How can an executor stay involved while the lawyer processes the paperwork?

Some executors or administrators of estates will hire a lawyer and ask that the lawyer take care of the entire estate from A to Z. More commonly though, executors and administrators want to be more involved than that. They want to keep costs low, keep the estate file moving along, and maintain control of the estate. Recently a reader in exactly that situation wrote to me, and I'm sharing the answer here.

"My father recently passed away and unfortunately does not have a will. I am trying to wrap my head around what exactly I need to do to get things straightened out. I've spoken to a lawyer and he has outlined what is required and I do need to give him some more information so that he can start the necessary process but if I am able to do some thing(s) myself, then by all means I am willing to tackle them."

There is a lot of opportunity for an executor (or, as in this case, an administrator) to take on tasks to keep legal costs low and to keep the estate file moving as efficiently as possible.

During the initial stage of the file, the lawyer will be gathering information to put together an inventory of assets and debts, as well as a list of beneficiaries and family members. You can supply a list of names, addresses and birth dates, and call around to family members to come up with information that might be missing.

You can also go through your father's house to find paperwork such as bank statements, investment statements, insurance policies, title deeds, property tax assessments, pink slips for vehicles, credit cards and bills of sale. All of these items contain vital information such as account numbers that will save the lawyer a lot of time. You can save even more time and money if you are able to go to the banks yourself to get updated statements (that isn't always possible for administrators, but it is for executors).

If there is a house, cabin or land to be sold or transferred to a beneficiary, you can save time and money by arranging to get appraisals. I recommend that you get at least two for each piece of property.

Once the lawyer interprets the law for you so that you know who is going to be a beneficiary under the intestacy laws of your province, you should notify them of what's going on. Once you have the grant of administration, you may wish to set up a day for everyone to get together and divide up the personal and household items.

Your lawyer may ask you whether you want to open an executor/administrator's bank account or have him run everything through his trust account. You can do it either way, but it's cheaper to do this yourself, unless there are beneficiaries who don't trust you to handle the funds. As an administrator (rather than executor) you won't be able to open the bank account until the court has issued you the letters of administration.

When it comes time to prepare an accounting to the beneficiaries, the lawyer should draft the Release documents. But you can save a lot of money if you prepare the statements yourself. Please understand though that you have to prepare a proper accounting that deals with all payments into the estate and payments out. If you prepare something inadequate or misleading and it ends up in court, you won't have saved any money or any time.

If you would like more of a step-by-step guide, pick up my book called Alberta Probate and Administration Kit. Even though the majority of the forms in it are for Alberta, there are also executor's accounting forms that can be used anywhere in Canada, and plenty of information, tips and ideas that apply to executors and administrators across the country.

Say what you mean in your will, because a court might not figure it out for you

One of the biggest drawbacks of home-made wills is that people are not very good at making their intentions clear to others. Even when wills are made by lawyers, from time to time there is a clause that is unclear. When this happens, the executor will have no choice but to resort to the courts for help in figuring out what the heck to do with the estate.

A new case from Nova Scotia has clarified what the court is and is not prepared to do in these situations. The case, from December 2012, is In Re Das, and revolves around a will made for Mr. Das by his lawyer. The will was somewhat complicated, and problems arose with an account from RBC Dominion Securities worth about $1Million.

There were two problems with this account, and the different ways the court dealt with them are good examples of what a court will fix and what it will not fix.

The first problem was that there was a typo in the account number of the investment in the will. The court looked at all the evidence and agreed that it was  just a typo. The court said it was pretty clear that Mr. Das meant to mention the correct account number, so the will could be relied upon as if the proper account number had been included.

The second problem was something much more troublesome. Mr. Das specifically excluded the account from the distribution of certain assets of his estate to his wife and daughter. But then he wasn't clear about what was to happen to the account. The way the will was worded, the account might have been intended for charities mentioned in the will, his wife or his daughter in some proportion.

The court said that based on the wording of the will, as well as outside evidence, it was impossible to tell what Mr. Das had intended to do with that account. The court said that it could only speculate, and that they did not believe that speculation was their role. In the end, they declared that the investment account was not covered by the will and therefore must be distributed according to the intestate laws of the province.

The case makes it clear that the responsibility lies on each of us to make sure that our intentions are properly expressed in our wills. The courts will help out when they can, but they've said they won't simply make things up where the evidence doesn't exist.

To read more about this case, click here to read a blog post by lawyer Chris Staples.

My personal advice to those of you who are making will is this. If possible, find a lawyer who specializes only in wills and estates. If no such lawyer is available in your area and there isn't a major centre nearby with that expertise available, try to find a lawyer who you know has done a good number of wills. Secondly, this is no time to cheap out. Sure, you might save a couple of hundred dollars, but the legal costs your estate pays later could be in the tens of thousands.

Distant relative may inherit gold fortune found in man's garage

This news story was reported in the National Post. Walter Samaszko Jr. died leaving $7.4 million in gold in his garage as well as a few other assets. He left no will, and the estate is going to a distant relative who has been located by genealogists. Click here to read the story.

I wonder why Mr. Samaszko never made a will? Apparently Mr. Samaszko had no children or other close living relatives. I've met a number of people who don't have children and therefore don't really know what to do with their estates. They sometimes put off doing their wills while they think about it. This often results in someone passing away without ever having done a will. You'll note at the end of the National Post story that a number of people are calling to claim a share of Mr. Samaszko's estate, and one person is so persistent (despite having no support or proof of his claim) that they had to get some type of court injunction against him.

That is always a danger when someone leaves a large amount of money with no will; relatives, friends and complete strangers come out of the woodwork hoping to get a piece of the pie.

There are plenty of things you can do with an estate even if you don't have children to whom you can leave your money. If you don't feel like leaving it to your siblings or other relatives, you should consider charities. Everyone from food banks to animal shelters could use a hand. You could set up a scholarship for deserving but financially disadvantaged students. You could leave money to build a park or set aside land for an ecological reserve. Your options are limited only by the size of the estate.

I really don't know whether this was Mr. Samaszko's reason for not making a will. But if it was, it's too bad he didn't talk to an estate planner to find out some great ideas for sharing his fortune in a creative, positive way.

House in the wife's name only - what if she passes away?

Most married couples own their homes as joint tenants, so that if one of them passes away, the other one automatically owns the home. This arrangement helps to give assurance that the surviving spouse and the family's children will legally and financially be able to continue living in the home.

But there are sometimes reasons why couples set up other arrangements. Often those reasons are related to finances or poor credit, but it could also be to avoid unwanted legal consequences or to protect assets from potential creditors. Not owning the home jointly may be the best arrangement available for a particular couple, but it tends to leave them wondering about who would own what should one of them pass away.

A reader left me this question about their home:

"After being married for almost 3 years, husband and wife put down payment together to purchase a house, but the title of the house is only under the wife's name. What will happen if the husband or wife pass away during marriage?"

If the husband passes away first, really nothing is going to happen about the house, as he doesn't own it. If the wife should pass away first, the answer could be much more complicated. Here are some of the factors that would be taken into consideration when dealing with the home:

Did the wife leave a will? If so, the will should address the question of what is to happen with the home. She might have left a will leaving the house directly to her husband. More likely, she may have left a will leaving her entire estate to her husband. If she has left the entire estate to him, that will of course include the house. Her will might also have done something entirely different, such as putting the house into a trust for their children, or directing that it be sold. The will should also address the household and personal items in the home.

Does the couple live in a province with Dower rights (such as Alberta)? If so, the Dower Act states that on the passing of the wife, the husband would have the right to live in the house for the rest of his life. He would always have a roof over his head, but he would not be able to sell or mortgage the house as he would not own it.

Who else is in the picture? In the absence of a will, the husband would receive whatever the law of the province of residence says he will receive from his wife's estate. He may have to share with the family's children and/or with any children the wife had in a previous relationship. Intestacy laws tend to work on fractions as opposed to specific assets, and would not necessarily include or exclude the home from the husband's share.

Is the husband adquately provided for, either by the wife's will, or by intestacy law? All across Canada, surviving spouses have the right to claim a larger portion of an estate if they have not been properly provided for. This is true whether or not the deceased spouse left a valid will behind. The husband might launch a claim of this sort and through that receive the house. Again, this might depend on who else is in the picture with competing claims.

Does the wife have a lot of debt? Depending on the type and amount of debt, the house might have to be sold to pay the wife's liabilities. Debts and taxes must be paid before any beneficiaries receive anything from the estate, even if that means selling the home.

Is the husband in bankruptcy? If so, his inheritance, including the house, may be seized by the receiver and used to satisfy his debts.

As you can see, nothing good is going to happen without some effort by the wife to protect her husband in the event of her death. She should prepare a will that sets out her intentions for the house. She should also speak with an estate-planning lawyer in her province who can inform her more specifically about her options and consequences.

What not to do in estate planning

In some ways, hearing about what not to do is even more important than hearing about what you should do. This is especially true with estate planning, where often people have already gone ahead and done some things on their own without realizing the possible negative consequences. Frequently when I do seminars and presentations, people from the audience come up to me afterwards and confide that they've already taken the very step I just finished telling them not to take.

So on that note, I'm attaching a link to a recent article from www.advisor.ca called What Not to do in Estate Planning. Click here to read it as it contains some really on-point information.

Does the share of a deceased beneficiary go to her husband?

What happens if a beneficiary named in a will dies before the testator of the will? This question was recently asked of me by a reader. Here's the question:

"My father wrote a will long time ago and named my mom, my brother, my 2 sisters and I as the beneficiaries but unfortunately, one of my sisters died 10 years ago. Will her husband and her only son take her part and become beneficiaries? Her husband has got married right after my sister's death. Should my father delete my sister's name from the will if he does not want to leave money to her husband?"

There are two major considerations to keep in mind when looking at a situation like this. One is what the will says, and the other is what happens if the will doesn't address it.

Your father should take out his will and check what it says. The exact wording of a will always matters (which is why I don't really like people making their own wills). For example, if the will says your father leaves the estate to the four children "or the survivor of them", then your sister's share would be divided among the surviving three children. However, most people don't set their wills up that way unless their children are pretty young. You did say the will was made a long time ago so it's possible.

As another example, if your father's will says that a deceased child's share is to be divided per stirpes, the share would pass down to your sister's son.

Normally a will says that the share of a deceased child would be given to that child's children, simply because this is what most people choose. Also, in most places, this is what would happen under intestacy law if there were no will in place or the will didn't mention it.

Your sister's husband is not going to be entitled to your sister's share unless the will specifically says that he is. In my experience, most people choose to pass inheritances down through the family bloodlines and it's pretty rare that they leave a child's share to the child's spouse. Also, if the will doesn't mention what happens, there is no law that says he must get her share. Whether or not he re-married is not relevant.

When you take both of these considerations together, it seems unlikely that your sister's husband is going to get her share, but without seeing the will itself obviously I can't know for sure. This is important stuff for your father, for your siblings and for your sister's son. It's better to clear up questions now while your father is able to address them than to wait until it's too late.

A problem with some older wills is that the language can be archaic and hard to understand. This could be an impediment for your father as he reviews the document on his own. If your father finds that he really can't tell what the heck the will means on this question, he should make an appointment with a wills and estates lawyer to review his will. Ideally, I would like to see your father sit down with an experienced lawyer to explain what he wants to do with his estate and have the chance to ask whether his current will meets his needs. He would achieve peace of mind by knowing that the proper document is in place.

Keep in mind that wills laws and tax rules change over time and older wills should be reviewed from time to time to make sure they are still current. This will go a long way to ensuring that there will be no problems administering your father's estate when that time comes.

It also occurs to me that if he made his will such a long time ago, he might not have made a Power of Attorney or a health care directive. Maybe this is the time to re-visit all of this. It's great that all of you are discussing these issues as a family and that you seem prepared to help your parents get everything into place. I strongly urge your father to see an experienced lawyer and talk all of this through.

The potential consequences of adult adoption for inheritance

Have you ever thought about the effect adoption of your siblings or parents would have on your estate plan? Not many people have considered it. And what if your relative was adopted as an adult and not as a child? This article from http://www.verdict.justia.com/ tells the story of what happened when a woman from Virginia died without a will, but her closest living relative had been adopted out of the family at age 53. The article is American so the law cited won't necessarily be the same in Canada, but the underlying concept that adoption changes inheritance rights is the same. It makes interesting reading for anyone with an adopted relative in their extended family. Click here to read the article.

Take Care to Ensure Your Will is Properly Executed

The link below goes to an article from Megan Connolly, a Toronto lawyer with a specialty in wills and estates. In this article, Ms Connelly talks about a recent court case in which a will was held to be invalid because it wasn't properly signed and witnessed. This led to the assets of the estate being divided in a way that the deceased hadn't intended. Click on the link to read the article.

Take Care to Ensure Your Will is Properly Executed

The dangers of dying intestate

I'm attaching a link to an article from http://www.myfinances.co.uk/ which gives some good information and excellent examples of what can (and does) happen when people die without valid wills. Click here to read the article.

A legal will is worth the time and money

This article from the Globe and Mail talks about the reasons you need a will. Some of theme will sound familiar to those of you who read this blog regularly, but they can't be said often enough. Click here to read the article, which is packed with good information.

Alberta's new Wills and Succession Act - part 2

Our new law dealing with wills and estates is expected to take effect in Alberta in January of 2012. It's bringing big changes to this area of law that will affect all Albertans. In Part 1 I talked about the right to stay in the family home temporarily after the death of a spouse who was the only owner of the house. In this post I'd like to talk about a major change to our law of intestacy.

Intestacy refers to dying without a valid will. If you die intestate, the law says who gets what from your estate. Currently we have a formula that divides the estate between the spouse and the children. I'm personally quite happy to see this part of the law changed as I don't think it was working well for modern families.

The new law says that when a husband or wife (either legally married or common law) dies, and all of the children are their joint children, i.e. no step-children, the entire estate goes to the surviving spouse. The children don't get anything from the estate, but the idea is that when their second parent dies, he or she will pass down the estate to them.

The law provides for something different when a deceased has children from previous relationships. When a husband or a wife (legally married or common law) dies and the spouse who died had at least one child from a previous relationship, the surviving spouse does not get the whole estate.  The spouse will get a "preferred share" and the rest will go to the deceased's descendants.

The preferred share is going to be either 50% of the estate or the amount set by regulation, whichever is larger. The regulation isn't in place yet, but is supposed to be in place by the time the new law comes into force in January. The amount set by the regulation is probably going to be $150,000.

Remember that these are the rules that will apply if you should die in Alberta without a will. You can maintain control over what happens to your estate and have things set up the way you want them by making sure you have a valid will in place.

So you died without a will

This blog entry from All About Estates makes some persuasive arguments about why we should all have proper wills made. As the author says, stop worrying about tempting fate. Click here to read the article.

Why it’s so important to have a will in Canada. Every province is different

The article at the link below describes - province by province - what happens if you die without a will. The article is from MuchMor Magazine, though I'm not sure who the author is. I certainly agree with the main idea of the article, which is that you need to have a solid will in place. Click on the link to read the article.

Why it’s so important to ensure you have a will in Canada. Every province is different

Intestacy for First Nations people

Recently a reader asked about whether the rules for distribution of an estate on intestacy (i.e. without a Will) are different for First Nations people under the Indian Act. The rules can be very different so I'm creating this post to discuss them.

The Indian Act, which is federal, applies to a person who is defined as an "Indian" under the Act, which generally means a person who is ordinarily resident on a reserve. If a First Nations person doesn't live on a reserve, the laws of the province where he or she lives will apply to his or her estate.

The rules for intestacy are set out in section 48 of the Indian Act. If the deceased's estate is worth $75,000 or less, the whole estate goes to the surviving spouse. This includes married and common law spouses.

If the estate is worth more than $75,000, the spouse gets the first $75,000. If there is a spouse and one child, the spouse also gets half the rest, with the other half going to the child. If there is more than one child, the spouse will get one third of the rest, with the other two-thirds being divided among the children. If a child has predeceased, that child's children will inherit the child's share. Other than the $75,000 dollar amount, this proportionate division is similar to provincial laws.

The definition of "child" is unique under the Indian Act. A child includes a legitimate child, an illegitimate child, and an adopted child, as it does under provincial law. The unique element is that the adoption can be either the usual legal adoption or an adoption according to First Nations custom.

The Minister of Legal and Northern Affairs has the discretion to change this distribution.

If a person under the Indian Act dies without spouse, children or grandchildren, his or her estate will go to parents next, and if the parents are not alive, then to siblings. Beyond that, an estate can be distributed to the further next of kin, as long as it isn't land on the reserve. If the deceased owned land on the reserve and there are no survivors of sibling level or closer, the land will vest in the Crown (i.e. the federal government) for the benefit of the deceased's band.

The rules about signing and witnessing a Will are more relaxed under the Indian Act than they are under most provincial/territorial statutes, which should result in fewer people ending up with an intestacy due to Will being declared invalid.

What do two million Canadians and Stieg Larsson have in common?

This article talks about what happened to Stieg Larsson's estate when he died without a Will, and what will likely happen to yours if you die without a Will. Note that the figure of $200,000 mentioned as the spousal preferred share for Ontario is not the same for all Canadians; in Alberta, for example, it is only $40,000. Click here to read the article.

6 Ways To Lose Your Estate

If you'd like to learn 6 Ways To Lose Your Estate, click on the link to read this article from Investopedia. It's packed full of good advice and common sense.

Top ten posts about Wills and Probate

I've prepared a list of the top ten posts on my blog (in terms of number of people reading them) and brought them all togther here in a list. There are a couple of really frequent questions covered in this list. Enjoy!

Click on the title to go to the article:

1. What do people in a second marriage have to consider when making a Will?

2. The avoiding probate at all costs issue.

3. Chart of probate fees across Canada.

4. Who can witness a Will?

5. Can I leave my child out of my Will?

6. Can I appoint my lawyer as my executor?

7. Can my executor also be a beneficiary?

8. Can a blind person sign a Will?

9. Do I have to leave anything to an illegitimate child I haven't seen in years?

10. If I die without a Will, my wife gets everything. Doesn't she?

I told my lawyer what I want in my Will but didn't sign it. Is that good enough?

Life is busy. Sometimes people get started on something, like getting Wills made, and life interferes by keeping them too busy to get to the lawyer's office to sign the Will. I see this most often with clients who are about to leave on a lengthy vacation and who left their Will-preparation to the last minute.

When I urge these customers to find the time to sign the Wills before leaving so that they are not traveling without a valid Will, the response is along the lines of "you wrote down what I want, that's something right?". Well, no, legally it isn't anything.

I believe this question arises simply because most people are not very familiar with the probate process or the requirements for a valid Will. Everyone likes shortcuts. People would love to be told that all they have to do is talk about a Will for a Will to be created.

Unless you've signed and dated a Will properly, you don't have a valid Will. If all I have is a draft document with no date, no signature or any proof that you approved its contents, then I'm just one more person who claims to know what you wanted. Someome will have to apply to the court to be appointed as administrator and your estate will be distributed according to intestacy law.

Having this document in place to protect your family, your assets and your business is essential, and it's worth making the time to sign it before you travel.

How to prove you are an heir in Ontario

This link goes to the Ministry of the Attorney General in Ontario, where you will find some practical information on intestacy and how to prove you are an heir.

Does intestacy work differently in different provinces?

Intestacy refers to the way a deceased person's estate is distributed if that person did not leave a Will. Every province and territory in Canada has laws that describe who is to get the estate of an intestate person, and in what proportions. The law is not the same everywhere.

Most provinces, including Alberta, have a system that's sometimes called the "per stirpes" system. Manitoba, for example, is different and has a "per capita at each generation" system. The per stirpes system passes down a share through the bloodline of an individual to succeeding generations. The other system passes down a share by finding the nearest generation that has at least one person surviving, and giving the share equally to the people in that generation. I find the easiest way to understand the difference is to use examples.

If Wanda dies without a Will and has two children, Ian and Florence, under both systems her children would share her estate equally. But what if Ian had died before Wanda, and left two children of his own?

Under the per stirpes system, Florence would get 50% of the estate and Ian's children would share his 50%, each getting 25% of the estate. This is because Ian's share is being passed down through his bloodline.

Under the nearest generation system, Florence would get the whole estate and Ian's children would get nothing. This is because the nearest generation to Wanda that has anyone surviving is Florence's generation, and she is the only person alive in that group.

What if Wanda died, but both Ian and Florence had died before she did? Let's say that Florence had one child. Under the per stirpes system, Ian's 50% share goes equally to his children so they each get 25%. Florence's child takes Florence's 50%. Again, each share follows the bloodline of the person.

Under the next generation system, there is nobody left in the first generation, since Ian and Florence are gone. Then we look at the next generation and we see that there are three survivors, those being Ian's two children and Florence's one child. These three would each take an equal share of the estate, or 33%.

Remember that these are the rules on intestacy, so they are the default system for those who don't make Wills. You can set up whatever arrangements you think are fair by making a Will.