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Monday, August 29, 2016

Testators can't ask the impossible or illegal in their wills

Did you know that you do not have the right to put absolutely anything you want in your will? We all know that there are certain people that you cannot leave out of your will without a huge risk of your will being contested, but did you know there are also limits based on public policy? We have a set of rules for wills that impact each and every one of us.

For example, what if your will left out one of your kids who thought you did so because his or her spouse was of a different race? What if you left your estate to a racist hate group? Would these instructions be allowed under Canadian law?

Recently I was interviewed by about testamentary freedom, which is the phrase that describes a person's freedom to say what he or she wants in his or her will. There have been two cases lately in which Canadian courts had to make a decision about the limits on this freedom. In both cases there were allegations of racism in the will. In this interview, I discussed the two cases and what they offer in terms of clarifying the limits.

To read the interview, click here.

Friday, August 26, 2016

Reynolds painting accepted in lieu of 4.7 million inheritance tax

In Canada, we don't have inheritance tax. We can inherit any amount from our parents and not pay tax on it. This is not the case in other countries. For example, in the U.K. there is such a tax, and for families with huge estates the tax bill can be daunting. In some cases, trying to come up with the cash to pay the bill would actually mean selling the bulk of the estate itself.

One of the ways the U.K. government deals with collecting these huge tax bills is by accepting valuable artwork and historic collections instead of cash. The items collected this way may make their way into British museums, or may stay in their original locations in huge manor homes, as long as they are viewable by the public (these manor houses are open for public tours). This works for the taxpayer, who gets to keep the house, land and the rest of the goodies. It works for the government, which collects and preserves important items that document the history of the nation.

Of course this doesn't work for the average man in the street, who doesn't own a portrait of titled ancestors that he can trade to the tax man. Then again, the average man on the street doesn't owe several million in inheritance tax.

The Arts Council England has recently announced that it has accepted a portrait of the 5th Earl of Carlisle, painted 200 years ago and passed down through the family that owns Castle Howard in Yorkshire to settle an inheritance tax bill of 4.7 million pounds (about $8,000,000 Canadian dollars). Click here to read the story and see the portrait.

This seems to be a workable scheme in the U.K. where the huge, fabulous manor houses have stood for hundreds of years and are chock full of historic valuables. Here in Canada, our history is much younger and we never did have a system of lords living large up in the big house. We don't have castles dotting the landscape the way the U.K.does. There really is no possibility of setting up a similar system here. However, it's interesting to see how a system with inheritance tax affects the citizens. And of course it's interesting for us to get a glimpse into how the rich and famous live.

The attached portrait of Castle Howard accompanied the article mentioned, and is credited to Richard Watson/Getty Images.

Thursday, August 25, 2016

More interesting links added

I often spruce up the "Interesting Links" section of this blog, taking down anything that's outdated and adding new things I've found. Today I added links to:

  • probate forms for Nova Scotia 
  • probate forms for PEI
  • PEI Registry of Deeds
  • HeirSearch
  • Death certificates for all provinces and territories,and
  • a guide for determining whether a senior should give up driving.
Whenever you're searching for something, check out the links on that page, which are listed alphabetically. I'm always on the lookout for more forms, guides and other resources for executors, beneficiaries, and families.

Monday, August 22, 2016

Executor who wouldn't give info to beneficiaries to pay own costs of $80,000

The number one complaint I hear about estates is not about the cost or the time it takes. It's about the fact that executors refuse to part with information about the estate, even to beneficiaries with a legal entitlement to the information. Some executors hug estate information tightly to their chests as if they're being asked to give up their first born, and when pressed they become hostile and defensive.

We all know this leads to lawsuits but they do it anyway. Not all executors do this, by any means, but there certainly does seem to be an awful lot who do.

Beneficiaries who are tearing their hair out trying to find out information from an estate should take heart. There is a brand new case from Ontario in which the court refused to allow an executor's legal costs to be paid from the estate. This is a departure from usual estate litigation practice in which an executor who is working on behalf of an estate may pay the legal fees from the estate, and pays nothing out of his or her own pocket.

The reason for this decision is that the executor refused to answer reasonable questions from the beneficiaries and refused to deal with their reasonable concerns. It was only after the beneficiaries launched a lawsuit against the executor that they got some information. In the reasons for the judgment, the court said that the executor had caused the lawsuit by:
- not accounting for how he administered estate assets
- not answering specific questions until after a lawsuit was issued
- not being forthcoming
- failure to "exhibit timely candour"

According to the court, this behaviour amounted to the executor acting more in his own interest than in the interest of the estate, and therefore he could not rely on the estate to indemnify him. According to the case report, the legal fees for the executor were just over $80,000.

So executors might want to re-think their position of refusing to answer questions, unless they want to get stuck with a lawsuit and a huge legal bill.

Anyone who wants to read the case in full, click here (Brown v. Rigsby).

Age gracefully and free of parasitic progeny: Ethically Speaking

The title of this article grabbed my attention right away, since it deals with exactly the same things I have dealt with over the last 30 years: the potential for estate disputes and drama over Mom and Dad's estate.

The article was recently published by and is an opinion piece by Ken Gallinger, who writes about various matters from an ethical perspective.

Mr. Gallinger writes in this article about adult children who are, simply put, greedy. They are already angling for a larger share of their parents' estate while the parents are alive. Click here to read the article, which I believe you will find to be blunt and to the point.

One piece of advice given by Mr. Gallinger in this article is for aging parents to sell their home and use the proceeds to pay for accommodation in a seniors' facility. For some people, living in a care facility is necessary because of medical or other needs, and for a lot of us, selling the house is the only way care can be funded. However, I like the idea of selling the house even where living in other accommodation is a choice, not a necessity.

For one thing, selling the house would avoid that ridiculous, painful, idiotic practice of parents leaving one house to several children. As if there were any possible positive outcome to that plan. Parents simply have to admit that even when their children are not the "appalling" type mentioned in the article, leaving one house to several adults who all have their own families, jobs, and lives is just not going to work. Sell it. Split whatever money is left over after you've met your own needs. Nice and clean.

The other benefit to selling the house and downsizing is that the parents will be able to distribute much of the household furnishings and personal items. These personal items are the subject of thousands of estate disputes, whether the problem is dollar value or sentimental value. Why not head off those fights by giving away items while you are alive?

A lot of children are greedy; there is no doubt about that. But even in families where that's not an issue, parents should do what they can to avoid estate disputes that will pit the children against each other.

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