Retirees' options for accessing home equity

I've come across a very good article at Caregivers Solutions Magazine (one of my very favourite Canadian publications), written by the Professional Chartered Accountants of Ontario, that talks about two ways that seniors can get cash flow based on the equity they own in their homes. Click here to read it. If you're wondering about reverse mortgages or lines of credit, check out this article for some answers.

My additional suggestion is that if you decide to take one of the steps described in this article, make sure you understand the impact it may have on your estate, particularly if you are thinking of leaving your home to someone.

Specialized drafting is best left to the lawyers

Recently lawyer Chris Staples, who blogs at Estates and Elder Law in Canada, posted an article about why the drafting of wills is best left to lawyers. The logic behind this is simple: the law is complicated and even the smallest of language mistakes can lead to an outcome not contemplated or wanted by the testator. Click here to read Mr. Staples' article.

In the article, Mr. Staples discusses the Ontario case of Budai v. Milton, in which the testator had his will written by a retired financial planner. The will was not straightforward, in that it contained some paragraphs drafted completely by the financial planner (as opposed to being standard or boilerplate clauses). Unfortunately, drafting of legal documents is not something that non-lawyers should do. The court struck down a clause that said a beneficiary could not challenge the will in any way.

If your will requires specialized drafting because you have a very specific wish or unusual request, make sure that it's drafted by an experienced wills lawyer.

Can you use your will to change joint ownership of property?

Below is a question that illustrates a question that arises frequently among those planning their estates. It involves trying to work around a joint property designation.

"We are trying to draw up a will. If one spouse dies, we want to divide their portion of joint assets (50%) among the surviving spouse (50%) and two adult children (25% each). Our concern is will the assets (house, property) have to be forced liquidated to pay out the children? How can this be avoided?"

You are making a fundamental error in your planning. That mistake is trying to make a will control joint assets. The legal nature of a joint asset is that ownership on the death of one owner is already determined while both owners are alive, and your will does not affect this. Regardless of what your will says, on the death of one of the joint owners, the property will pass to the surviving joint owner.

Therefore, if you really want the children to receive a share of the joint property, the surviving joint owner will have to sell the property to pay out the children.

I hesitate even to type this next paragraph, as I do not know your situation, your assets, or the rest of your estate-planning goals. Changing the ownership of the property to tenants in common might be a solution to your question. However, making a change like that is not something that should be done without first working through tax consequences and other possible outcomes. Make sure you understand any downside to any changes you make.

Every estate plan is a combination of a will, joint property designations, beneficiary designations, wishes and goals. I strongly suggest that you sit down with an experienced estate planner, and possibly an accountant, to discuss your situation. There may other ways to achieve your goals or address your concerns.

Posts with more than 200 comments are "full"

Hello readers,

A number of the posts on this blog have a couple of hundred comments on them. The system here only allows 200 of them to show up, though it doesn't prevent anyone from continuing to add comments even after 200 has been reached. When I see a post that has 200 or more comments, I add a note in bright red in the body of the post to do my best to alert anyone who wants to leave a question or comment.

However, some of you post on those threads anyway. When that happens, the system tells me that a comment has been made on the thread, but I can't access it. So, if your question or comment has gone unanswered, it could be because you added it to a thread with too many comments.

You can always add your question to another post.

Lynne

Preparing a final tax return

This article from www.widowed.ca contains information and detailed instructions to help someone file a tax return for a spouse or other loved one who has passed away. It is practical and useful information that any executor or widowed spouse will find essential. Click here to read it.

However, in my experience, an awful lot of widowed folks find it extremely difficult, if not impossible, to carry out detailed paperwork shortly after the death of their spouse. It's not that they aren't smart enough or capable enough; it's more that they are overwhelmed with the adjustments they must make to being on their own. Sometimes paperwork such as a tax return can be the last straw for someone who is struggling.

If you are struggling, call an accountant to complete the return. Don't feel that you must do everything yourself. There is nothing wrong with asking for help, particularly with complex paperwork such as tax returns and probate applications. An accountant will be able to provide you with all the advice and information you'll need.

Provinces spend millions each year to ensure that Canadians get a proper burial

What happens when a person dies in Canada, but cannot be identified? And what if their identity is known, but they have no money for a funeral? What if their loved ones won't get involved?
In Alberta alone, last year there were 1,577 individuals who had nobody to provide them with a funeral.

Provinces have programs in place to ensure that everyone gets a dignified burial. Click  here to read a story from the National Post about these programs.

Ontario woman and her husband charged with elder abuse of her mother

There is a very sad, very serious case being heard in court in Ontario this week. Viola Simonds was in her 70s and had dementia and other medical issues. Her daughter and son-in-law had a Power of Attorney for Personal Care for Ms. Simonds. However, they didn't follow the doctor's advice, and didn't seek out either home care or a nursing facility for Ms. Simonds. They have now been charged under the Criminal Code for failing to provide the necessities of life to Ms. Simonds, who was found in her daughter's home covered in vomit, urine, and feces, in a room with the window painted black. Ms. Simonds has since passed away.

Click here to read a blog entry from Ontario  lawyers Whaley Estate Litigation, which contains links to further articles and photos about the case.

Though I am deeply saddened and upset at Ms. Simonds' situation, I am glad that the matter is going to trial. For too long, the neglect or poor treatment of vulnerable older people has been something that people turned away from, calling it a family matter. But if your family members aren't going to look after you, the rest of us have to intervene.

After all this time I've spent working with seniors, I understand that people are capable of treating their own parents worse than they'd treat an animal, but it still makes me sick.

Great response to For My Family, With Love

I'm pleased to report that the initial response to my new workbook entitled For My Family, With Love has been all positive! Thanks to those of you who have checked it out. I'm always open to hearing feedback about your use of this book (or any of my other books), so please feel free to comment here if you wish.

I'm using a copy of the book myself, to leave behind for my own family, so it's a book based on 30 years of experience in the wills industry, as well as on the experience of a mom.

Those of you who haven't checked it out yet, keep reading to find out more, or click here. I'd be pleased to answer any questions you might have about it, either before or after you purchase it.

For My Family, With Love is a workbook I developed based on my experience of what it's like for executors to step in and begin the job of looking after an estate. Those of you who read this blog on a regular basis know that I take a practical, down-to-earth approach to estates, and that I'm in favour of tools and materials that help an executor to get the job done. That's why I developed this book.

Executors have a million details to look after. Wouldn't it be great if all the information about assets, debts, joint property, medical and legal contacts, passwords, loans to family members, spare keys, and all of the rest was to be found in one place? Wouldn't it be marvelous if Mom or Dad wrote down where they keep things, who has a key to the house, who walks the dog for them, where they pick up their mail?

Having all of that information at hand would relieve hours upon hours of searching and asking questions. It would save an executor untold stress and frustration. This 92-page workbook contains space for all of the information a parent, spouse, or grandparent would like to leave for those who will look after the estate. You could use one of these books for yourself, or give one to a parent or relative for them to use. Or, you could get one for a parent and you could fill it in together.

More than that, this book contains places for Mom or Dad to write personal notes that will be read after they have passed away. The notes could be to the kids, or to anyone else who is important. They could be words of love, encouragement, or guidance.

The book is coil-bound to lie flat for easy use. The sections are organized in a logical way and clearly set out so that the book is simple to follow. There is no legal jargon, just suggestions for what your loved ones will need to know after you're gone.

Here are the sections of the book:
Part 1 – My family
Part 2 – Contacts my family might need
Part 3 – Passwords my family might need
Part 4 – My financial assets
Part 5 – My sources of income
Part 6 – My debts and liabilities
Part 7 – My insurance policies
Part 8 – My wishes for funeral, burial, or cremation
Part 9 – Legal documents that I have in place
Part 10 – Special arrangements
Part 11 – Where to find important things

This workbook will accommodate your information, whether your estate is simple, or whether you own a business and rental homes. It will let you describe your family relationships whether they are simple or complex.

As you can see, this book would also be a wonderfully useful tool for someone acting under a Power of Attorney. It would help ensure that nothing is missed.

What a gift this book would be for your kids, grandkids, or executor. Believe me, they'd bless you for the help!

Available in paperback as of August 5, 2014.

If the executor doesn't want the job, can she hand it off to the sole beneficiary?

When a will names an executor who probably doesn't want the job and there is no alternate executor named, what happens? Can the executor hand off her duties to the sole beneficiary? A reader recently asked me this question, as well as a question of how that might be accomplished. His question and my answer are below:

"My wife is an only child. Her mother is alive, but father has passed away. Her mother has a 20-year-old will that names her sister-in-law as executor but my wife is now the sole remaining beneficiary. My wife and her mother get along just fine, but her mother is very uncomfortable discussing wills and estates. I have two questions:

1. If her mother passes away, her sister-in-law is named as executor. The two are not close and I'm fairly certain that if my wife offered to take on the responsibility of executor, the sister-in-law would have no problem with that. Is that something that could be arranged through a lawyer if both parties agreed?

2. What if the sister-in-law predeceases my wife's mother? There is no other backup executor named in the will. Would my wife be able to petition a court to be named executor or could this be done somehow through a lawyer?"

If your mother-in-law passes away leaving your sister-in-law as executor, it is not possible for the sister-in-law to give up executorship and pass it to someone else without the involvement of the court. Your wife and the sister-in-law cannot arrange it by mutual agreement.

Should your sister-in-law not wish to act as executor, she has the legal right to renounce the appointment, as she cannot be forced to take it on. However, she can't decide to whom the role of executor may be passed. Nor can she name anyone as a co-executor. It's just not her decision.

If she renounces, this would legally be the same as if she had predeceased your mother-in-law, in the sense that there is no back-up executor named to replace her. In either case, your wife could apply to the court to be the administrator of the estate. You mentioned that she is the only child, so she would be the person with the closest degree of kinship to her mother. Her position as sole beneficiary also provides her with legal standing when it comes to the question of who may apply. Nobody else would have a legal right greater than your wife to apply to the court.

A lawyer cannot make your wife the administrator. Only the court can do that for a person who passes away leaving no executor. However, not every will needs to be put through probate, and I would encourage your sister-in-law, when the time comes, to see a lawyer to ask whether she even needs to go through the process. This will depend on the type of assets owned by your  mother-in-law, their value, and the ownership arrangements (e.g. joint, solely owned, designated beneficiary). It may also depend on how good the will is, and whether a 20-year-old will is really recent enough to reflect changes and updates to wills and estates law.

It's too bad that your mother-in-law doesn't want to discuss these matters or make changes, but she certainly isn't the only person who is uncomfortable with the topic of her own mortality. I'm glad you and your wife are respecting your mother-in-law's right to decide for herself what is to be done, even if it really isn't the best decision she could make.

30 Unusual Wills

It's Friday and time for a smile. The following video is from www.mentalfloss.com  and is full of interesting, unusual, and funny last wishes. Enjoy!

Will your children fight over their inheritance?

This is a question that concerns an awful lot of parents, but they don't necessarily know how to prevent squabbles between the children. In this article, lawyer Kyle Krull gives a few tips for helping to head off disputes.

One of the tips given is to name the right executor. That of course is more easily said than done. As I've said many times on this blog, parents should give some serious thought to naming a trust company as executor, either instead of the kids, or to work together with one of the kids.

Click here to read Mr. Krull's article.

Can a lawyer be the executor and beneficiary of a family member's estate?

Can a family member who happens to be a lawyer act as executor of an estate, as well as be a beneficiary of the estate? Is that a conflict of interest? A reader recently wrote to me to ask about this. Her question and my answer are below.

"My cousin's husband acted as executer and estate trustee to my grandmother's will when she died. Consequently, he, his wife and my aunt (her mother) stood at the same time, as a result of a last minute will change, to inherit nearly everything. It should be noted that when my aunt dies, what was given to her through this arrangement will also go to my cousin and to her husband, this lawyer. They are in Ontario. Obviously his position lacked objectivity and seeing he will stand to take or inherit everything, did he not act when their is a conflict of interest and should he have not, out of professionalism given this work to another member of the firm? Especially since everything will go to him and he has a direct financial interest?"

I had to read this a couple of times to get straight who's who. Here's what I understand: a family member who happens to be a lawyer acted as the executor of your grandmother's estate. He was also a beneficiary. Another beneficiary was your aunt. You believe that when your aunt dies, this lawyer and his wife will inherit the aunt's estate.

Your question is about conflict of interest, but I don't see any conflict at all in what you've presented.

Lawyers do have a duty not to act in situations where their own interests conflict, or may conflict, with those of their client. Lawyers dealing with elderly individuals have an even greater duty, as many of our clients are vulnerable to pressure. The details of that duty are not always clear to those outside of the legal profession, so I understand why you felt you had to ask this question.

If the lawyer were drawing up wills for people in which those people were leaving him their estates, I'd certainly see a conflict. In that case, he definitely should ask another member of the firm to draw up the wills. However, in the scenario you've described, the lawyer is not in control of who leaves what to whom; he is merely the executor and beneficiary. You did not say that  he drew up the will, only that he was named executor of it. He hasn't done anything to make himself the recipient of the estate.

He was named as an executor of your grandmother's estate and carried out those duties. No, he should not have given the work to another member of the firm because the firm was not named as executor. A law firm can't be an executor. He was named individually (and just happened to be a lawyer), and therefore he had to do the work. No doubt he hired his own firm to do the probate application, but there is no conflict in doing so. That is well-established in the wills profession.

You mention that "his position lacked objectivity", but objectivity is not required of an executor vis-a-vis people who are not involved in the estate. He was given a will of a deceased person and asked to administer it. He's not allowed to stand back and decide whether the will is "fair" or not; his job is to distribute the estate as the will directs.

There is no law that says a beneficiary or family member who happens to be a lawyer cannot act as executor, any more than an accountant or baker or mechanic would be barred from acting as an executor. In fact, plenty of people like to name their relatives who are lawyers because they feel those individuals will do a good job of it.

I don't know how you are privy to what's in your aunt's will, or how you are aware of her plans to deal with her estate. She may change her will for all we know. But even if she doesn't change it, exactly what has this lawyer done that creates conflict? From what you have said, all he has done is be named as a beneficiary. Unless he drew up that will giving himself your aunt's estate, I just don't see it.

The executor has done nothing for six years. What can a beneficiary do?

Here is a situation that will sound familiar to many of you - an executor who is doing nothing, while an estate sits, waiting. Is there anything a beneficiary can do? Yes! There are options, as I discuss below. Here is a question I recently received from a reader, followed by my response:

"My grandmother passed six years ago. My uncle was supposed to be the executor. He has done nothing or even maybe worse then nothing. He is no longer returning calls or communicating with family. How do I get my grandmothers estate taken care of?"

It's time for you to take action. In fact, that time arrived about five years ago.

There is a common-law rule of thumb in Canada called the Executor's Year, which lets both executors and beneficiaries know that an average estate with no lawsuits should be wrapped up in about a year. Realistically, it is more like 18 months but at the end of a year, an executor should have substantially completed the estate.

If your uncle is named as the executor and is doing nothing, a beneficiary of the estate may apply to the court for help. The help you ask for will depend on exactly what the executor has done (or not done), exactly which assets remain in the estate, whether there has been any loss to the estate, and what you are prepared to do. Some of the things you can ask the judge for include removing the uncle as executor, or imposing deadlines on the uncle such as selling a property by a certain date.

If there has been financial loss to the estate, and it sounds from your question like that may be the case, you may ask for further help. For example, if the executor has failed to invest estate funds for six years leading to a loss of interest earnings, you may ask that he repay these losses personally.

When I say that you may apply to the court for help, please understand that before a court case is launched, many lawyers will suggest that a letter be sent to the executor outlining exactly what the problem is, and giving him a deadline to get his act together before you sue. This is to try to avoid an expensive, lengthy lawsuit if the situation can be salvaged. The majority of cases don't actually need a trial to sort them out, but it could go that far if the executor has damaged the estate or is uncooperative.

With a bit of luck and plenty of discussion, it's possible that you can light a fire under your uncle without having to endure a trial. That would be the optimum solution, as lawsuits are horribly expensive and you have no guarantee that your costs will be covered.

Mediation is another option, if it is available in your area. It might be useful for the executor and the beneficiaries to meet in the presence of a neutral third party to talk about why the estate is not progressing, and what can be done to kick-start it. This is certainly cheaper than litigating, but it relies on the willingness of all parties to participate.

By refusing to answer calls or communications, your uncle is refusing to deal with the estate. He apparently thinks that ignoring the situation will make it go away. However, the legal system won't care if he refuses to answer. His answer is not necessarily required for matters to go ahead.

I've met many, many beneficiaries over the years who hesitate to enforce a will because they feel that doing so will make them look greedy, or because it will upset family dynamics. However, please keep in  mind that when your grandmother named you as a beneficiary, she conferred certain rights on you. She also conferred the responsibility of ensuring that the executor carries out his job properly. There's nobody else watching what an executor does; it's up to the beneficiaries to keep him on the right path.