During Hull on Estate and Succession Planning Episode #40, Ian and Suzana discussed issues surrounding the conclusion of the Family Conference, including tax matters, unapproving family members, implementing drafts and bullet-proofing your estate plan.
During Hull on Estate and Succession Planning Episode 39, we continued our discussion on the Family Conference, focusing on the actions to be taken in regards to non-participating family members. We also discussed the importance of documentation and defined will challenges.
Amidst the hustle and bustle of preparations for the holiday season, I'm always amazed by the kinds of matters that can bring a sudden reality check to our situations and to life in general.
Recently, after having attended the funeral of a friend of the family, I had my own reality check. Pat, a remarkable 37-year old woman, passed away after a courageous 2 and a half year battle with breast cancer. Pat was survived by her husband and two beautiful children, a daughter and a son. Learning about the amazing legacy that Pat left behind, I started to consider the legacy which I was creating and what it was that I hoped one day would be said at my funeral.
So often, we get wrapped in all the little things that, in the grand scheme of things, really do not matter. Struggling to maintain the professional and home life balance is challenging at best, but, in the end, nothing can be more fulfilling.
Everyday, we deal with clients who are either trying to create an estate plan for themselves or deal with the one that has been left to them. The whole area of estates and trusts is premised on the desire to deal with our material possessions for the benefit of others when we are gone. Sometimes, however, the emotional legacy that we leave behind is much more important than the financial one.
All the very best,
Suzana.
During Hull on Estates Episode #39, Jason and David discuss considerations that apply when beneficiaries seek to remove the trustee(s) of an estate. They discuss a factual situation involving a trustee who engages in questionable conduct and the various recourses available in an application for the trustee's removal.
We thought it might be a good idea to follow up on the recent trends in legal blogging. One interesting blog is posted fairly regularly by Doug Jasinski , who writes an insightful blog about lawyers generally.
In his recent December 4, 2006 blog, Doug touches on the ever-important life balance that lawyers must maintain. He takes us to a recent study done by a group called Catalyst , who wrote a report: Beyond Reasonable Doubt: Lawyers State Their Case on Job Flexibility. The study involved 1400 lawyers and there were some helpful tips on what it means as a lawyer to have “flexible work hours”. Obviously, the use of technology plays an important role in allowing a fuller balance between family and work for many lawyers. We encourage you to take a look at this study.
All the best, Suzana and Ian.
When looking at the myriad of issues and problems that are created with succession planning for a family business, it is often forgotten that the family member who has been charged with (or readily accepted) the job of carrying on the family business is not him or herself particularly happy with the proposed division of the estate.
The question of "fair but not equal" is often a lifelong struggle for those who want to pass on a family business. In some cases, there is simply not enough money to fund a relatively equal division of the estate, as the core assets of the estate are tied up within the family business.
In certain situations, the non-participating family business members are treated in a "fair manner" by being given, for example, the proceeds of an insurance policy as opposed to the family business on death. The child who is charged with running the family business may not see that as being particularly fair. He or she may feel that for him or her to financially succeed, he will have to work in the business for the rest of his life, while the other siblings who are receiving fixed assets simply have to wait for the estate to fall in and they do not have the same lifelong work commitments to fulfill.
Continue Reading...As we continue to look at the non-tax issues in estate planning, we are struck by the fact that many families do not see, or possibly are not prepared to face, difficult emotional issues which are easily identified and almost certain to bring about considerable family tension.
For example, we recently worked with a family who a substantial family business and, in many respects, the birth order of their children was the reason for the resulting family tension. The couple had two children and then fifteen years later had twins. Within the family unit itself there was such diversity of interests between the two generations of children that tensions ensued. The chief emotional officer, the father in this case, died at a reasonably young age and therefore the family was left with a wide variety of ages of children (plus a surviving widow) and their different financial interests were similar to an almost three generation (i.e. parent, child, grandchild) scenario. The financial interests of the younger children versus the older children were so different, tension within the family was created upon the death of the father, the chief emotional officer.
In this case, simply the issue of birth date order alone, combined with the desire to pass on a family business, is enough to alert someone to carefully work through their estate plan.
If something as simple as birth date order can cause tension, possibly litigation, and emotional chaos within a family, one can easily see the need to carefully consider the non-tax issues in almost any estate plan.
An important and helpful "first step" in the process of trying to avoid the "train wreck" is to begin the process of holding regular and productive family meetings.
In future blogs, we will look at further non-tax transition issues.
All the best,
Ian & Suzana.
Continuing with our consideration of non-tax issues in estate planning, we turn to the reality that, notwithstanding the importance of non-tax issues, taxes are important. We will typically initiate our advice on these tax-related issues by reminding our clients that they need to think "outside the box" and leave the tax issues to the professionals. In our experience, if you let the tax issue drive the advice, you overshadow the non-tax issue at great peril to the family succession plan.
Obviously, an important initial determination that needs to be made at the outset of creating a succession plan is to decide whether or not you plan to pass the business on (to family members or a trusted employee, for example), liquidate the business, or sell the business to a third party.
Once the preliminary determination has been made in respect of the future of the business, then one needs to look at the issues from two important but separate perspectives. One from the ownership vantage point and the other from the managerial view. In family-run businesses it is especially important to separate the two perspectives and to approach the business and succession planning issues from both of these viewpoints on a separate and analytical level.
An example of the importance of separating these two aspects of decision-making is when the ownership of the business is being passes on to younger family members, yet the management is being maintained by existing non-family senior managers.
Continue Reading...During Hull on Estates Podcast #38, we discussed provisions that may be included in Orders Giving Directions.
For our next few blogs, Suzana and I thought we would like to highlight some interesting aspects of the non-tax side of estate planning. Unlike the typical tax driven context upon which estate planning is often pursued, matters related to non-tax issues are not governed by reasonably strict and identifiable tax rules and regulations.
Creativity is the name of the game and often that must be combined with the fundamental tax planning and considerations in any event.
In some cases with the transfer of wealth included in one's assets are a family-owned company. As such, you need to consider four important challenges: strategic, succession, financial and family challenges.
An important starting point when considering the issue of succession planning is to determine, from your client's perspective, just what succession planning really is. Succession planning has been defined as the "process of creating and implementing a strategic plan for the family business that is designed to mesh the emotional and financial needs of the owner, family and the key employees, with the needs of the business as a viable ongoing entity".
Continue Reading...During Hull on Estate and Succession Planning Episode 38, we discussed the process for ensuring a successful family conference including:
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During Hull on Estate and Succession Planning Episode 37, we discussed the steps that are followed during a Family Conference including:
During Hull on Estates Episode 37 we discussed:
The term “Elder Abuse” has become increasingly prevalent in the media over the past few years. The term means different things to different people. Television programs and feature articles in newspapers have occasionally chronicled tragic occurrences of physical mistreatment of residents of long-term care facilities.
Apart from such physical abuse and neglect of the elderly, financial abuse is also increasingly reported in the media. Terms such as “scam artist” and “predator” are commonly invoked to describe those who seek to defraud the elderly. Police forces in urban centres commonly have investigators exclusively assigned to the protection of the elderly (and others) from such threats. The Public Guardian and Trustee has a similar mandate in the civil context. In Toronto, the Advocacy Centre for the Elderly has the protection of the elderly as one of its mandates.
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