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.

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.

Celebrate Good Times

For many people, a major change in your life is a time for celebration. Maybe you recently got married or had a child or won the lottery. First of all, congratulations! Secondly, while this is a time for celebration, it is also an important time to check your will. You might not think to do so, but many major events in your life can impact your will.

A change in your marital status can significantly impact your will. If you get married, any existing will that you have has now been revoked (unless that will specifically states that the will is made in contemplation of your marriage to that individual). This means that your existing will is treated as though it no longer exists. Similarly, if you get divorced, any existing will that you have has now been revoked. Separation from a spouse does not revoke a will, meaning that your spouse can inherit under your will and could still be appointed as your executor.

It is also important to keep track of your assets in case those substantially change. If this is the case, your will might have to be updated to reflect these changes.

So if you just went through an exciting major change in your life, celebrate it, but also get your will updated if its necessary.

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.

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.

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.

Do you know how to pass on your digital assets?

Many of us don’t see a whole lot of (if any) monetary value in our digital assets – there’s not much to gain in a Facebook or email account. However, there is always a possibility that there could be significant value to a digital asset, and either you don’t know, or your executor doesn’t know.

Do you have a gaming account? What about money stored in an eBay or PayPal account? A blog that creates defined value for your business? An e-commerce site? Music or video files purchased through an online store such as iTunes? Most difficult of all, digital currency, such as Bitcoin?

There is currently no law in Canada that allows your executor to access any of your digital assets. If you have anything at all that you would want your executor or beneficiaries to have access to, you must have a will.

Without proper advice, mistakes are all too easy to make

I see it all the time – people look on Google, find something that seems to make sense, and follow it through without getting advice from a professional. And then, when the action they took turns out to not have the same result in the place where they live as it did in the place where the blogger or journalist lived, they end up paying way more than they would have to just leave things be. Here are some common ones:

  1. Not naming a backup beneficiary for life insurance or registered investments. It’s great if you’ve named your spouse, but what if you die at the same time? Naming an alternate (or contingent) beneficiary means that this money will pass outside of your estate, and not be taxed.
  2. Gifting property (including adding a child to your deed). Always, always, always get advice from a lawyer and accountant before doing this. There are more dangerous than can be stated in a blog post.
  3. Designating registered investments through your will. This can be set up properly, but there is a specific way to do it – if you’re not using a lawyer, you can run into a lot danger, and end up with taxes owing on them because they accidentally pass through your estate.
  4. Putting severe restrictions on inheritances in a will. More often than not, they’ll be found to be invalid.
  5. Leaving assets to minor or disabled beneficiaries without setting up trusts. They could squander the money, or they could lose valuable benefits. It’s always best to have a professional do your will; it’s vital if your beneficiaries need any assistance at all.

This is a complicated area of law. Be careful.