Troubling trends in 2011 census: more risk of family disputes, more chance of elder abuse

Statistics on their own can be deceptively boring. Their impact and power come from putting them into context. I've attached an article here from Whaley Estate Litigation that does just that. It gathers together various stats recently released as part of the 2011 census and paints a picture of how Canadian lives and families have changed.

The article reaches the conclusion that the changes in Canadian society have resulted in much more complicated family arrangements. I agree that this is a problem, since so many people still don't get proper wills made. They leave their blended families or same-sex spouse to fend for themselves, often in lengthy, expensive estate litigation, when they could have saved them the trouble by having a good will done.

Another important conclusion reached by the article is that people are living longer, the incidence of dementia is rising, and more fragmented families mean less support for seniors. Nothing is as painful as a family fighting internally over a parent and his or her finances. And few things are as shocking as a senior, all alone in the world, being abused at a care facility.

If you'd like to read more, click here to see the article.

Discussing the undiscussed: a problem solving method

This brief but interesting post from Toronto Estate Law Blog makes the point that discussing financial matters openly as a family (particularly a blended family) can help clear away many estate-planning issues. Click here to read the article.

Estate planning in blended families

As estate planning lawyers, we know that blended families can be challenging because of the dynamics of the group. However, many people in blended families are somewhat blind (due to their optimism I assume) to the potential issues. Corina Weigl has posted an excellent article on All About Estates describing some of the issues that crop up in blended families, and talking about one useful solution. Click here to read it.

All the right heirs

This post from Toronto Estate Law blog summarizes a report that talks about the issues involved in determining who are the correct beneficiaries of an estate. It's pretty interesting stuff, particularly when you look at the percentage of estates in which there appears to be an unknown beneficiary. Click here to read the article.

I'm not surprised to see that so many executors have trouble figuring out who is supposed to be a beneficiary and who is not. Blended families, adoptions, second marriages, estranged siblings... they all make it tough to know how to apply the law.

Alberta's new Wills and Succession Act - part 1

There are big changes coming to wills and estates law in Alberta. Our new Wills and Succession Act (WSA)is expected to take effect in January 2012. Over the next few weeks I'll write a series of blog posts to let you know what's coming. When you read the posts, think about whether the changes could affect you, and perhaps talk to your wills lawyer to find out for sure.

The first change that I'll tell you about has to do with a spouse having possession of a deceased person's home. In Alberta we have the Dower Act, which talks about the situation where a man and woman are legally married and the house is only in the name of one of them. If the one who owns the house dies, the other spouse has a right to live in the house for the rest of his or her life. That hasn't changed. But what about common law couples? The Dower Act doesn't apply to them.

The new WSA talks about that, which is completely new to Alberta law. It says that the spouse can stay in the house for at least 90 days after the death of the spouse who owned the house. The situation must be that:
- the deceased spouse is the one who owned the house
- it can be a house, condo, apartment, mobile home, etc
- the couple must have been Adult Interdependent Partners (Alberta's equivalent of common law spouses, and usually means they must have lived together for at least 3 years)
- the couple must have lived in the home as their family home

This isn't likely to be a problem if the deceased spouse made a will and left the house to his or her surviving spouse. But it's important if there isn't a will.

It's also important if the spouse who owned the house was in a second marriage. Often, in second marriages the spouse wants to leave his or her estate (including the house) to the children of the first marriage. If there was no right to stay in the house for a period of time, which until the new law comes into force is the case, then the surviving spouse has to pack up and get out ASAP so that the children can inherit.

Having observed first hand through my work how cold the children of a first marriage can be towards a step-parent, I'm in favour of this change. It will give a least a short breather for the surviving spouse to make plans to live elsewhere.

Executors from two sides of the family

The choice of executor is an issue that takes many of us quite a while to settle, as it should. The choice of executor is crucial to the efficient and timely administration of an estate. If you think otherwise, perhaps you should read the comments and questions left on this blog and many others about the problems people have dealing with reluctant, secretive, aggressive or greedy executors. It's important that each of us examines all of the possibilities clearly and do the best that we can for our families left behind.

Recently I was asked by a woman who is in her second marriage whether it's a good idea to appoint two executors. They would each represent one "side" of the family. In other words, one would be from her family, likely one of her adult children, and the other would be from her husband's family. This is a very common idea. I've seen it many times over the years and it's generally thought to be a sort of compromise.

I'd like to look a bit closer at this arrangement. In particular, I want to look at why someone might want to set things up this way.

If you asked someone why this might be a good idea for them, you would likely hear answers that have to do with making sure that everyone has a say, everyone is represented, and everyone has a way of making sure that things are fair. Nobody wants to feel that they are at the mercy of someone in the "other" family. Picking one person from one side without equal representation would make the other side unhappy.

Ok, that's the surface. But what's beneath all of this?

At the very core of the problem is the fact that the two sides don't trust each other. The people making the wills are expecting trouble between the two factions. They already know the two sides aren't going to get along. So how does it make sense to try to force people who don't trust each other to work together? This seems particularly problematic when the work that has to be done arises at a time when emotions are running high due to the loss of a loved one, and when old resentments surface.

It seems unfair to the two individuals who are chosen to captain their testamentary teams, and who will be exposed to immense pressure from their sides of the family. It also doesn't seem to be a particularly good idea for the estate, since joint executor decisions need to be made jointly, and that's going to be hard for the executors to do.

A better solution for a family in this situation is to find one neutral party to be the executor. Forget trying to bring two opposing camps together. The couple making the wills might choose one of their siblings, a close family friend or a trust company.

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.

Most Canadians unmarried, more couples childless

The family is changing, and rapidly according to the report from the Vanier Institute of the Family. Relying on 2006 census data, the report indicates that for the first time, there are more unmarried than married Canadians. To read the Globe and Mail's coverage of this, click here.

How does adoption affect the right to inherit?

Many Wills express the testator's wish that his or her estate be shared among his or her children. In some families, it's obvious who is meant by the word "children", while in other families it is less so. In this post I'm going to look at the legal rights of adopted children when a parent - biological or adoptive - passes away.

As with all general rules about what is meant by certain legal words or phrases, remember that if the person's Will says something contrary to the general rule, the Will must be followed.

When an adoptive parent passes away, an adopted child has exactly the same legal status as a biological child born to that parent. When the Will makes a gift to "my children", adopted children will be treated the same as biological children when it comes to inheriting. Every province and territory in Canada has legislation in place that creates that right.

What if the biological parent of a child who has been adopted should pass away? If the biological parent leaves a Will that divides the estate among his or her children, this will not include the child who has been adopted by someone else. According to the law, the child is no longer that person's child, because of the adoption. If the biological parent wanted to leave something to a child who was adopted, he or she could do so by specifically mentioning that child's name in the Will.

It's important to note that when I say "adopted" children, I'm referring to children who have been legally adopted under provincial or territorial law. On occasion, a child will be raised in a family that treats the child as its own, but never formally adopts the child. The child might not know one or both of the biological parents, and may have a strong family bond with the new family. In a case like that, the child is not considered legally adopted. The child is still the child of its biological parents, not the parents who voluntarily raised him or her.

This sometimes creates interesting situations for blended families, and is one of the reasons I always urge the parents of blended families to spend some time with an estate-planning lawyer to make sure their Wills are going to create the outcome they want.