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Tuesday, January 17, 2017

New podcast: "Can the executor do that?"

Our second podcast is now available on our web page. It follows the same format at the first one, with our practice coordinator, Chelsea Kennedy, asking me questions. This one is called "Can the executor do that?" and covers a variety of questions about what executors can and cannot do with an estate. Click here to listen or download (it's free).

Wednesday, January 11, 2017

No standing for adopted child to vary birth mother's will

There has been an interesting case recently in the BC courts regarding the rights of adopted children with respect to the estate of the birth mother.

Gary Boer was the biological son of Deloreen Mikaloff. He was adopted by another family when he was a year old. Thirty years later, Gary found his birth mother and they developed a close relationship. When Deloreen died, she left Gary part of her estate in her will.

Gary applied to the court to vary Deloreen's will. This is where the matter got interesting. Gary applied under the law that says a court can change the distribution of a will if the will does not make adequate provision for the spouse or children of the deceased. Every province and territory in Canada has a similar law (usually referred to as "dependent relief" law), so this question could have been raised anywhere in the country.

Gary asked the court to give him a larger share of the estate because, as Deloreen's child, he was not adequately provided for in her will. The court refused because Gary had been adopted by another family. He was no longer considered to be Deloreen's child.

This decision is consistent with the law of adoption and I would have been astonished if the case had gone any other way. Once Gary was adopted by other parents, he was legally not Deloreen's child any more. Legally he was nothing more to her than any other friend. He could not make a claim as her child because legally he was no longer her child and therefore there was no obligation on the birth mother to leave him anything.

The case is interesting because in most cases the child who was adopted by someone else is not mentioned at all in the birth mother's will. This case seemed to add a bit more substance to the question since Deloreen chose to include Gary in her will.

Anyone who would like to read the full judgment on Boer v. Mikaloff Estate can click here.


Monday, January 9, 2017

Our first podcast (free to listen, of course) is now online!

Such exciting news! Our very first podcast is on the website and ready to go! We've created a series of podcasts on various topics relating to wills, estates, trusts, and elder law, and we'll be uploading a new one each week. The first one can be heard by clicking here. The topic is giving away personal and household goods. The podcasts are free to listen to as many times as you like.

Check back weekly to see which new topics we've added.

The podcasts are in the format of an interview between our practice coordinator, Chelsea Kennedy, and me. It's a bit like reading a blog post but with much more information and of course you can listen to it anywhere. If you have feedback or questions, or if you'd like to suggest a topic, let me know in the comments below or email Chelsea at chelsea@butlerwillsandestates.com.

Thursday, January 5, 2017

A win for testamentary freedom

"Testamentary freedom" means the right to leave your estate to whoever you want. We all know there are some legal restrictions on testamentary freedom. For example, we know that if we leave our spouses out of our wills, the spouses have the right to sue our estates, and are usually successful.

Some of the rules that exist to restrict our testamentary freedom are there to protect the general public and are known as "public policy" rules. For example, you cannot say in your will that your son will only inherit from you if he commits a crime.

But how far do those restrictions reach? How much freedom do we really have to put whatever we want in our wills? Over the last year there has been quite a bit of discussion about this because of the estate of Eric Spence in Ontario.

Mr. Spence made a will in which he left out one of his daughters. She contested the will on  public policy grounds, saying that she had been left out because she had had a child with a white man, against her father's wishes. In other words, she said that her father was racist and should not be allowed to discriminate against her. In 2015, the Ontario court agreed with the daughter and struck down Mr. Spence's will. The estate appealed to the higher court.

In 2016, the Ontario Court of Appeal overturned the decision. It said that the will is valid. The court said that an adult child who is independent of her parents doesn't have any right to inherit and therefore there is no need for the father to explain or defend his choice to leave her out. In terms of public policy, the court said that the Charter of Rights (which prevents discrimination in public institutions) does not apply to private matters like wills, nor does the Human Rights Code.

To read more about this decision, click here to read a post by Daniel Bernstein, a lawyer in Toronto.

I appreciate the clarity this decision brings, and I have to say I wholeheartedly agree with it. Why should adult children with their own lives and agendas be able to dictate what Mom or Dad do with their money? Why should they automatically inherit even though in some cases they haven't even talked to the parent in years (that was the case in Spence)? The sense of entitlement people have these days is unbelievable.

Friday, December 30, 2016

I undervalued an asset on the estate inventory. Now what?

One of the tasks of an executor or estate administrator is to prepare an inventory of the estate. This is not always cut and dried, especially for an administrator who cannot always get access to records before the administration grant is issued. As a result, the inventory that is prepared shortly after the deceased passed away sometimes ends up with an error in it.

This is a situation that passed through my office a few weeks ago. A client of mine applied for probate of a parent's will and on the inventory listed an expected policy pay-out of about $65,000. From the paperwork, this was her best estimate as to what would be paid and I agreed with her. As it turns out, the actual pay-out was more than $275,000.

When there is a discrepancy this large, the correct thing to do is to file a supplementary affidavit at the probate court. You would re-work the inventory to include the new numbers and give a brief explanation of what happened. You wouldn't be the first person to do this, and you won't be the last, so the Clerks of the Court won't find it odd when you walk in to file this document.

Why is it important to file a new affidavit with the new values? When you file the inventory of the estate, it is part of an affidavit. You will have sworn under oath that the inventory is accurate and complete to the best of your knowledge. If you gain new knowledge but fail to update the value of the estate, you may be committing perjury. Just because you're not standing in a courtroom in front of a judge, don't think you're not giving evidence when you swear the affidavit.

The second reason is that the inventory serves many purposes, one of which is to inform the beneficiaries of what they will inherit. An executor who doesn't update a major change in the estate is not doing his or her job. And don't forget that the inventory is also used by the estate accountant to do the tax returns, and by potential creditors, and if the estate ever winds up in litigation, by the judge and the litigants. It's a mistake to assume that nothing will go wrong on an estate, believe me.

As an executor or administrator, you'll find that accurate records are your best friend.

If the discrepancy in the numbers was very small, I doubt the court would find the change in numbers to be material and would not find fault with an executor who did not update the inventory. It's a judgment call as to what is material and what's not.

When a supplemental affidavit is filed to show that the value of the estate has increased, the probate fee will also increase in most provinces, since it is based on the value of the estate.




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