valid will) or an administrator (i.e. appointed by the courts in the absence of a valid will). An administrator has no authority whatsoever to take charge of the deceased's money until he or she is appointed by the court. In other words, he or she can't open an account until the court provides them with a document putting them in charge.

If you're an executor, however, you can open the account at any time once you take charge of the estate. Your authority to do this comes from the will, not the probate. The name on the account should make it clear that this is not your personal money and that you are holding it in the name of the estate. If the deceased is John Smith and you, the executor or administrator, are Mary Smith, the account should be called either "The Estate of John Smith" or "Mary Smith, Executor of the Estate of John Smith".

Executors usually don't wait for the court to issue a probate document before opening the account. While the probate application is being processed, you, as executor, will usually apply for the CPP death benefit, collect any outstanding wages, benefits and refunds, and pick up any cash lying around the deceased's home. All of those things and more may be deposited into the estate account before the grant of probate is issued. As time goes on, you will add other assets to the account, such as when you cash in GICs, sell the deceased's home or transfer over the proceeds of the deceased's bank account.

If you receive cheques made out to the deceased person, they don't have to be re-issued to the estate. They can be deposited to the estate account as they are.