The farther away your executor is, the harder it is for your estate

We live in a very mobile society. Many of us have parents, siblings, or children who live in different provinces or different countries. For many aspects of our daily lives, it doesn’t make much difference, other than the difficulty in having regular visits. For estates, however, it makes a huge difference.

In Ontario, the courts have the right, at any time, to require an executor to pay a bond – basically, an insurance policy – to cover up to twice the value of the estate, in order to ensure that the beneficiaries are protected in the event that the executor disappears with the estate money. In practice, courts rarely ask for an estate to be bonded when the executor lives in Ontario. The further away the executor lives, however, the more difficult it gets.

If your executor lives in another province in Canada, usually they’ll be okay. If they live in a Commonwealth country, maybe they’ll be okay. If they live anywhere else – and that includes the United States – they will almost certainly be required to get a bond. This will result in increased costs to your estate, and will also make the entire administration take significantly longer.

If you have no one else, then by all means, pick an executor who lives further away. But if you have options, it is always better to pick Ontario resident executors.

Selling with a power of attorney

If you need to be away when your house is for sale, or if you become incapacitated or physically unable to sign paperwork, it is possible to sign by way of a power of attorney.

If you have an existing Continuing Power of Attorney for Property, this can be used to sell your home. If not, you can either create a new one, or sign a Limited Power of Attorney for Property that deals just with the specific property you are selling.

Either way, the power of attorney is registered in the local Land Registry Office so that it can be referenced on the sale document. You will need the original power of attorney; a copy will not do. Your lawyer will also likely want to talk to you, or to a doctor if you are incapable, to be sure that it is being used appropriately.

If done properly, powers of attorney can make a sale go much more smoothly in difficult situations.

Want to help the government pay its bills?

Then don’t do a will. In fact, don’t get any professional advice at all.

I regularly see issues in the way clients have things set up – whether that is how they are on title to real estate, beneficiary designations on investments, etc. Even if it’s just a matter of a will making it easier to avoid having to go through the probate process, if you have a will, you are likely to pay less in estate taxes.

Get a will, In the long run, you’ll save money.

A secured credit line is still a mortgage

Be aware. If you’re selling, and you have a credit line that you borrowed against your house, this must be paid off. Factor it in to your bottom line so that you’re not shocked when the closing date comes around. And if you’re buying, be prepared to see it get registered against your new home – you get that nice low interest rate because your house is security. Legally speaking, it’s a mortgage, and the bank will treat it as such.

Where is your will?

Florence Griffith Joyner was a famous and highly decorated Olympic athlete. She made a will. She told everyone that she made a will. She figured that she had done what she needed to do.

The problem was, she didn’t tell anyone where that will was.

When she died, no one could find the will. It’s entirely possible that it’s still sitting in a lawyer’s office, or that she locked it away in a safety deposit box at a bank she used for nothing else. And in the end, after a years-long fight between her husband and her mother, a third party was appointed as the executor.

It doesn’t matter whether you’ve made a will if your executor and beneficiaries can’t find it.

What does title insurance do?

In a recent real estate post, I discussed the need for a survey and why, often, it’s not as critical as it once was. The main reason for this is because of title insurance.

Title insurance, in a nice syllogism, insures your title. Basically, it protects you against issues that could come up to affect your ownership of the property that you did not or could not have found out about before your bought it – things like unregistered easements on your property, or encroachments from your neighbour’s property, or a prior owner doing work without a permit that would have normally not been permitted by the municipality. It also covers for fraud, in the event that someone impersonates you and puts a fake mortgage on your property or tries to sell it.

If you are getting a mortgage, you will almost always be required to get title insurance. Even if you aren’t, it’s usually a good idea – it’s low cost, and can give you peace of mind.

Fraud by Power of Attorney

A few weeks ago, two people were charged with defrauding an elderly woman in Clearview Township. They managed to commit the fraud through an abuse of a power of attorney.

There is a specific Criminal Code offence of theft by power of attorney. Section 331 of the Code states:

“3 Every one commits theft who, being entrusted, whether solely or jointly with another person, with a power of attorney for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds of a sale, mortgage, pledge or other disposition of the property, or any part of the proceeds, to a purpose other than that for which he was entrusted by the power of attorney.”

If you sign a power of attorney, it is very important to choose the right person to act for you. While none of us can control what that person ultimately does, the most important first step is picking someone who will always keep your best interest in mind – and not treat your money as their bank account, or decide to take what they consider their inheritance a little early.

Common law is not married

Period. End of story. In Ontario, common law spouses may be able to sue an estate for support, but they have no automatic right whatsoever to inherit if there is no will. It is harsh, but it is the law. If you are not legally married and most assets are not in your name, your partner needs a will or you will be left out in the cold.

Do you need a survey?

The answer is, sometimes.

If you can get a survey, they’re very useful. They can tell you all sorts of things – the legal limits of your property, whether there are any hydro or sewer lines, if there are any easements, even the proper location of a fence or your house. Often, however, a new survey isn’t available when you buy a house, if a survey is available at all.

If you are buying in an urban centre, the likelihood is that you don’t need a survey. It’s nice to have, to see where your lot lines are, but any encroachments from neighbours or easements that were never registered would usually be fully covered by your title insurance, so it’s not critical to have a survey up front.

Where it becomes more complicated is if you’re buying in a more rural area, and particularly if there are any questions about access to your property. Having a right-of-way to use someone else’s property to access your own can be a difficult matter to deal with; if it turns out that the travelled road is not where the legal description says it should be, the other owner doesn’t have to let you continue to use the travelled road. And then you could get stuck with no access to your property.

If you’re buying a subdivision house in town and there’s no survey, talk to your lawyer but you probably don’t need to worry. If you’re buying anything out of the ordinary, you may want to think twice before agreeing to not have a survey.

Plan for conflict, and hope it doesn’t happen

A recent TD Wealth survey found that 44% of planning professionals believe that family conflict is the biggest threat to estate planning today. And I think that’s absolutely correct.

In my personal experience, the estates that have the most difficulty are the ones where the parties don’t get along. Even if everything is being managed perfectly and properly, personal conflict will lead one party to hire their own lawyer, and sometimes even to start a lawsuit against the estate. Sometimes this even happens between executors who can’t get along. It wastes a huge amount of time and money that should be going through the estate to the beneficiaries.

The best advice that I can give if you must choose more than executor one is to choose executors who will get along, and to tell your beneficiaries ahead of time what your plans are. Processing it all now means fewer problems down the road.