Why - Part 3 - Hull on Estates and Succession Planning #221
Listen: Why - Part 3
This week on Hull on Estates and Succession Planning, Ian continues his discussion on "what" it means to be an estate trustee and "why". Specifically, he talks about dealing with and protecting special assets.
Ian continues his list of Duties for an Estate Trustee continuing with:
4. Dispose of perishable assets and secure and protect all other assets including business interests and rental properties.
5. Review insurance coverage and obtain increased or additional coverage of the assets where necessary.
6. Determine and list the names, addresses and ages of beneficiaries and notify them of their interest.
7. Determine the nature and value of the assets and debts of Louis, an inventory of the Estate, and arrange valuations where necessary.
The “Why” series was spurred by the book Start with Why By Simon Sinek which can be found in the Hull & Hull LLP Reading Center.
If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.
Ian M. Hull – Click here for more information on Ian Hull.
Why – Part 3 - Hull on Estate and Succession Planning #221
Posted on February 1, 2011 by Hull & Hull LLP
Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag. The podcast you’re listening to will provide information and insights into estate planning in Canada. From the offices of Hull & Hull in Toronto, here are Ian and Suzana.
Ian Hull: Hi and welcome to Hull on Estates and Succession Planning. Well welcome back. I’m Ian Hull and I’m doing a solo presentation here without my colleague, Suzana Popovic-Montag who will be back into the loop soon.
We wanted to continue on our mini-series about I’ll call it the “what” and “why”, but the “why” and “what” probably more accurately, of being an estate trustee. We’re gonna build a list of not everything. We’re building a list, hopefully in order that makes some sense, of what the duties of an estate trustee is over these podcasts. And the last podcast we dealt with some of the preliminary considerations, dealing with the body and issues where you have to deal with immediate concerns, as dependents that have to be addressed like small children and so on. I want to move on to my next one and again, we’re gonna be posting these as we work through them.
Our next one is dealing with special assets and dealing with and protecting those special assets. And in those circumstances I’ll often say to my client who is an estate trustee and appointed as estate trustee, go into the house or go into the condominium and take a video camera, film everything as soon as possible, so that you can have a record of the assets, the personal items, the perishable items, things that may need immediate attention. But the specific home contents and so on. They can be such a lightning rod of complaints. Later on someone’s gonna say I always wanted that chest of drawers, where did it go? And you’re sitting there saying, look I was really busy dealing with everything else, I didn’t really notice Uncle Fred took it, or I don’t even know who took it. It was a busy day, there was a bunch of people around the house.
Anyway it’s just a helpful tool to help you describe and identify just what those contents are. And it’s a bit of an urgent and an immediate requirement as a duty of the trustee. I mean, you’re obligated as a trustee to bring in and distribute all of the assets of the estate. That includes the tea cups and the tea cups can be a very…unfortunately a vital source of very contentious litigation. So that’s an alternative. We also recommend strongly…we use some of the auction houses like Waddington’s. They’ll come in and they’ll make a whole list of the items right down to the pens and paper in the living room, put a value to it and as a locked inventory. An inventory that can be crucial in the context of all of the administration of the assets. And it’s not a difficult task, so one that I strongly encourage my executors as a duty to focus on early and do it right so you’ve got a record of the contents.
Now we don’t want to underestimate…and again we’re working through a list of duties in the sense that, you know, I’m trying to do it as chronologically as I can but this isn’t the be all and end all of lists. It’s just hopefully a good starting point.
The next one is reviewing insurance coverages and obtaining necessary increases. Often, in some cases anyway, you’ll have an estate that has artwork in the house. So you want to make sure, and I tell my clients make sure we’ve got full coverage. The house is now only being watched every day with a person coming by, you check with the agent. Maybe even secure those assets. Get that artwork out of the house in case there’s a break-in. So if it’s secured in a locked facility, a storage facility of some nature or something like that. But consider, you know, what coverage there is and increase that, if necessary. And I’ve had cases where the deceased simply just underestimated or was too lazy to value their insurance and in the living room happened to have a Group of Seven painting that was insured for a modest amount. You know, you as an executor, need to come in, move quickly and assess that and determine with certainty whether or not the insurance coverage is there.
The next item…I think we’re at about item 6…is determine a list of the names and addresses and getting a hold of all of the beneficiaries. And this is one of those situations where I strongly encourage my clients to leave us a hint, give us some help here. If it’s your long lost cousin in Scotland that you’re going to be giving money to or that famous chair in the corner, help your executor…I tell my clients to make sure we’ve got a contact name, make sure we’ve got a way to get a hold of the long lost relative in Scotland. But even in a more simple estate, just a list of nieces and nephews if that’s where the money’s going or something like that with contact names or addresses. Anything that can sort of allow you to move quickly, because once you get that, you want to… outreach is the big part of it and communication...Suzana and I have talked about that many times…is a fundamental aspect of any estate administration. Well, early and often, tell them early and often and so the sooner you can get that information out to the beneficiaries, even to say look, we’re on it, here’s the Will, we’re on it, even vague at that point because you’re not really even sure what you’re doing or not doing yet, what your priorities are, is so helpful to creating a feeling of comfort that the beneficiaries know well at least it’s well in hand. And often the beneficiaries respect the choice of the executor. The deceased is gone. The beneficiaries will say well, you know what, they trusted so and so to be the executor. I’ve got a bit of trust there. And when you communicate, you encourage the trust and that’s a…we find a really helpful thing.
The other part of this, and again, these early days of being an executor in terms of your duties can be a bit hectic, but obviously it’s determine the nature and extent of the assets and liabilities of the estate. You know, find out where everything is, get the bank accounts, the financial investment accounts and insurance proceeds or things like that rolling and getting that pulled in. As an aside, it’s an interesting sort of debate you find sometimes with financial advisors, and certainly in Canada, that the law is quite clear and expressly clear that as long as you’ve got a Will, a notarial copy of it, you should be able to put that to…I tell my clients you should be able to put that to the financial advisor and tell them to sell the assets. Put it into cash, that’s one school of thought. Another school of thought is to wait till you get probate to distribute the assets. Now the idea that you can insist on the sale of the assets brings with it some controversy but it’s an option that you may want to consider. You may not want to play the markets anymore and you want to go into a cash position and distribute. For example, if there’s charitable bequests and so on, you want to get whatever’s there on the date of death or as close to it in a cash position and distribute it. Others choose to play the market. Some people play the market within the context of the trusts that are created under the Will. For example, if there’s a trust for the surviving spouse. The point is, is that you have a lot of flexibility and you can consider that flexibility in the context of your certain circumstances and the flexibility ranges right from, look I want to go cash or right to here. And in Ontario we have a provision under the Trustee Act which we call the prudent investor rules which say if you’re gonna hang on to assets, this is how you do it and here are the rules. And Section 27 of the Act really, truly codifies those rules and gives people some guideposts as to how they should deal with the investments.
So I think we’re around 6 or 7 duties and we’ve got more and we’re gonna enjoy having discussions on each of those as we work through it, but we’ll post the first…next few that we’ve just talked about today on our web. And we appreciate you joining us as always. I’m almost certain we’ll get Suzana back shortly and thanks for taking the time to watch our podcast.
You have been listening to Hull on Estate and Succession Planning by Ian
Hull and Suzana Popovic-Montag. The podcast that 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 visit our website at hullestatemediation.com.
