Not as they intended: Estate plans gone wrong

Estate planners like me are always telling people to make their plans and get them onto paper in the right way. But even planned estates occasionally go off the rails. Sometimes it's because of an essential detail that got lost in the shuffle, and at other times (okay, let's be real here, MOST times) it's because beneficiaries behave badly after the death of a testator.

I recently came across an article in which www.financial-planning.com talked to a number of legal and financial advisors to find out the worst estate disasters they had seen. It's actually very eye-opening because it shows that no item is too small (a recipe box, for example) or too large (such as a big trust fund) to be the cause of an estate dispute. It also demonstrates very clearly that you don't have to be super-wealthy to get benefit from proper planning.

Click here to see the story.

Corona Beer founder Antonino Fernandez makes entire village millionaires in his will

In August 2016, billionaire Antonino Fernandez died at age 98. In his will, he left his entire fortune to the folks who live in the village of Cerezales del Condado, where Mr. Fernandez had grown up in a large, very poor family. Each villager will receive about 2 million British pounds.

This incredibly generous gesture is certainly one way to be remembered.

Click here to read a news story from http://www.telegraph.co.uk with  more details about the bequests and about how Mr. Fernandez went from rags to riches with Corona beer.

I like this story because it shows how a person can use his will to express himself and attain goals that are important to him. Mr. Fernandez must have felt real compassion for the people living in that village and wondered how he could make the best use of his fortune to help as many as possible. He gave his life's work great meaning by using it to ease the burdens of others.

If Mr. Fernandez hadn't left a will, we wouldn't now be talking about what a generous and great guy he was. His fortune would have been divided among his family members. The only way to make sure that wishes like this - whether it's to give $500 to the SPCA or to share billions among a village - are carried out after your death is to plan in advance and have a strong will made.

The attached photo of Mr. Fernandez accompanied the article in the Telegraph and is credited to ABC.ES.

French heir finds $3.7m gold hoard under furniture

How would you feel if you inherited a house from someone? Pretty good, I imagine. And what if the house was fully furnished and decorated? Even better! And now, imagine that hidden in the back of the linen closet and taped underneath couch cushions were stacks and stacks of gold. I'm sure you would think THAT would never happen to anyone. But it has. A man in France who inherited a house from a relative has found 100 kg (220 lbs) of gold in the house.

Click here to read a story from www.BBC.com with more details about this surprising haul.

If that happened to you, would you be allowed to keep the gold, or would that belong to the estate? That would depend on the facts and the wording of the will.

If the will left you the house and specifically gave you the contents of house as well, you'd be entitled to keep everything in the house, including the gold. If there were other beneficiaries, I'm sure they'd take a stab at claiming the gold belongs in the estate, but if the language of the will is clear, it should stand up to the challenge.

If the will left you the house only and did not specifically state that you were to get the contents as well, you would not get to keep the gold. Nor would you be able to keep the furniture or anything else in the house. The items would belong to the general estate and be divided among residuary beneficiaries. When a person leaves a beneficiary "the house", it does not include the contents. Leaving a house to someone means you have left your title to them, including the buildings but excluding the personal and household goods contained within them.

Other clauses in the will could also have an impact on whether the gold could be kept or not. Clauses in a will generally cannot be taken in isolation but must fit into the intent of the will as a whole. For example, if there was a clause in the will that said that all gold was to be left to A while the household contents were to be left to B, there could well be a legitimate dispute as to who should get the gold.

Most of us don't have gold bricks in the back of the junk drawer, but we do have plenty of other items in our homes, cabins, and rental properties. Whenever you think of leaving a piece of property to someone, make sure that you also consider what is to happen to the furniture, the decor items, the contents of the garage, and small valuables such as jewelry. If you are not clear in your will, you could create confusion and disputes among the beneficiaries.

The attached photo of some of the inherited gold accompanied the BBC article and is credited to AFP/GETTY.

My father was a beneficiary but died before the testator. Do I get his share?

Deciding who gets what under a will can sometimes be confusing. This is particularly true when a named beneficiary has passed away. A reader recently asked me about this situation:

"I am a Manitoban whose brother has passed in April 2016. My father was a beneficiary but died in 1998. My brother's will included my father as a beneficiary in other words he was not removed from the will. According to my understanding of the Wills Act, specifically #25, 25(1) and 25 (2) my sister and I should inherit my father's share equally. The will showed my mother, my other brother (both still alive) and my father (dead) as beneficiaries.

The testator also had a daughter and forgot to update his will to include her. She lives in the U.S. but just turned 18 in March. She is attending college. The ex common law partner has been out of the picture a long time. Am I entitled to my father's share? 

I think the Intestate Succession Act 5 (1) also supports my line of reasoning. Am I incorrect in believing I am entitled to something ?"

If your father was a beneficiary under the will but died before your brother did, there are two possibilities for what happens with his gift. They depend on the wording of the will because specific wording in a will is always going to supercede the default position set up in the legislation.

One possibility is that your brother's will simply left the gift to your father without  making any statements about what would happen with the gift if your father predeceased him. If that is how the will is worded, you are correct that section 25 (shown below) will apply but it isn't going to do what you think it will. Section 25 says that if a gift under a will cannot be given because the beneficiary has died, then the gift falls into the residue of the estate. This means the share that your father would have received will be shared among the other named residuary beneficiaries. That would appear to be your mother and brother.

25          Subject to sections 25.1 and 25.2 and except when a contrary intention appears by the will, real or personal property or an interest therein that is comprised, or intended to be comprised, in a devise or bequest that fails or becomes void by reason of the death of the devisee or donee in the lifetime of the testator, or by reason of the devise or bequest being contrary to law or otherwise incapable of taking effect, is included in the residuary devise or bequest, if any, contained, in the will.

The other possibility is that the will DOES say something about what happens to the share of a beneficiary if that beneficiary dies first. For example, it might say that if your father died first, his share would go to his children, or to a charity, or to a particular person. A statement like that would be the "contrary intention" mentioned in the first line of section 25. If the will gives instructions like that for the disposition of the gift, then your father's share would be distributed according to those instructions.

Another example of wording that might affect the gift is the addition of the words "if he survives me" after the gift to your father. That would mean your father's share would not be passed on to his children unless specified in the will.

Section 25(1) does not apply because it deals with estate tails, which are not in play here. Section 25(2) also doesn't apply because it deals with what happens when "issue" of the deceased pass away before the deceased. Issue are children, grandchildren, etc, and not the parents of the deceased.

The age of majority in Manitoba is 18. I understand that your niece turned 18 before your brother died. Normally an adult child who does not have a disability does not automatically have a right to receive a share of her parent's estate, but in this case she is a student. She might be able to make a case for a share of the estate, though that would affect the entire estate and not just the share that would have gone to your father.

The Intestate Succession Act is irrelevant here because your brother was not intestate. "Intestate" means dying without a valid will.

Newfoundland and Labrador Access to Justice free legal advice clinic

The Canadian Bar Association is holding a free legal advice clinic for the public this Saturday, November 19 2016 in St. John's, NL. We'll be there volunteering our time, along with plenty of other volunteer lawyers, articling students, and organizers.

The areas of law that are available to be discussed are:
- employment
- housing
- human rights
- wills/estates

For more information about times and location, or to make an appointment, click this link.

They've already held successful clinics for small claims matters and for Court of Appeal matters, so keep an eye on their webpage for future free public clinics.

A beneficiary was banished. Does he still inherit?

This letter from a reader is one of those questions that reminds me of why I blog in the first place. It reminds me of how much misinformation is out there, and how tough it can be for people to know what is "legal" and what is not. Here is the question:

"What if there is no will and someone dies leaving two siblings the estate? One sibling was banished from the property - what are his rights regarding selling his portion?"

When a person dies without a will, the law in the province where he or she lived states where the deceased's estate is going to go. In order for an estate to be given to siblings, the deceased must have had no spouse, no children, no grandchildren, and no parents alive when he or she passed away. In some provinces a common-law spouse counts as a spouse for inheritance purposes and in other provinces, the opposite is true. I assume that this much has been dealt with since you say that the two siblings are going to inherit.

Assuming that to be the case, the two siblings have an equal right to inherit. They also have an equal right to be the person who applies to the court to be appointed as the administrator of the estate.

As for banishment, that is not a legal thing. You haven't said who banished the sibling or why, but despite the family disharmony that led to the situation, it doesn't matter for inheritance purposes. It will have absolutely no impact on the rights of the sibling to inherit. It was a fight and it was important to the people involved, but it has no legal force. It doesn't matter if there has been no communication between the parties since the banishment.

If the person who died wanted to ensure that his or her sibling would receive no part of the estate, he or she should have made a will. If there had been a will, the deceased could have left the estate to one sibling, or to a charity, or to his best friend, or whatever he wanted. However, in the absence of a will, both siblings continue to have equal rights to inherit.

Lest we forget

This is my grandfather, John Ernest Butler, standing in front of the War Memorial in St. John's, NL, wearing the medals he won during WWI, surrounded by his children. Only months after his 19-year-old brother, Harry, was killed at the battle of Beaumont-Hamel, Ernest enlisted by lying about his age. He was only 16 years old. He was lucky enough to return home safely.

Is it a good idea to act as executor and POA for someone I don't know much about?

It used to be that people felt honoured to be chosen as someone's executor. I have always thought that frame of mind to be a bit naive, really. Being an executor is a lot of work and is generally thankless. It doesn't feel like much of an honour once you're out there, in the trenches! Recently a reader wrote to me to ask about taking on the job:

"An elderly friend of mine has asked me to be executor of her estate and Power of Attorney. I have only known her for 2 years and do not know her family at all. I know she has one daughter who she doesn't get along with. I don't believe she has a large estate as she doesn't own the home she is living in but resides in a senior's complex. Because I know very little about her I am nervous about taking this on. I am a senior myself and do not want to take on anything that may cost me financially as I only have my pension. I really would like to help my friend as she is not doing well but not too sure what all this would involve. I guess my question is 'Would it be a good idea to act as executor and POA for someone I know very little about but would like to help?"

Your heart's in the right place, but I understand  your concerns. Estates can be messy business, and nobody wants to get drawn into another family's drama.

Acting as an executor should not cost you financially. You don't have to use your own money and you are not personally responsible for her debts. If there is not enough money in the estate to pay all of the bills, the creditors cannot come after you, assuming that you have not done anything unlawful with the funds. Some bills come in pretty quickly, such as the funeral bill, and this might happen before you have access to estate funds. In that case, you would take the bill to the bank where your friend has an account and ask the bank to pay the funeral home directly. Assuming there are enough funds in the account, banks are quite willing to provide this service.

It does sometimes happen that executors pay for things themselves (for example, the probate fee at the court) but that is usually voluntary, and done just to keep things moving. If you do that, you can reimburse yourself from the estate.

Acting as executor can expose you to personal liability. As a general rule, executors who take reasonable care and act honestly don't have a problem, though unruly beneficiaries can take an otherwise normal estate to ridiculous places. If you cause any financial losses to the estate due to your fraudulent or negligent actions, you could be required to repay those losses personally.

Perhaps a good place to start would be to find out more information. Decisions are always easier and better if you have more data. Casual conversations about related topics are fine, but perhaps you and your friend should sit down together and exchange detailed, factual information. Take a look at the workbook I designed (click here) that has space to record everything from bank accounts to passwords to family to the names of your friend's doctor and pharmacist.

Having this kind of information on hand is absolutely essential so that if you act for your friend in the future you do not miss things or make mistakes.

Recording this info will achieve a number of things. It will create a valuable resource for future use, of course, but it will also give you a good idea of what you'd be getting into. Sometimes people can have quite convoluted financial affairs that we know nothing about. You'd have a chance to ask your friend whether she already has her will and POA done, and if they are up to date (she may have asked you to act because she is having new ones drawn up). She may or may not be willing to show you the actual will, but she should be willing to describe her general estate plan. If you do get to see the will, check to see what it says about paying you as executor. You don't want to have to fight with your friend's family to get the compensation you are entitled to.

You might find out about things your friend may have had no reason to mention, such as an unsettled lawsuit, a timeshare in Florida, a joint account with a grandchild, a safe deposit box full of Canada Savings Bonds, unfiled taxes for the last 20 years, or a dozen other things.

I would also suggest that you ask your friend to be frank with you about why she does not get along with her daughter. I hope you will be sensitive in asking the question because that sort of discussion is not always easy for a parent, but you need to know whether the issue between them is likely going to impact your ability to be an effective representative for your friend.

Consider what resources you will need to access, such as a local lawyer who could help you with the estate. You will likely also want an accountant to prepare your friend's tax return. Being an executor often involves a lot of trips to the lawyer, land registry, court house, and bank, so getting around to all of those places should be taken into consideration.

Because your friend is of modest means, she may not be willing (or eligible) to name a trust company as her executor and POA. Many people appoint their children but it appears that is not a good choice for her either. It's great that she has a friend like you who is willing to consider helping, but you are smart to do some homework to see what's involved. While you are on this site, search "executor's duties" and you'll find lists of the tasks that most executors have to do on most estates.

Catholic Church bans scattering of ashes as "pantheism"

As a regular part of my discussions with individuals, couples, and families about estate planning, I have conversations with them about the disposal of their remains after death. We talk about funeral services, burial vs cremation, expense, the need for closure, and a dozen other related matters.

Fairly often, clients will discuss known restrictions or guidelines that are part of their faith. Generally they want me to be aware of restrictions so that the documents I prepare address them properly, thus ensuring that the restrictions will be followed by executors and family members who carry out their funerals later. I can't remember any client who told me about religious restrictions then told me they wanted to ignore them.

With my clients in mind, I read with interest a recent article which discusses new restrictions from the Roman Catholic Church regarding cremation. Though cremation itself is - reluctantly - approved of by the Church, the scattering of ashes or even the keeping of ashes in an urn at home is forbidden. The Church wants the ashes kept in a sacred place such as a cemetery. Click here to read an article that gives more detail about the restrictions and the reasons for them.

Cremation is by far the most popular method of disposition, judging by the instructions my clients ask me to include in their documents. Thirty years ago, I was rarely told by clients that they wanted cremation whereas now it is pretty much standard. I wonder whether the new rules from the Catholic Church will have an effect on the popularity of cremation itself, or if it will simply change the practice of scattering ashes that is currently the practice. It's not my place to give clients religious advice, so I hope this is something they learn about from their religious leaders.

Taking an elderly parent or grandparent to make the will YOU want them to have is elder abuse

I often hear about adult children who take their parent or grandparent to a lawyer and tell the lawyer that Mom or Grandad wants a new will. Sometimes they really do want a new will and sometimes they don't. To me, the practice of taking an elderly person with dementia to a lawyer they don't know and springing this surprise on them is elder financial abuse. A reader recently told me his story, which is below, followed by my comments.

"My grandmother's estate was to be split evenly between her four children or their portion to their children should they pass before their mother. Two of the four predeceased their mother. One of the two surviving children have changed the will to cut the grandchildren out and to have it split evenly between the sole surviving children. My grandmother had dementia for the last 10 and was in a care home during which time the change was made."

You haven't asked a question, but I assume that in addition to being appalled by what has happened with the will, you are wondering about the validity of the changed will and whether you can challenge it.

The surviving children could not change the will, but I think what you mean is that one of them persuaded your grandmother to change the will. I wish I could tell you this is rare, but unfortunately a depressingly large number of people are willing to use their aging parents or grandparents as pawns in the game of inheriting money.

It's exceptionally tricky to try to apply the law to the facts in cases like this. The law itself is clear; a person must have mental capacity at the time will instructions are given as well as at the time a will is signed. What is not always so clear is whether any individual person does or does not have mental capacity at any given time, particularly if you are talking about some time in the past. It's not always clear whether a decision or choice was freely made.

As a general rule, we assume that an adult person does have capacity to make a will unless there is some reason to doubt that assumption. A diagnosis of dementia is certainly a reason to raise doubt though on its own it may not be enough to rule out a valid will. This is because a person with dementia can be in early stages in which the dementia is less severe, or could be having an especially good or bad day, and capacity must be "sufficient", not "perfect". The effects are not the same from person to person, or even within one person from day to day.

In your case, you seem to be saying that your grandmother had been diagnosed with dementia for 10 years before the will was changed. To me, that suggests that the dementia had time to progress beyond the early, milder, stages and there is a greater chance that her capacity is impaired.

Another issue that is intimately related to that of incapacity is undue influence. It's essential that a person who signs a will does so voluntarily. However, it can occasionally be almost impossible to determine whether the person really does want the will that he or she signs, particularly if the will is quite a bit different from his or her earlier will. Sometimes incapacity contributes to the person's inability to make clear decisions or to form proper judgments. In other cases, the person who is changing their will may be afraid of what will happen if he or she does not go along with what is being imposed upon them by others.

So where does all of this leave you?

If your grandmother passes away with the changed will in place, you can challenge its validity based on your grandmother's lack of mental capacity or the fact that she was influenced, or both. This involves a full lawsuit, so you would have to be prepared for something lengthy and expensive. It would be really tough on family relationships as well.

In my view, you have some important facts in your favour. One is that you said your grandmother had dementia for 10 years, so I assume that there must be at least one written diagnosis during that time. She was in care, and often seniors go through an assessment at the time they go into care to determine placement based on how much assistance they need on a daily basis. A written, dated, diagnosis of dementia would support your argument that your grandmother didn't have the capacity to change her will.

A fact that goes strongly in your favour is that the change to the will benefitted the person who helped your grandmother make the change. You haven't given details on exactly how the person arranged for the change to the will, but typically it involves someone physically taking the parent or grandparent to a lawyer and asking for a new will. This week I met with the family of someone who picked up their elderly mother from her care facility and didn't tell her where they were going until they arrived at the lawyer's office where the mother was given a new will to sign. When a will benefits a particular person, it makes it more likely that they really did try to influence the testator in order to gain some financial advantage.

A trial on these issues would likely involve testimony of family members as well as the input of the lawyer who drew the will, doctors who have examined your grandmother and perhaps other medical experts. These trials do succeed when the evidence is there to support you.

Though I have warned you that estate litigation is difficult, I'm certainly not suggesting that you avoid it by persuading your grandmother to go back to the lawyer and change her will back to the way it was before. That would mean you'd be doing exactly what someone else has already done - that is, to interfere with your grandmother's plans for personal gain.