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Friday, September 30, 2016

Only my name is on the title. Will my wife get my house when I pass away?

I'm always glad to see questions from people who want to clarify their situations. It's so much better to find out important information while you still have a chance to act on it than it is to overlook potential problems, but it's not always easy to find specific answers.A reader recently wrote to me to ask about the title to his home:

"My wife and I bought a house after marriage. She was abroad on the closing date so the house title and mortgage only have my name on it. In this case are we joint tenants or tenants-in-common? If I pass away will my wife automatically becomes owner of the house without my will?"

You are neither joint tenants nor tenants-in-common. You need more than one name on a title to be either one of those things, and you said only your name is on your title.

Whether or not your wife would automatically gain ownership of the home is not going to be based on the title, since the title as it stands gives her nothing. However, there are other factors that could result in her becoming entitled to own the house even if you don't have a will, such as:
- you pass away leaving only your wife and no children, and your whole estate passes to her, with the house being part of that;
- you live in a province which treats the matrimonial home as joint property where the sole owner spouse dies, or one in which she can elect to keep the home.

You would create a lot more certainty and peace of mind by having a will prepared in which you leave the house to your wife. Remember that the contents of a house are not part of the title and be sure to deal with those as well.

Another option is to change the title on the house to something that suits you better. The fact that it was set up so that  you are the sole owner doesn't mean that it always has to be that way. You can transfer the house into both of your names at any time. Money does not have to change hands.If you changed the title from your name into a joint arrangement with your wife you would be able to achieve your stated goal of having the house pass to her on your death.

I would caution you that I can't really tell you whether changing the house into joint names would be a good idea in  your case. I just don't know anything about your financial position, debts, risk of litigation, tax exposure, pre-nuptial agreement, family arrangements or anything else. If you think that putting the house in joint names is a good idea, I urge you to consider it in the bigger picture. Don't think of the house on its own, but instead think about it as one piece of your financial picture to ensure that you don't create new problems just by changing the title.

Wednesday, September 21, 2016

Should you name your children or your estate on your life insurance policy?

When it comes to naming the beneficiary of a life insurance policy, there is no one-size-fits-all answer. There are plenty of variables to consider but they fit individual people differently. A reader recently wrote to me asking about potential beneficiaries. Read on to see his question and my comments.

"I am trying to figure out if it is best to leave my life insurance to my children with a named trustee or to a trusted adult. Is there any advice you have?"

I wouldn't presume to advise you since I don't know anything about you or your family or your estate, but I can provide you with some thoughts about this question generally. There is no right answer that fits everyone in every situation.

If your intention is for the children to receive the life insurance benefits, then I do not like the idea of leaving it to "a trusted adult" and telling them that it is really for the children. Certainly you trust the person, but if you name that person as the beneficiary, you are not creating any legal right in your children to claim the money if something goes wrong. Even a trusted adult can pass away, lose capacity, be taken advantage of, or succumb to extreme financial pressures. If your children are not named as the beneficiaries of the policy, they will have absolutely no legal recourse to try to recover the insurance proceeds.

I don't agree with documents saying one thing while your intention is really something else.

When you say you might leave your life insurance to your children with a named trustee, there are two ways of doing that. One is to name the children and the trustee right on the policy itself with the insurance company. The other is to name your estate as the beneficiary of the policy and to use your will to bequeath the money to the children.

As a general rule, you will have more flexibility and more control over the funds if you gift your children through your will.

For example, let's say you have three children. You name them all on the policy. Each of them will receive  his or her share on the day they reach the age of majority. But let's say you think that's too young for them to receive that much money. Perhaps you think it would be best to give them half the money at age 21 and the rest at age 25. You can't do that on your insurance policy, but you can do it through your will.

Let's say that one of the children passes away before reaching 25. The policy would then be divided between the remaining two children, if they were named directly on the policy. However, if you had named your estate as the beneficiary and left the residue of your estate to your children, you could say in your will that if one of  your children passed away, his or her share could be given to his or her children.

You could, of course, set up a separate insurance trust to control all of the variables such as the age the children receive their funds, whether the trustee can encroach on the funds, and other important issues. But why do this when those exact issues are already being covered in your will?

These are just examples, not an exhaustive list. Your will can be used to craft the trust you want. In other words, you can use your will to personalize the gift to the children to suit your goals and your children's needs. It also helps you to integrate the insurance policy proceeds with the rest of the inheritance  you are leaving to your children. For example, if you were also leaving your children other assets such as a share of your home, bank accounts and investments, you might find it easier to deal with just one source of money (your estate) than to deal with two (your estate and the insurance company).

Having life insurance paid into your estate may actually help your children to inherit other assets that might otherwise not go to them. For example, if there is a cabin in the estate but not enough cash to pay the capital gains tax, the cabin would probably have to be sold to cover the taxes. But if the life insurance had been left to the estate, it could be used to pay the taxes. Then your children would have the opportunity to inherit the cabin.

There is a drawback to leaving the insurance proceeds to your estate, because any debts and liabilities you have will be paid out of the estate. Therefore if you should pass away leaving a huge lawsuit or tons of debt, the insurance proceeds are just as exposed as the rest of your assets. If you had left the insurance proceeds directly to your children, those funds are not likely to be accessible to creditors.

The best way to decide what's right for you is to discuss your life insurance with your estate planner in the context of your entire estate to see how the pieces fit together.

Saturday, September 17, 2016

Three out of four isn't bad

I just noticed that of the four top-selling books in the law category on my publisher's site, three of them were written by me. "For My Family, With Love" continues to be a very strong seller even though it has been out for a couple of years. Please feel free to check out all of my books and DIY kits at

Friday, September 16, 2016

How do you find your deceased parents assets when they've been gone for 14 years?

Now here's a tough one. A reader left me this brief note:

"How do you find your deceased parents assets when they been gone longer than 14 years?"

There's an awful lot I don't know about your situation, including why 14 years have gone by with nobody looking after any potential assets. I don't know your parents' age when they died, where they lived, what they did for a living, or anything else useful. I don't know whether you're an executor who wants to go forward or one of the kids who is curious, or whether you have any living relatives who might be helpful.  As a result, the answer I'm about to give is going to be pretty general.

The passing of time doesn't make things any easier, that's for sure. Properties that are not paid for end up being foreclosed or reclaimed for back property tax. Unclaimed bank accounts may be closed. Records are destroyed after a few years. However, here are a few ideas to try, though admittedly many of them are long shots after 14 years:

1. If your parents left wills and you have a copy, read them to see whether there is any mention of accounts or life insurance policies, etc.

2. If you don't know whether they left wills or whether anything has happened with their estates (assuming you are not the executor) search their names at the probate court nearest where they lived. If an executor sent their wills to probate, there will be an inventory of assets that existed at the date of death. If there was an executor named, that is the best source of information you are likely to find. If you're in BC, there is a wills registry you can search.

3. Assuming that you know where they lived, do a title search on the property to see if they still own it. Do the same for a cabin or cottage.

4. If your parents owned a business, search the corporate registry to see who owns it now.

5. Visit banks near where your parents lived to see whether they have any records of accounts.

6. Call the office of the public trustee to see whether they ever represented your parents either as a power of attorney or as an executor. They are usually only involved with individuals who have no family members willing to help them, or whose families can't get along. It's worth a shot, though. If they did once represent your parents, they should have information about assets that existed at that time. Also, sometimes when a beneficiary of an estate can't be found, his or her share is left at the public trustee's office, so they might have information about your parents' estates.

7. Talk to any family members you have. Ask if anyone acted under a power of attorney for your parents. See if anyone has recollections of insurance companies, banks, investment advisors or lawyers you could talk to.

8. Check with your parents' former employers to see if there are any unclaimed pension benefits.

9. Search newspaper archives for your parents' names. There are plenty of useful things you might find, including a notice for an estate sale or auction, a property listing by a realtor, or an advertisement for estate creditors that includes the name of their lawyer.

There are some other sources of information about assets but unless you are the executor or administrator of your parents's estates, you're not going to get access. For example, Canada Revenue Agency could provide copies of past tax returns that contain information about investments, property, etc, but you are not entitled to get that information if you are not the executor. Places such as banks, law firms and insurance companies are also going to be reluctant to give out private information about their customers.

If anyone reading this post has additional ideas based on their experience, I'd be interested to hear them, as I'm sure other readers would as well.

Thursday, September 15, 2016

Things don't happen automatically. That's why we have executors.

Today I met with a client who was upset and angry that the stocks and bonds owned by her father had never been transferred into her mother's name. Her father had died without a will and there was nobody in charge of the estate. My client was mad at the transfer agent who registers and trades stocks because they hadn't changed the name. When I asked how on earth the transfer agent would even know about her father's death and why the transfer agent would presume to know what to do about his shares, my client asked, in complete surprise, "doesn't it happen automatically?"

I hear similar things relating to the land titles registry. When a husband or wife dies, nobody changes the title at the land registry into the name of the surviving spouse, and then when the second parent passes away, the kids get mad at the land registry for not having up to date records. Again, I've been asked "doesn't it happen automatically?"

Is this common misconception a result of wishful thinking or misinformation from advisors? Perhaps a bit of both. I myself have been guilty of explaining joint ownership with right of survivorship by saying that when one owner dies, the surviving owner automatically gets the property. Perhaps that does sound as if everything happens on its own without anyone having to actually initiate the process. I'm sure similar explanations are offered by lawyers, accountants and bankers everywhere. The gist of the legal arrangement is communicated, but the logistics of bringing it about are not.

In reality, it does require involvement by either a beneficiary or an executor to bring about these "automatic" arrangements. This is because while a right might arise automatically, the paperwork to document that right doesn't do itself. When a spouse dies without a will and his wife automatically "gets" his estate, that means that she has the right to own the  assets. It doesn't mean that the assets will find their way to her like a magnet to a fridge. Someone has to actually notify the holder of the assets, prove the death of the owner, and arrange for the asset to change hands.

When a joint owner of property dies, the surviving owner has the right to own the whole property. But that survivor also has the responsibility to prove that the other owner died and to document the change using the proper paperwork. The land titles registry, the courts, the corporate registry, the life insurance company and Canada Revenue Agency are all relying on you or your legal representative to do your part and let them know that someone has passed away.

There is some element of wishful thinking, too. These days people seem to want things to happen very quickly, if not instantly, preferably with a click or two on the internet. There is very little tolerance for paperwork, which unfortunately is a part of estate administration.

Nothing happens automatically. That's why an essential element of your will is the naming of an executor to carry out the paperwork and the legwork involved in giving everyone the property they have the right to inherit. We have executors for a reason.

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