Reasons Why an Estate Plan Can Go Awry - Hull on Estate and Succession Planning #146
Listen to Reasons Why an Estate Plan Can Go Awry
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss the reasons why an estate plan can go awry and how to address these issues.
The reasons include the concept of an acrimonious extended family member, intransigent family members, making sure you have properly drafted documents and the choice of your estate trustee or personal representative.
If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.
Reasons Why an Estate Plan Can Go Awry - Hull on Estate and Succession Planning #146
Posted on January 7th, 2009 by Hull & Hull LLP
Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag that will provide information and insights into estate planning in Canada. From the offices of Hull & Hull in Toronto, here are Ian and Suzana.
Suzana Popovic-Montag: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to episode 146 of our podcast on Tuesday, January 6th, 2009.
Ian Hull: Hi Suzana.
Suzana Popovic-Montag: Hi there Ian, Happy New Year to you.
Ian Hull: Yes, Happy New Year to you.
Suzana Popovic-Montag: It’s a couple of days into the New Year but it’s great to be back on Hull on Estate and Succession Planning. Just a quick reminder to any of our listeners who have any feedback or any comments they’d like to share with us to feel free to provide us with those comments at hullandhull@gmail.com.
Ian Hull: And our daily blog is still going strong at estatelaw@hullandhull.com.
Alright, Suzana, well transitioning from our last podcast but also into the New Year of ’09, let’s talk about a couple of more trigger points that we can easily identify that tend to be the starting point of going down a very bad road with estates, and that is, where things get contentious and where things go off the rails. And some ideas, we got to the top four reasons why an estate plan can go awry and go sideways. Let’s see if we can get the last few in here today to really get a sense of why its so important that we use our trigger point of 2009, early 2009, to revisit and consider what we’re doing with our estate plan.
Suzana Popovic-Montag: That’s a great idea, Ian. And what I think maybe we could start today’s podcast with in terms of these top, whether you say 8 or 10, points of why an estate plan can go bad is to start with the concept of an acrimonious extended family member. And I say that because that’s sort of one of those trigger points that we see quite often in our experience where it may not necessarily be the immediate blood relatives that are fighting, but it may be that second generation, it could be that step situation, it could be someone other than the direct players involved, who could cause some difficulties.
Ian Hull: Well that’s a really good point and it comes back to in our last podcast, you talked about the importance of doing a plan, number one. The importance of really maintaining it and keeping it current. And obviously family members come in and out of your life and some of them are more acrimonious than others at different times in your life, so that’s another good reason to keep it current. And you also talked about making sure you get good advice and good advisors who might alert you to these problems. Someone might say to you, geez, you know, you’re in a situation now where there’s a shareholder dispute potentially coming on, and did you realize that the two main shareholders are now getting married and do you want to tell me how those relationships are, and those kinds of things? So identifying as your life moves along to keep your plan current because the facts changing can affect your estate plan.
Alright, so what’s another sort of offshoot of that as well, I guess, in terms of we’ve got acrimonious where we know we’ve got a tense situation with some of the family members and we have to manage that?
Suzana Popovic-Montag: I think an offshoot of that, as you say Ian, would be intransigent family members. So the direct blood relatives who are just sort of putting their foot down and saying, you know what, no this is not acceptable, or I don’t want this or this wasn’t intended. And those people can be particularly difficult to plan for because it’s so much more than just the financial impact of that kind of relationship, or that kind of difficulty. Because there is the emotional considerations that underlie that as well, which can be really difficult to plan for but certainly something that I think we should be alert to.
Ian Hull: Okay. So managing the family is a huge part of this. What’s another way, I think we’re probably at number six. What would be your seventh top ten reason, and I think we’re dealing with kind of offshoots of all of these, but you told us about intransigent or acrimonious family members. What’s a way to diffuse that, or help diffuse that?
Suzana Popovic-Montag: Well Ian, we talked in the past on previous podcasts about the concept of a family meeting where the need for full disclosure, you can call it whatever you want. It could be very, very fluid in terms of how you actually apply it. But the truth is, I think, that people really need to be as honest and forthright as they can in their estate plan. And you really do need to disclose things. Maybe things that you wouldn’t necessarily or even traditionally be comfortable doing. If you want to create an estate plan that is accepted by people and understood by people, more importantly I think, so that it’s easier to sort of digest after the fact.
Ian Hull: Well that’s great because I think we all know in our real lives that communication tends to take tension away. And so that idea of communicating and disclosing can address directly these acrimonious, intransigent family members and it also ties into the ongoing need to be current and to make an estate plan because you want to have something to disclose, something to communicate and something that you may have to refresh from time to time as the circumstances change.
Alright, let’s talk about now maybe another sort of aspect of the tensions and the fights that can come out of an estate plan. What’s another trigger point? We’ve got the necessity to do a plan, we’ve got the necessity to manage family. Who else should we be managing? What else should we be doing?
Suzana Popovic-Montag: Well I think we need to recognize that even when you have got a plan in place, that you’ve got to make sure that its done properly so that you’ve got the proper advice in creating the plan, that you’ve thought it through, that you’ve had all of these possible trigger points identified and that you’ve actually had the opportunity to turn your mind to it. So that it’s something that is still a fluid process, it’s not like a one-time deal where you make a plan and you can close that book on your chapter of life and think that it’s done, that you want to make sure that it’s done and that its done properly. And so that, you know, we talked previously in terms of some of our prior points about the need for professional assistance. And I think its all part and parcel of that, to make sure that you’ve got proper documents in place.
Ian Hull: Because we see such a tremendous amount of estate litigation that arises out of poorly drafted documents. And coming back to your sort of beginning steps and make a plan but keep it current and refreshed. That process alone, the current and refreshed process, will help pick up on mistakes where someone might get a fresh look at it, a new set of eyes on it. And so every 3 to 5 years when you’ve got your professional advisors looking at it and they say, you know what, I just don’t like the way we phrased this. And maybe it’s not a mistake but the law has changed and there’s a way to make it clearer.
Suzana Popovic-Montag: Right, and that’s always a good idea. Another flashpoint that just sort of comes to mind as you were speaking is the fact that there are certain assets that just tend to cause friction. And we wouldn’t necessarily know it at the time and we may not even expect it but you know, as part of this whole idea of disclosing and communicating, we may want to turn our minds to the fact that there are some assets that will cause friction possibly, like the family cottage, for instance. There could be a whole bunch of emotional sentiment attached to that, that perhaps the mother or the father wouldn’t necessarily recognize, wouldn’t necessarily expect, but the kids or the grandchildren might pick up on that. So those kinds of assets. Or even perhaps jewellery or family heirlooms - things like that, you know, you want to consider whether or not that’s something that should be specifically carved out in your estate plan and have your mind actually turned to it as part and parcel of the planning.
Ian Hull: Well I think the nature of the assets can be a trigger point that some good advisors will also pick up on too. And so that’s another nice reason to have, a good reason to have people around the table because issue identification is so very important with estate planning. And good advisors, both lawyers, accountants and financial planners, can issue identify. And you’re absolutely right. On the nature of the assets, they might be able to say geez, you know, not just the cottage, the RIF or the RRSP is going to cause this problem or that problem. Do you want to think it through?
Suzana Popovic-Montag: That’s right.
Ian Hull: Okay. What’s our last? Because we’re at ten and we’re just about out of time today.
Suzana Popovic-Montag: The last of the top ten, I think, is the choice of the person whose going to take care of your assets while you’re either incapable, your attorney or your guardian, or someone whose going to administer your estate when you’re gone. So your estate trustee, your executor, your personal representative. Depending on what jurisdiction you’re in, they will be called differently. But that choice is a very important one that we see that tends to cause a lot of friction.
Ian Hull: I think I agree with you 100% and I think that last one is worthy of probably our next podcast because we’ll want to talk a little bit about what issues do arise with personal representatives and the kinds of litigation that can come out of that. So please feel free to give us your feedback in 2009. We welcome it. It’s at hullandhull@gmail.com.
Suzana Popovic-Montag: And our blog, if you’re interested in visiting it, is at estatelaw@hullandhull.com. Thanks very much.
Ian Hull: Thanks.
You have been listening to Hull on Estate and Succession Planning by Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current issues in estates and estate planning. It is not legal advice and you are reminded to always speak with a legal professional regarding your specific circumstance.
To listen to other Hull & Hull podcasts, or leave any questions or comments, please feel free to visit our website at hullestatemediation.com.
