What happens if there is an error on the will?

I recently helped a client get probate for her mother’s estate. The will had been done years earlier, and unknown to everyone involved, the pages were accidentally misnumbered to be missing one number – so while there were no pages missing, it appeared that page 5 was not there. Thankfully, we were able to get the lawyer who drafted it to sign an affidavit that there was no page 5 and it was simply a typo, and were able to get probate for the estate.

We all make mistakes; none of us is immune. For minor errors like this, it is often possible to explain the situation to the court and have probate approved. If there are more serious errors, it may require a formal hearing to address the issue. Either way, just because there is an error is not fatal to a will.

Do you have a right to see the will?

Only if you’re named in it. If you think you might be a beneficiary, it can be helpful to have your own lawyer contact the executor to see if they would be willing to share the will with you, but ultimately, if you are not named in it, you have no legal right to see it.

Just in time for taxes: do you need a clearance certificate?

First, what is a clearance certificate?

If you are acting as the executor of an estate, you will be required to file a tax return for the year of death. Once you have that back from CRA, you can apply for a clearance certificate, which gives CRA a final chance to audit the deceased person.

Generally, you will want to apply for a clearance certificate, because it gives you peace of mind that there are no further taxes owing. This is especially true if you are the executor but not the sole beneficiary, but even if you are the sole beneficiary, it can be helpful to know that CRA is not coming back to you while the estate money is still separated from your own. Ultimately, this is a discussion to have with your lawyer and accountant.

For a great post on this, check out this.

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.

Don’t Forget Your Furry Family Members

Many of us consider our pets to be members of our family. Some have taken this idea even further, actually left their entire fortune to their pets on their death. An example of this is Karlotta Leibenstein. Ms. Leibenstein was a German countess and multi-millionaire who left $80 million to her dog, Gunther III. This fortune was inherited by Gunther III’s son, Gunther IV, who is now worth over $400 million. You can read more about Gunther IV and his luxurious lifestyle here (he owns a property in Miami that once belonged to Madonna). While you might not be able to leave your pet millions of dollars, you can set up a pet trust for them in your will.

Under Ontario law, pets are considered as property. As such, your executor will have the right to decide what happens to your pets. Your executor would have the power to choose where your pets go and can even decide to take them to a shelter or put them to sleep.

If you do not have a will, you will not be able to decide who will care for your pets after your death. The courts will appoint an executor for you. This person will be chosen from the members of your family who step forward to act as executor. The person that the court chooses might not be the person you would have chosen to act as your executor.

One way to protect your pets is to put a pet trust into your will. A pet trust will arrange for any pets to be cared for after their owner’s death. By planning ahead, you can ensure that your furry family members are cared for after your death.

Can I get a witness?

When preparing your own will, it is easy to overlook some legal formalities that could cost you (or others) much more than you think. One of these is having proper witnesses for your will.

It is a requirement to have two witnesses to witness your signature on a will. If this requirement is not met, it would require a court application to determine if the will is valid. If the will is not valid, then a previous will or intestacy laws would determine who inherits.

There are also restrictions as to who can be a witness on a will. If you are a beneficiary under the will and you are also a witness on the will, the gift that was left to you as beneficiary is no longer valid. This offers protection for will drafter in case the beneficiary is forcing you to sign the will. While it might not be your intention, you could prevent someone from inheriting their gift, or they could have to take legal action to inherit under the will (costing them money).

Under a holograph (handwritten) will having witnesses is not a requirement. This type of will can come with its own set of problems though in relation to witnesses. A handwritten will must be entirely written in your own cursive handwriting (not typed, printed or handwritten by another person). Your handwriting must then be properly identified by someone, which could require previous writing samples or could even involve hiring a handwriting expert to identify your handwriting. All of this would be submitted under a court application to validate the will, costing more money.

All this said, using a lawyer to draft your will provides you with an expert who can avoid these legal pitfalls and help save you money in the end.

Anthony Bourdain: No reservations, and no updated planning

Anthony Bourdain tragically died by suicide recently. Also tragic: he did not update his estate plan after his separation, which means that his estranged wife will be managing his estate. Perhaps this is what he wanted, trusting that she would manage things appropriately; more likely, he got busy and forgot, or didn’t realize that he had left her in charge.

In Ontario, as in many places, neither divorce nor separation revokes a will. Unless you make an effort to do a new will, for the most part, everything will stay the same.

If you are going through a change in relationship – entering or exiting – you need to change your will, too.

An executor’s checklist

You’ve been chosen as an executor. Now what?

When you act as an executor of a will, there is a lot to do. From arranging for the burial and funeral, to applying for probate if necessary, to paying taxes, to managing assets, being an executor is a proper job. If you aren’t getting advice, you should be.

You can find our checklist on acting as an executor here.

A little preparation goes a long way

If you ask most people, they would prefer that none of their hard-earned assets end up wasted on taxes or professional fees, or simply squandered, when they are passing them on to the next generation. Unfortunately, however, these things often happen, especially as estates get bigger – and we’re often worth more dead than alive, so estates are always getting bigger. Here are some ways to help prepare your heirs to inherit:

  1. Share assets during your lifetime. Gifting money to your children now allows you to see it enjoyed. It also allows you to see whether they will spend it wisely.
  2. Set up a trust. While there can be some tax consequences to trusts, they can also have a lot of benefits if set up for the right reason and in the right way. Always speak to your accountant, financial planner and lawyer before making the final decision, but where they make sense, they can allow you to save significant time and money transferring assets on your death, and can protect those assets from your heirs’ ex-spouses and creditors.
  3. Teach them about money. It’s never too late – or too early – to start learning. My two-year-old plays with his cash register and is learning about how many “coins” it takes to buy “milk” but we will be teaching him with real money before too long. Even if your children are adults, if you’re concerned about their ability to handle money, you can always still teach them. This also applies to grandchildren.

Estate planning is not a set-it-and-forget-it situation. Ensuring your assets don’t disappear the moment you die can require a bit of work, but it’s worth it.

 

 

 

 

Foreign executors

bridge-1I have many clients with children who live abroad. This makes things complicated when they want to have their child who lives in England or the United States act as the executor of their estate, because the courts in Ontario have broad powers to require what is called a bond. Basically, the courts can say that the executor has to pay into court an amount equal to the value of the estate; executors can get around this by buying a bond, or a type of insurance policy, to cover the amount. The cost of the bond is not reimbursed when the money is released from the estate to the beneficiaries, so it is a loss to the estate.

Generally, the court will not require a bond if the executor is in Ontario, other parts of Canada, or even a commonwealth country such as England or Australia. Generally, the court will require a bond if the executor is anywhere else.

If you are thinking of naming a foreign executor, in addition to the difficulty of acting from afar, keep bonding in mind.