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Lessons from the Rich and Famous

Posted in Uncategorized

In the aftermath of the death of beloved comedian Robin Williams, minds will at some point consider the actor’s legacy. Recent celebrity deaths, such as James Gandolfini or Philip Seymour Hoffman, have brought light to public interest in what happens to celebrities’ fortunes upon their death.

The news has faithfully followed some of the more sensational battles, such as that of Anna Nicole Smith, and the public thirst for it continues. Now, a cable channel has capitalized on television watchers who want to know what happened with some of the lesser-known celebrity estates.

Celebrity Legacies seeks to expose “how rich the famous actually were when they died and the surprising fortunes being made years after they’re gone”. It also outlines what claims were made and who got paid out in the end.

A review of the new show on Forbes.com, after its premiere August 5, used the opportunity to remind readers that these extraordinary cases can act as lessons for us all. Danielle and Andy Mayoras point out, in the article, how celebrities make the same mistakes in their estate planning as everyone else.

Regardless of whether leaving behind a modest or sizeable estate, disregarding heated subjects or substantial details can mean a world of difference in the administration of your estate after passing.

An interesting part of the show’s description is that it takes a look at how some celebrity’s fortunes have grown after their death. In the realm of arts and entertainment, payments like royalties can allow a substantial amount of money to be paid into an estate after the actor/musician/artist has passed. If the estate is profiting post-mortem, however, it can also lead to a significant amount of litigation.

Thank you for reading,

 Suzana Popovic-Montag

How to protect your children from “Affluenza”

Posted in Uncategorized

People from varying age groups, countries and walks of life were all shocked last week when the news broke of Robin Williams’ unexpected death. Despite living with his own personal battles, Mr. Williams made the lives of others happier through his quick wit and charming ability to make the people around him laugh. For instance, on the day before his own death, Mr. Williams took the time to skype a terminally ill young mother in New Zealand who had hoped to meet the actor before she died. This heartwarming video exemplifies just how thoughtful Mr. Williams really was.

Mr. Williams’ concern for others is also reflected in his estate planning. A recent Market Watch article entitled “Did Robin Williams get it right on kids’ trust?” discusses how Mr. Williams wanted to protect his children from “affluenza” – the hazardous situation in which children receive a massive inheritance all at one time when they are too young to prudently manage it.

In order to guard his children from such a situation, Mr. Williams settled an insurance trust in 2009, under which his adult children [Cody (22 years old), Zelda (25 years old) and Zachary (31 years old)] were each to receive segments of their respective shares at the ages of 21, 25 and 30. It is important to note that this trust was no longer a part of Mr. Williams’ estate plan at the time of his death; however, the article uses it as a starting point in its analysis of how one can protect their children from the perils of “affluenza”.

More specifically, the article raises some interesting considerations that should be made by high net value individuals when estate planning. These include: (i) whether assets should be gifted to their adult children while the individuals are still alive in order to protect the estate from future taxes, (ii) whether assets should be given outright or held in trust, and (iii) if held in trust, when, if ever, their adult children should be entitled to the capital.

Though most people do not have as high of a net worth as Robin Williams did, such considerations are still relevant when contemplating whether to settle a trust for adult children.

Thank you for reading.

Andrea Buncic 

Where There is a Will There is a Way

Posted in Estate & Trust, Wills

We have all heard the story of the shoemaker’s children, where the shoemaker, so preoccupied with making shoes for the town’s feet, forgets to address his own family’s needs. The shoemaker keeps putting ‘make my family shoes’ at the end of his to-do list and never seems to quite reach the end of his list. Unfortunately for his family, this leaves them barefoot, despite his best intentions.

When our lives get busy, our own personal matters can often be overlooked. Even lawyers themselves are often remiss in getting to their own estate and Will planning. While writing a Will inevitably requires us to consider the prospect of our ultimate demise, which is certainly unpleasant, this shouldn’t mean this important act gets relegated to the bottom of your to-do list.

We’ve previously blogged about the importance of having a Will here and here, however I recently came across a fun article written by Thomas William Deans, PhD, on his blog at willingwisdom.com. The article is titled Top 10 Reasons You Should Never Write a Will. But don’t let the title deceive you; in his article Deans uses sarcasm to remind us of the ultimate importance, and value of having a Will.

Here are a couple of his powerful passages:

“1. You have spent a lifetime working, saving and generally deferring consumption to fund your retirement. Now that your money has outlasted you, it will be awesome to see how the government divides your assets. Governments always make amazing decisions about other people’s money.

9.  If you die (I say “if” because you may be the first to live forever) the grieving process is enriched when family hunts through your personal files and possessions in an attempt to figure out what you owned. This is like a scavenger hunt but with more zeros. After the hunt, some might say they’d like to bring you back from the dead and kill you themselves – but they’re just having fun. This is a game the whole family can play. In truth, it’s a game the whole family will play because everyone wants to make sure others get more.”

There is nothing like a little sarcastic humour to emphasize the importance of making a Will.  Have a read. I think you will agree that Mr. Deans’ satire is most persuasive. 

Thank you for reading,

Ian Hull

Bringing Awareness to Death

Posted in Estate Planning, In the News

I recently came across two vastly different approaches with respect  to increasing awareness around death.  As this is an obvious foray into estates, these activities clearly shed light on estate planning and end of life decisions.

Death Dinners

As the title indicates, a website called Let’s Have Dinner and Talk About Death invites individuals to discuss end of life over the dinner table.  As the founder indicates, the idea for choosing the dinner table is because it is the most forgiving place for difficult conversations.  The website offers talking points, reading material, and advice on proper invitations to broach death dinners.

Accordingly, participants are encouraged to confront real-life issues surrounding death and dying that many people generally shy away from.  Conversations about the use of feeding tubes, or funeral arrangements are an example of such discussion issues.  Wishes of this sort are often found in living wills/advance directives, and Wills.

These types of discussions can be especially important given that a study in the USA suggests that 70% of adults do not have a living will and 30% of people aged 65 years and older do not have a Will.

Death Simulator

An alternative approach to death dinners, set to open in China, is a Death Simulator attraction, which gives participants the experience of dying.

Samadhi – 4D Experience of Death‘ is an escape room game that uses dramatic special effects with the aim of giving players the experience of death.  Apparently losers of the game are cremated, which uses hot air and light projections to create an authentic burning experience, and then transferred to a soft, round capsule, signifying rebirth.

Apparently this type of experience is already popular in South Korea.

One of the creators volunteered in a hospice and from this learnt that few people wanted to confront the idea of death.  Unlike educational programs that teach you to be rich and successful, there are no such model answers in life and death education, the creator notes.

While I cannot admit to having such a discussion or experience as of yet, given that I do enjoy dinner parties and video games, perhaps this is in fact an interesting way to increase awareness around death, and the decisions that derive from it.

Noah Weisberg

Providing Support Under the SLRA

Posted in Estate & Trust, Litigation, Support After Death

Although not a recent case, the 2005 Ontario Superior Court of Justice decision in Ivanic v. Ivanic Estate provides an interesting interpretation under Part V of the Succession Law Reform Act with respect to the provision of support immediately before death.

In order to obtain support under Part V of the SLRA, s. 57 requires a claimant to demonstrate that not only are they a dependant of the deceased,  but in addition “…the deceased was providing support or was under a legal obligation to provide support immediately before his or her death” [emphasis added].

The Ivanic Estate, which was heard in Guelph, Ontario, involves, inter alia, a claim brought by Pearl (the separated spouse of the deceased) for a $60,000 lump sum support payment.  Under the deceased’s Will, the entire Estate was divided equally amongst their two adult children.  Pearl was not a beneficiary under the Will.

Although not formally divorced, Pearl and the deceased were separated and lived apart from each other from approximately 1969 up until the day of the deceased’s passing.  Nonetheless, Justice Herold found that Pearl met the definition of a dependant.

Turning to the issue as to whether the deceased was providing support immediately before his death, Pearl’s counsel identified that at least as of April 2001 (approximately 18 months before the deceased’s date of death) Pearl was a recipient of the deceased’s family plan for extended health benefits made available by his former employer, the Ford Motor Company.

In reply, counsel for the respondent beneficiaries proceeded with two arguments.

Firstly, it was argued that health benefits are not ‘support’.  Herold J. did not agree and considered that the “…provision of health benefits to a spouse from whom one is separated is a form of support sufficient to satisfy that party of the definition”.

Secondly, it was argued that even if the health benefits are considered ‘support’, it was not the deceased who was providing it, but his employer.  While Herold J. admits to finding this argument appealing, he nonetheless indicated that if not for the deceased and his union bargaining for that benefit, his employer would not have offered to pay Pearl’s extended health costs.  Furthermore, the deceased elected family coverage.  He therefore concluded that “…he was providing a benefit, indirectly though it was, in a form which can be considered support to Pearl immediately prior to his death”.

Therefore, it may be possible to conclude that payments made by an employer to a dependant, on behalf of the deceased, satisfy the requirements under s. 57 of the SLRA.

Noah Weisberg

Superior Court Decision Considers Removal of Estate Trustee

Posted in Estate & Trust, Trustees, Wills

A recent Ontario decision, Virk v. Brar Estate (“Brar Estate”), released last week, is an example of how seriously the court considers its role in fulfilling a testator’s wishes.

The court had to decide, in this matter, whether to remove the estate trustee, as appointed by the testator in his will, from his role due to questionable actions he undertook and animosity with the testator’s former wife.

Rule 75.04 of the Ontario Rules of Civil Procedure is the authority for the court to revoke the certificate of appointment of estate trustee and section 5 of the Trustee Act gives the court authority to appoint a new trustee.

Case law and legislation have both provided guidance when the court is faced with contemplating the removal of a named estate trustee. While each case is to be decided on its merit, guidelines emphasize that courts are not to take the testator’s choice of trustee lightly. There must be a clear necessity to interfere with removal and the removal should only occur if it is clear there is no other course to follow. Executors should not be looked over simply because they are of bad character or there is friction among legitimate co-executors. However, other reasons may exist for their removal- for example, a conflict of interest (Re Becker).

In Brar Estate, the court believed the estate trustee’s conduct and animosity rose to the level of court intervention (factors included a lack of communication and notice to a claimant and a breach of trust), but it ultimately did not grant the application for removal.

The release of this recent decision may act as a reminder to those acting as estate trustees, as well as to practitioners, that while beneficiary interests are very important when acting to administer an estate, the testator’s wishes are also crucial. A testator’s wishes in naming an estate trustee are to be upheld in the same manner as their wishes in distribution of assets.

Thank you for reading,

Suzana Popovic-Montag

The Giving Pledge

Posted in Charities, Estate Planning, In the News

Warren Buffet, Bill and Melinda Gates, Mark Zuckerberg, and Elon Musk are undisputedly household names known throughout the world for their cunning business knowledge, entrepreneurship, and of course their vast fortune.  However, an additional trait shared amongst them all is their charitable spirit.  This is best exemplified through The Giving Pledge, which is a commitment amongst the world`s wealthiest individuals to dedicate the majority of their wealth to philanthropy either during their life or in their Will.

While watching The Giving Pledge segment on one of my favourite TV shows 60 Minutes, I was not only intrigued by the proverbial all-star cast of participants, but a few are named above, but more so their unified desire to `transfer their wealth`.  Although there is no set amount as to how much each participant should give, it has been assumed that the ‘majority of their wealth’ is at least 50%.  Suffice to say, as the Giving Pledge is specifically focused on billionaires (or those who would be if not for their giving,) parting with their wealth will likely have a profound positive impact on society.

One of the reasons for making the Giving Pledge public is to bring attention and awareness to philanthropy.  The topic of charity on the Hull & Hull LLP Toronto Estate Law Blog is quite a popular topic as it has much interplay with Estate law.  While it is unlikely that many of us will be in a position to join the Giving Pledge any time soon, reading the pledge letters is nonetheless encouraging in the pursuit of philanthropic and charitable activities.

Should you decide to pursue philanthropic/charitable activities, the Giving Pledge provides some useful discussion points:

  • One of the signers is Sara Blakely, the founder of Spanx.  Interestingly, in an article found here, Ms. Blakely sat down her minor son and advised that she would be giving away at least half of her money and that she hoped he would one day understand.  Relating this to estate planning, although advice should always be sought from an estate solicitor or professional, it is worthwhile to consider discussing estate plans with family members and potential beneficiaries to address any ‘issues’ while living.

 

  • Although the Giving Pledge refers to the use of Wills, there are various tools available, such as a charitable remainder trust, to not only ensure that wishes are complied with, but to take advantage of tax allowances.  Again, advice should always be sought to determine which tool is best suited given the circumstances.

Noah Weisberg

Hull on Estates #386 – Practices for Solicitor-Client meetings

Posted in Hull on Estates, Hull on Estates, PODCASTS / AUDIO, PODCASTS / TRANSCRIBED, Show Notes

Listen to Hull on Estates #386 – Practices for Solicitor-Client meetings

Today on Hull on Estates, Andrea Buncic and Jordan Atin discuss prudent practices for Solicitor-Client meetings. If you have any questions, please email us at hull.lawyers@gmail.com or leave a comment on our blog page.

Click here for more information on Andrea Buncic.

Click here for more information on Jordan Atin.

Comparative Commonwealth Inheritance Taxes

Posted in Estate Planning

With Nick Esterbauer’s recent blog post on the UK inheritance tax debate, I thought it might be helpful to compare the various inheritance taxes found in commonwealth countries (and one ex-commonwealth country) around the world.

As Nick explains, estates valued at less than £325,000 (around $600,000 CAD) in the United Kingdom are exempt from the inheritance tax.  Estates whose value exceeds this amount, however, are subject to an inheritance tax of 40%.  That rate can be reduced to 36% if 10% of the estate is left to charity.

The United States’ federal estate tax exemption vastly exceeds the United Kingdom’s at $5,340,000 in 2014.  If the gross estate surpasses this threshold, then it will be taxed a rate of 40%.  This means that most estates in the United States are exempt from the federal tax.  However, individual states often have their own estate taxes with lower thresholds and lower rates of taxation.

Canada does not have an estate tax.  Instead, in Canada an individual is deemed to have transferred all of their assets immediately before their death at fair market value.  A terminal tax return is then filed by Estate Trustees for the deceased`s estate, and taxes are paid on capital gains.  Individual provinces have their own estate taxes as well.  Ontario has an estate administration tax which charges $5 for each $1000 for the first $50,000 of the value of the estate, and $15 for each $1000 exceeding $50,000.

South Africa has an “Estate Duty” which is payable at a rate of 20% of a dutiable estate exceeding R 3,500,000 (around $350,000 CAD).

Australia has no estate tax but assets transferred to a charity, superfund or foreign residents may be subject to the capital gains tax.

New Zealand, India and Singapore have abolished the estate tax.

Thank you for reading,

Ian Hull

Toronto Maple Leafs let Hamilton man down one last time

Posted in Funerals, In the News

Following the death of a resident of Hamilton, Ontario several weeks ago, readers of newspapers in which his obituary was published found themselves in for an unexpected laugh.

As requested by the man prior to his death, the conclusion of his obituary read:

It was Terry’s last wish that his pallbearers be the Toronto Maple Leafs so that they could let him down one last time.

Such a wish made by a person prior to their death, whether expressed orally or in writing within a self-written obituary or a Last Will and Testament, is not legally binding on his or her estate trustees or family members who will plan the funeral.  Ontario case law supports the authority of an estate trustee to make any funeral and burial arrangements, so long as arrangements are not “inherently inappropriate”.

Even in situations where an individual goes to lengths to plan his or her own funeral, an estate trustee has discretion to make alternative plans, with no obligation to follow the instructions left behind by the deceased.

Nevertheless, the Leaf fan’s survivors obliged and his pallbearers donned Leafs jerseys as they carried the man’s casket through the cemetery, letting him down one last time.

Have a great weekend.

Nick Esterbauer

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