This week on Hull on Estates, David Smith and Nadia Harasymowycz discuss a fairly new investment vehicle that has been set up by the Canadian Government to allow for Canadians with disabilities and their families to save for the future.  More specifically, this podcast discusses how one can use this investment fund as an estate planning tool. 

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

For more information on David Smith click here.

For more information on Nadia Harasymowycz click here.

Listen: Understanding the Role of an Executor

This week on Hull on Estates, Ian Hull discusses the role of an executor and how you can anticipate problems that may arise.

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.

Understanding the Role of an Executor - Hull on Estate and Succession Planning #222

Posted on February 15, 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 episode 222 on Hull on Estates and Succession Planning. 

Welcome back. I’m Ian Hull doing a solo podcast today without my compatriot, Suzana Popovic-Montag. Today is episode 222. It’s a great show that some of us of my vintage remember, Room 222. So it had a nice resonating history to it and I wanted to speak about a topic that ties into that historic show in the sense of this, and that is, is that we went to class, we watched 222…Room 222 when we were kids and as young teenagers and it taught us to understand and appreciate leaders, and leadership through education. Taught us to respect our teachers and some we didn’t respect and some we did. Sometimes we were wrong; sometimes we were right. Probably didn’t know until many years later. It ties into the same theme in my view as to being an executor. It’s an often criticized role and it’s easy to, as my dad used to say, it’s easy to kick down sandcastles – it’s not so easy to build them up.

And like every executor has, is that when they get the job of executor when someone passes away, the beach is flat. There are no…the water has been just waving across the rocks and the sand is flat and maybe not even wet enough to build anything with. Well the executor has to go and start from the beginning and building the sandcastles. And we often and too often in my view, see beneficiaries who just turn around and try to kick down the sandcastles as opposed to admiring them and respecting the work that they’ve done. Having said that, that’s life. And if you’re gonna take on the job, it comes with its own warts, so to speak. And we’ve been talking about in this series, in this mini-series, about some of the warts and some of the problems that executors run into with a view to trying to anticipate them and anticipate where you’re gonna get poked and prodded and complained about. 

One of the easy things that I think is easily addressable is the whole question of the bank accounts. Early on, you’re gonna be required, as an executor, to determine the nature and extent of the bank accounts of the deceased. We tell our clients, please make some sort of list, even if it’s a photocopy of the bank statement that sits in a safe area where when you pass away someone can at least match up what institution, give some lead to the bank and so forth. Sometimes what helps is that when we ask our clients to draw Wills, we’ll say to them look, we want all this information about where your banking is, even the bank account numbers, so that it’s a record that should the executor come to us and say I don’t even know where my great uncle banked, I’ll have a note of it at least. Starting points. Leads. 

But having said that, once you’ve identified it, we have an obligation to create our own estate account which we’re gonna talk about. But this is about pulling in assets at this point. We’re in the early stages. The water is just still rippling across the sand and we’re still trying to get our feet wet and determining whether the sand is too dry to build our sandcastle up or do we need to add some water to it. And so what we’re often faced with is, is what bank accounts exist and where are we gonna find those and locate those. There’s some Internet searching that’s available as well in most jurisdictions, a very easy one. One of the interesting searches that you can undertake is to look at old accounts through the Bank of Canada to see if the deceased just left money in an account that went dormant. But let’s just talk about easier ideas, sort of the low hanging fruit accounts. And those are the ones you kind of knew that they always banked at a certain bank and you’re gonna be able to find that out because if you show the bank the Will, they’re gonna give you that information. And in so doing, we’re often faced with the problem of it may or may not be in the form of a joint account. Now we have spent time over the years in our podcasts and we will continue to talk about this issue in some level because the Courts still struggle with it. But a joint account is a very classic estate planning technique and so as an executor if I come into this role and I meet a joint account issue, those are the sorts of issues that I want to seriously consider and probably seriously consider getting some legal advice or some help from my financial advisor or accountant as to how to deal with that joint account. But identifying the nature of the account, solo or joint, is a crucial, initial step that again, when we see attacks on an executor’s role and their duty, those are easy, low hanging fruit attacks as well in the sense that we see it too often, that the executors didn’t move quickly enough to determine the nature and extent of the assets in the context of bank accounts. Do determining if there are any bank accounts is vital.

The other sort of…now there are dramatic illustrations of this…but the more simple estates and the more straightforward estates are, we’re obligated as executor to really determine what the liabilities are. And it is sort of like chasing the bank accounts. It’s finding out what Visa cards are out there, what car leases are out there, what day-to-day automatic withdrawals are coming out of the account and for what purpose. And nature and extent of the liabilities is a core element of expectation of the executor.  So again, we sit back and we say well where can we enhance our position with the beneficiaries, so that they’re not making attacks on us? Well we can show and document to the extent that it’s necessary…maybe a memo or a note…I went to these banks.  I did this to find out the bank accounts.  I determined their status, joint or not, or otherwise.  I’ve determined if there is a corporate bank account, if there’s a private held company.  I’ve determined that these are the liabilities that need to be addressed right away.  And whether they’re funded through the bank account and the estate bank account is for another day and how we do those mechanics are for another day. But often it’s the itemizing, allocating and organizing of both the in assets and the out assets, so to speak. The in – finding the bank accounts; the out – paying the liabilities.  That we see a lot of attacks on trustees unnecessarily if it’s done in an organized, efficient…and when I say efficient, that means timely as well. Because the Courts have consistently said if you’re not timely with these things coming out of the gate, you are going to be susceptible to criticism.  Whether you should or shouldn’t be is another day and that’s for another lawsuit and it depends on the facts. But it is a very fundamental and basic organizational tool to expect of an executor and it’s an easy area to defend if you’ve done it right and you’ve identified it in a meaningful way.

So tomorrow we’ll talk a little bit about...the next podcast we’ll talk a little bit about what we’re gonna do with that in and out information and what our expectations are. But I wanted to cover the sort of basic parameters and the expectations I think that touch on our leaders, and those leaders being the executors. And coming back to my Room 222, the leaders are the teachers in our classroom or the people around us or the people that are prepared to take on roles such as executor.

So thank you very much for joining me this week. I’m missing Suzana and I apologize for her non-attendance and we look forward to our next podcast. Thank you very much.

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. 

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. 

 Listen: Why

This week on Hull on Estates and Succession Planning, Ian continues his discussion on the book Start with Why By Simon Sinek.  This book can be found in the Hull & Hull LLP Reading Center.  Ian discusses why one becomes an executor and what it means to be an executor. This is followed-up with his first three duties for an Estate Trustee.

1. Make proper funeral and burial arrangements.
2. Determine that the Will appointing the Executors is the last will and testament.
3. Make provisions for the immediate needs of any dependants.

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.

Listen: Year of 2011

This week on Hull on Estate and Succession Planning, Ian discusses the year of 2011. Specifically, he discusses the book Start with WHY by Simon Sinek, which can also be found in the Hull & Hull LLP Reading Center. Ian examines the question of why in regards to estate planning issues and contentious planning matters.

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.

Year of 2011 – Hull on Estate and Succession Planning #219

Posted on January 18, 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. This is episode #219.

Hello and welcome back to Hull on Estates and Succession Planning. Suzana and I have taken a slight pod break but we’re back on air, 2011 with lots of vim and vigor and all kinds of topics that we want to cover over the next year. We hope everybody had a nice holiday season and although we’re well into January now that this podcasting is being launched, we want to welcome everyone back from our little pod break…podcast break. Over the holidays…oh and sorry you’ll notice that Suzana isn’t with me today…on either side and we’re podcasting without her and she will hopefully be back for our next one, if not the one after. She’s engaged in a big mediation right now. 

I’m gonna start off with this year with a podcast about the year of 2011 and something that I’m trying to do more with my clients, and I’m hoping that people are trying to consider generally when we’re dealing with estates and trusts and potentially or actual contentious matters with estates. And I…over the holidays I had some time to read some books and one of the books I read was a booked called “Start with WHY” and it is a book by Simon Sinek and it’s on our preferred reading list on the web page that we have updated regularly. And the link to the book is there. But it talks about starting with ‘why’. And I thought what might be a good idea for our…and I’m gonna start pushing on my clients to do…is let’s start with ‘why’ when they come to see me about dealing with (a) estate planning issues or (b) dealing with contentious estate planning matters.

I often face the different types of litigation that we see in our office with a great deal of hesitation. I know the turmoil and the pain that the litigation will be for the client and it’s like telling a teenager about the risks going forward. They don’t understand them until they’ve lived through them. So there’s a certain amount of, I find with my clients, a little bit of…my warnings go on deaf ears. And that’s okay, of course, and it’s appropriate because that’s a personal choice that the client wants to make. But it seems to me that we need to press back and consider ‘why’. Why exactly are we pursuing the litigation? And consider today the question of ‘why’ in the context of the types of contentious matters that arise, certainly in every day-to-day practice.

The two key components to any matter at our office that we deal with is (1) communication and (2) transparency. Communication about what we’re thinking, about how we’re seeing the dynamics unfolding as the litigation or as the contentious proceedings move on. We are always working at better communicating those thoughts and those concepts to our clients to keep them up-to-date (a) but (b) to let them know where we think the matter is proceeding, both from a strategic and from a legal standpoint. 

And secondly, the transparency – the transparency between both the client and the individuals, individual lawyers and of course, the transparency within the litigation. We need to hold our…obviously we hold our cards close to our chest and are there for the number one goal of protecting our client’s interests, but sometimes the transparency can be so important. And where transparency can be so important is, of course, and one of our general themes throughout our podcasts is, when planning. Forget the contentious side because that can be tied to strategic advantages to proceeding and certain information being disclosed at certain times. But on the planning side, the strategy tends to be more wide open. And again, I will ask myself and ask my clients to consider ‘why’. Why do I want to communicate my future thoughts in terms of my estate plan? And why do I want to be transparent? Well we’ve talked many times in our podcasts about the benefits of the ‘why’, the benefits of transparency and communication. But I wanted to think…I was thinking about it when I was reading this book. And what is the ‘why’? When we wake up in the morning and we consider pursuing our estate plan, or we consider pursuing a litigation plan within the context of our estate, why are we doing it? And I like to ask myself, and I’m gonna use 2011 as a reminder to me to ask my clients too, when they come to see us about a contentious matter. For example, we have a series of podcasts that deal with how a Will challenge proceeding is conducted. And we have my father’s video on-line where he explains in his views some of the real core components of a Will challenge and a piece of Will challenge litigation. That’s the’ what’ and we have dedicated our website and we’re continuing to dedicate our website to the ‘what’. But ‘why’ is only answered by the client. And certainly from my perspective, I’m gonna start to be more vigilant to ask the clients why. And why do they want to engage in the litigation? Is it a variety of factors? Is there more factors? Is it more overwhelming than the other? And the Will challenge litigation is an easy illustration of that, because the ‘why’ to pursue that litigation is a choice. And it’s a choice. Whereas when we have dependant’s relief applications or situations where our clients or we’re defending them or in the context of a dependant’s relief application, it can be the ‘what’ in the sense that they need the money. The spouse has not been properly treated, not given enough money during his lifetime, the Will does not provide for it. So you bring a dependant’s relief application. That’s because the ‘what’ is, I need money for my client.

Whereas when we get back to the ‘why’ in the context of estate litigation and Will challenges, sometimes it’s about the money. But sometimes it’s about far more than the money. And what we’re finding more and more when we’re pressing on that issue of the ‘why’…we’re absolutely capable to do with the ‘what’…the ‘why’ helps us deal with the ‘what’. Once we get a better understanding of why our clients are proceeding in the way that they want to proceed in the context of the litigation that they want to proceed, that can have a tremendous impact refining and directing our litigation in a very surgical and a very pointed way. And it seems to me that’s where the efficiencies can start to come into play in the context of the ‘what’.

So I’ve used ‘why’ and ‘what’ back and forth and in the context of two different choices – a dependant’s relief application where the ‘what’ is, we need the money; and a Will challenge where the ‘why’ is not necessarily driven by the money. And it’s driven by different factors, why they are pursuing that litigation.

So I look at the other kinds of litigation that we’re involved with and I think to myself, from our perspective anyway, when we’re looking to remove a trustee, the question of ‘why’ needs to be answered at the outset or at least needs to be framed at the outset so that then we can proceed with the ‘what’. If we’re not happy, my client is not happy with the actions of the existing trustee, why are we trying to get them removed? Well is it partially because they’re putting the estate assets in jeopardy? Or is it partially because we just don’t like them? And once we can drill down on the ‘why’, we can then create our plan going forward and our ‘what’ going forward.

So again I thank the author, Simon Sinek, for alerting me of the ‘why’ and the ‘what’ distinction. I hope I haven’t been too confusing with the ‘why’ and the ‘what’ today but I thought that it was a great way to illustrate our starting point into what is going to be an exciting year of podcasting with myself and Suzana. And we look forward to being back on air more regularly after we’ve taken our Christmas extended break from podcasting. So welcome back to everyone and I look forward to our next podcast.

Thank you very much.

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. 

 Listen to: Interesting and Informative Books

This week on Hull on Estates and Succession Planning, Ian and Suzana discuss what they are currently reading for business and pleasure.

Some of the books they discuss are:

·  The 50 Biggest Estate Planning Mistakes . . . and How to Avoid Them by Jean Blacklock and Sarah Kruger

·  The High Road by Terry Fallis

·  The Final Call by Kerry Fraser

·  In Bound Marketing by Brian Halligan and Darmesh Shaw

·  Say it with Series by Gene Zelazny

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.

Suzana Popovic-Montag – Click here for more information on Suzana Popovic-Montag.

Interesting and Informative Books – Hull on Estate and Succession Planning #218

Posted on November 29, 2010 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.

Suzana Popovic-Montag: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to episode 218 of our podcast.

Ian Hull: Hi Suzana.

Suzana Popovic-Montag: Hi there Ian.

Ian Hull: Well welcome back.

Suzana Popovic-Montag: Thank you very much.

Ian Hull: You’ve been much missed. We’ve had to do a couple solo performances.

Suzana Popovic-Montag:  I apologize for that.

Ian Hull: So … no it’s all good. Never say sorry on a podcast. We’re always happy to have you. Alright so what we thought we would do today it came out of a recent sort of barrage of enquiries and when I say barrage it wasn’t in the thousands.  But I had a few people asking me and…coincidently at the same time, what are you guys reading? What is Suzana reading? What are you reading these days? And I’m a bit of a zealot with technology so I’ve got my Amazon Kindle quite a while ago.  I guess we both have had it for about a year and a half. All of the readers are excellent and quite frankly, I don’t really know enough about the other ones because I only use the Amazon Kindle because that’s the one we early adopted to. But we thought today we’d talk in our podcast a little bit about what are we reading in the sense of...it is…you know these are sources of materials that we’re getting from other podcasts and other bloggers.

Suzana Popovic-Montag: And I just wanted to start, Ian with firstly a book that has been done by Jean Blacklock and Sara Kruger. And I know we’ve previously referred to it and it’s “The 50 Biggest Estate Planning Mistakes… and How to Avoid Them”. And I think that this is an excellent book and as we’ve talked about in our earlier podcast, it really is one of those kinds of things that you hate to admit that you actually do read as a practitioner but it is full of sort of horror stories and things that we certainly try to avoid on a daily basis. So I think I highly recommend it and I know that you’ve enjoyed it and actually have some kudos attached to your name at the back of the book as well.

Ian Hull: I do have my name on the back, but not on the front where these good authors have properly placed themselves. It’s a great book, it’s a super sort of summary of some of the key mistakes in estate planning and it’s just literally out the last week or so. It’s called “The 50 Biggest Estate Planning Mistakes… and How to Avoid Them”. And I like the “and how to avoid them” because it’s not just all about saying how where the problems are, it’s also like we like to do, about what are the solutions.

Suzana Popovic-Montag: And as we go through the books that we talk about today, I just want to remind people that not necessarily all these books are available to be downloaded.  Some of them still come in the traditional hard copy format. You actually have to go to the book store to purchase them. But certainly definitely worth trying to see if you can get them downloaded, if that’s your preferred way of reading these things.

Ian Hull: So as we, certainly for me, I sort of look at my category of book reading as, some fun stuff and non-business and business related. And I would say that “The 50 Biggest Estate Planning Tools” obviously illustrates a business related book. A non-business related book and one that we’ve about in previous podcasts is of course “The High Road”. And “The High Road” is the novel written by Terry Fallis and it’s just come out in soft cover.  We have heard that it’s on as I’ve said in my previous podcast, it’s on Canada Reads.  It’s one of the top ten books to read. So that’s a fun novel.

Suzana Popovic-Montag: That’s for sure.

Ian Hull: The other fun book we have, and we’ll come back to some business ones, is a great book by Kerry Fraser and it’s called “The Final Call”. And Kerry was good enough to invite me to the book launch a couple of weeks ago and we had a really interesting fun time down at Gretzy’s restaurant. And he spoke about this, it’s a phenomenal book and I’ve read it now, really enjoyed it, some great hockey stories for those of us who like the folklore of hockey.  And some of us who remember Kerry Fraser, of course, being the referee that didn’t call the penalty on Wayne Gretzy in 1993, I think it was.  And we didn’t make it into the finals against the Montreal Canadians. So that’s not his only call but it’s a great book and interesting book for sure. Now coming back to the business books, why don’t we talk about our next one?

Suzana Popovic-Montag: The next one is a great book by Brian Halligan and Darmesh Shaw and it’s called “In Bound Marketing -Getting Found using Google, Social Media and Blogs”.

Ian Hull: So this book is interesting to me because we read a ton of social media and blogging books, always trying to see sort of what other people are thinking. This is, in my view, anyway if not the best, one of the very best sources of how to get your head around all of the angles and all of the approaches that we want to consider when we’re blogging and podcasting. And I’ve got both of this.  I actually have it on my Kindle and I have it on in a hard copy. Now it sounds a little strange but the Kindle has a reader on it and so I can listen to the book and I might pop around, go back and forth on chapters. And then I also sometimes, not all books, but I sometimes like a hard copy. This is one of those books that I’ve used so much that I keep coming back to it and so the hard copy was important.

Suzana Popovic-Montag: And I just wanted to take a chance just to read a little bit off the back of this in terms of understanding what in bound marketing is all about and how it’s contrasted with outbound marketing. And I think the authors succinctly state it when they say that when you want to connect with today’s buyer, you need to stop pushing your message out there and actually start pulling your customers or, in our case, your clients in. The rules of marketing have changed and the key to winning them is to use this change to your advantage. And it’s very interesting to have the focus on these social media techniques that we are so much looking into these days and how we’re trying to draw our clients in as opposed to pushing our messages out.

Ian Hull: Alright well this is, as I say, a terrific book and we can’t say enough about it.  I will say, too, and thanks to Daniel Debow who is the CEO of Rypple, another phenomenal program that we’re using in our office and we've spoken about it at other podcasts. He’s the guy that called me up and said, I know you’re doing a lot of this work, this is the book to read.  And he didn’t have to convince me for long because I’m really glad that he did and I’m glad that we’ve been able to enjoy it. 

The last sort of few business related books we wanted to talk about are on my Kindle and they’re not actual hard copy books and they really are, you know, a big help to me.  And the series that I have just purchased and bought and I’ve only gone through about half of them now is the series called “Say it With”. And it’s “Say it With Presentations”, “Say it With Charts” and “Say it with Charts, sort of, Revised” and in more detail. So there’s three books.  They’re all written by Gene Zelazny.  I’m saying it wrong but I’ll spell it right in the show notes. But the “Say It With” series that he has written is phenomenal, helps with presentation skills for both your visual and with charts and so forth and your presentation skills just generally and some of the techniques that are really useful. 

The other book that I do say that is probably the very best marketing and presentation book I have on here is a book about Steve Jobs and I, of course, am forgetting the name because I’ve read it like three times and I haven’t read it for a little while.  But it’s…we’ll put it in our show notes as well, and it’s a phenomenal book about… it’s a book on Steve Jobs and the theory, of course, behind that is that he is perceived by some as the greatest sort of on-line presenter and personal presenter in the business now. And that book has really been a big help. 

So those are sort of just a summary of the books that we’ve used.  The source is the Kindle, the hard copy books.  And the last thing I just want to say is managertools.com, a series that we listen to all the time, their podcasts, they’re a phenomenal group. They’ve also put out a listing of book reviews and you can go on-line and track their down what they say and they’ve put down I think about fifty or a little less than fifty of their favorite books to read. And I highly recommend it.  We’ve probably read about a third of their list and we’re working on it. So thanks very much for joining us. Thanks, welcome back Suzana.

Suzana Popovic-Montag: Thank you.

Ian Hull: And that’s the end of our attempt to give you a little bit of an idea of what we’re reading.

Suzana Popovic-Montag: Thanks very much.

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. 

Listen to: Assortment of topics

This week on Hull on Estates and Succession planning, Ian discusses an assortment of topics.

Topics include:

• The High Road by Terry Fallis
• 2010 Canadian (International) Conference Of Elder Law
•  The Articulate Advocate by Brian K. Johnson and Marsha Hunter
• The use of personal and life coaching to manage work and life balance

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.

Assortment of Topics – Hull on Estate and Succession Planning #216

Posted on November 17, 2010 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 to our semi regular podcasts.  We’ve missed a couple of sessions because of life’s running around, but we’re back, I’m back any way on a solo basis.  Suzana is still involved in a lengthy trial.

So what I wanted to talk about was what I what call a potpourri of issues and recap a little bit about what’s been going on recently.  One of the most exciting things that’s going on is that our great friend and fellow podcaster and blogger Terry Fallis has his book on Canada Reads, the CBC Canada Reads competition and is in the top ten of the Canada Reads competition for the CBC and that his new book “The High Road” which is a great book and it’s on… actually it’s available on the web.  It’s available on Amazon and all of those other sources.  But we’re really excited for Terry.  The book is a tremendous follow-up from his first book, and it’s called “The High Road” by Terry Fallis.  So we’re excited about that.

The second thing is I’ve just come back last week from … too far back.  I went to speak with Kim Whaley of  Whaley Estate Litigation at the World Conference or the World Study Group for the Canadian Conference on Elder Law.  And it was a fascinating seminar session three day conference, was at the first day, the Thursday, and enjoyed speaking at that conference about recent developments in Power of Attorney litigation.  The conference was on for three days.  I went to the famous “Red Shoe Dinner” or not dinner, reception that Laura Watts, the organizer, who did a phenomenal job.  The organizer of the conference, Laura Watts put on the first opening reception and then we had a great time at the final closing dinner with some excellent speakers. 

But the conference itself was, as I say, it was fantastic in many levels.  One of the speakers that we were treated to was Professor Doug Surtees and Doug Surtees is … and I’ll spell that S-u-r-t-e-e-s in case I’m mispronouncing his name, but he was with the College of Law at University of Saskatchewan.  And he gave us some really empirical data reference points as to what is going on in the growing area of elder law and the growing needs that are coming out of it. 

One of the sources of the data is a study that he’s been in charge of and effectively been pulling together in terms of his research.  But I did my own research just to see what the current state of affairs with the transfer of wealth and how we’re dealing with our aging population is.  Just some interesting stats we’re about… there’s an article called  “Inheriting Money is Stressful, but These Steps can Help” and it came in the Investor…Globe Investor, Tuesday, October 5^th 2010 in the Toronto Globe and Mail.  And it was an article about how families and how investors should deal with inheriting wealth and what they should or shouldn’t do when the wealth comes in.  The author speaks about the recommendations that the experts are talking about, is easy things like, obviously pay off all your debts.  Any debts you‘ve got, use your inherited wealth to get rid of your debt load and then move on to the investment step.  The article itself was, you know, I guess helpful and a bit anecdotal.  But some of the statistics in this article were very interesting.  The Globe article estimates that the estimated value of Canadian inheritances in 2010 will be about 70 billion dollars.  So he says over the five year period, ten year period we’re at about 550 billion dollars over the last ten year period with regard to inherited wealth.  And where we’re going the projection is about 4.3 trillion dollars will be held by asset managers by 2014 with the number of Canadian baby boomers born between 1946 – 1964 right now at about 9.4 million dollars…I’m sorry, 9.4 million people. 

So you can see with our aging population, we’re going to have about 1/5^th of Canadians by 2021 that are going to be over the age of 65.  And what has that done?  Well that has spawned obviously all sorts of efforts in the financial community to assess and address the new aging population. But this world study group program was phenomenal.  And, as I say, we spoke, myself and Kim Whaley co-presented … financial abuse and neglect in the Power of Attorney and we talked about some of the recent case law developments.  And there were really tremendous seminars.  There was another seminar in the afternoon of the first day.  It was called “Moving towards an International Lens of Elder Rights Issues.  And Dr. Jane Barrett, the Secretary General of the International Federation of Aging and Laura Watts talked about where we are going and what kind of projections that they had in their mind in terms of elder law and elder issues themselves.  So from that standpoint, any way, we we’re very lucky to hear some of the great speakers and again Laura Watts puts on a tremendous annual conference.   I’m told that this year it was in Toronto.  I’m told that next year it’s going to be back in Vancouver.

In any event, the last…. and keeping on with my potpourri, I want to talk about as well today is the book, an interesting book that was brought to my attention and it’s called “The Articulate Advocate”.  And for those of us who podcast and present and watch and read about these issues all the time and that is, how do we better perform in that sense or how do we better present better word for it.  Brian Johnson and Marsha Hunters’ book called “The Articulate Advocate” was a book that was recommended to me and I’ve taken a look through it and read through most of the book by now actually. But it is…what was really interesting was the way that they talk about how to present and the sort of techniques to consider.  The part one aspect of the book was fascinating to me and it wasn’t about just articulating and trying to engage your audience the whole first part. . third of the book talks about the body and how we are to control our body.  And we all have in our swaying or our hand movements and so on and there’s a whole section on understanding adrenalin and how our body reacts to adrenalin and how we can deal with it in presentations. 

So any way I thought that was a really interesting book and one that I highly recommend in terms of where and when we are presenting our…whatever pitch we’re making, whether it’s on a podcast or it’s in the context of our own day-to-day business of presenting our pitches at the office or in schools and so forth.  So I highly recommend that, “The Articulate Advocate”.

Coming back then to some of the other...dealing with my potpourri issues coming back to that is we…I was lucky enough to do some personal coaching and some coaching within our firm and why I say that is that Joanna Mackie of Rhythms of Change is the company that’s been helping us with that personal life coaching to our firm and our team.  And it’s all about how to manage both your life and work balance and some of the coaching you can take from that in a business environment.  And one of the interesting things that came out of that is we’ve all learned to manage and develop better feedback models within our own firms and so on.  But it’s also being picked up on the main stream and again in the report on business …the actual section, the Report on Business in the Globe and Mail on October 13, 2010 had a really interesting article talking about the use of mentors and life coaches when hiring and firing and when managing your firm.  So again, I just sort of…that was something that we’ve been really focusing on in our firm.  We’re always trying to, sort of, innovate and decide what aspects of our firm we can enhance and to make stronger and one of them is using life coaches.  And professional coaching is well talked about in lots of sources but just an interesting article came out in the recent Globe and Mail article on Wednesday, October 13, 2010.

Any way that wraps up my potpourri of discussion points and I really appreciate you joining us today and we’ll look forward to hopefully our next podcast with Suzana as well.  Thanks very much.

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. 

Listen to: Transitions

This week on Hull on Estates and Succession Planning Ian and Suzana discuss transitions, both personal and professional. They examine transitions currently taking place; how they affect us and different approaches one can take.
 

Ian M. Hull – Click here for more information on Ian Hull.
 

Suzana Popovic- Montag - Click here for more information on Suzana Popovic- Montag.

Transitions – Hull on Estate and Succession Planning #215

Posted on November 3, 2010 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.

Suzana Popovic-Montag:  Hi and welcome to Hull on Estate and Succession planning.  You’re listening to episode 215 of our podcast.

Ian Hull:  Hi Suzana.

Suzana Popovic-Montag:  Hi there Ian. How are you?

Ian Hull:  I’m great thanks and yourself?

Suzana Popovic-Montag:  I’m good thank you.

Ian Hull:  Well that’s great.  Well today we want to talk about transitions and cultures.  And we see it a lot with families as we all know sort of as our families grow and my family moved from sort of toddlers into teenagers and they’ll move on to the next stage of life.  We all as parents have to adapt and we have to adapt our estate plan in that way.  And we also, of course, have seen transitions in business.  We see transitions in politics.  So we’re going to talk a little bit of that and talk a little bit about how the Courts have been dealing with a couple of interesting recent approaches to transitions.  So the first thing we’ve got to do is talk about the new mayor.  We have a new mayor in Toronto.

Suzana Popovic-Montag:  Yes we do.

Ian Hull:  It’s great.  And he is… it’s exciting times whether we like him or not it’s new blood down in City Hall.  So we’re anxious to see what he’s going to do and see where our city goes.

Suzana Popovic-Montag:  Well they say change is good so it’s good that we’ve had the opportunity to see it live before our faces.  And so much change is going on in our daily lives and in the hustle and bustle of life in general.  So it’s good to sometimes take those moments to actually think about, you know, what that change is going to mean.  And you mentioned at the outset, you know, in terms of our estate plan and in terms of our…just life in general.  So…

Ian Hull:  And it’s so true because we talk about…we can talk about transitions in big steps and then we can talk about short term transitions and short term changes.  And of course a mayor changing in the City is a flash point and an automatic change.  And in fact today we’ve heard in the news that the transition team is moving in.  So there is a team for a transition.  But in life we don’t have those kinds of luxuries but it does help us sort of remind ourselves anyway to maybe we should be rethinking about our estate plan and rethinking about how we can do that.  And in doing that we have been really having some interesting times here in our firm even because we have been trying to, in our own way, work a family meeting.  And we look at the necessity of running a feedback model within a business as a vital component to our day-to-day operations.  Like, we would always have, what we have always said with our family meetings.  We have looked for those as being a formal opportunity to give feedback.

Suzana Popovic-Montag:  That’s right.

Ian Hull:  And give feedback to the heads of the family.

Suzana Popovic-Montag:  Yeah, all as part of the dialogue in getting…encouraging people to talk about things that they wouldn’t traditionally have otherwise talked about.

Ian Hull:  And even and then a …feedback…everybody that works in the business community is focused on making sure that their team understands and there’s transparencies and there’s expectations that are managed and not managed, but a silent office doesn’t make any sense.  But yet we go home and we have a silent home.  And it’s unusual that our natural instincts are in the business community to really focus on communication.  And what we’ve tried as well in the office here which is sort of an interesting tool, it’s a business tool, but one that I think helps demonstrate the importance of the need for meaningful communication in a formal way as we have been just using a new program that’s called “Rypple” and it’s R- y- p- p- l- e, it’s rypple.ca.  And it’s a feedback model.  And it’s a feedback model that makes us document specifically the feedback within the members of our team.

Suzana Popovic-Montag:  And it’s one of those great pieces of technology that we’ve introduced into the system because, you know, we are certainly in the midst of a bunch of change internally as well with our document management system, our very stringent attempts to go paperless.  And so having this opportunity to do an on-line feedback conversation with individuals is part and parcel of that whole project.

Ian Hull:  And it comes back to our estate planning.  I mean why aren’t we having, we can’t help but ask ourselves, why aren’t we having these kinds of documented and meaningful and pointed moments in time of feedback between ourselves and our family.

Suzana Popovic-Montag:  It is really funny you say that Ian because you are so right. The business world is made up of those kinds of conversations, those kinds of exchanges, and yet when we come to our families, it’s a very different environment.  So we see a lot more of this kind of professionalism being injected into the process.

Ian Hull:  And what if we could do is professionalize it and regularize it, both in the estate planning dialogues that we’re going to have and in the business dialogues that we have.  It seems to pay off and we know it pays off in the business environment.  We’ve seen results in the business environment.  The experts say it does.  So why isn’t it paying off in the family environment?  Well I think it’s partially because we are not trying hard enough.

Suzana Popovic-Montag:  That’s right.

Ian Hull:  Another neat thing that we’ve been working around here as well, as you said, the paperless model.  And we’re stepping away from, for a lot of good reasons, but we are stepping away from moving paper all day long.  And that doesn’t necessarily transition well or, you know, tie well into estate planning because we still need paper for some of the estate planning process like a Will.  But what it does is again, it illustrates how we’re trying to take a team work approach to a problem that we all have the same goal, and that is, transfer of family wealth where we want to transfer paper within our office environment.  And the feedback model that we were talking about the rypple.ca program we’re using and other methodologies we’re using has really helped us.  And as I say, I think it can transition really well and easily into the real world of family.

Suzana Popovic-Montag:  And just to sort of circle, come full circle in terms of our firm’s experience, we also have our document management, or pardon me, our knowledge management system.  And we talk about sharing feedback, sharing you know information.  Here’s the perfect way of taking, you know, the hard copy of knowledge and sharing it with others within our firm so that we can complete that entire circle of that exchange.

Ian Hull:  And it’s so true when you look at the estate plan and when someone gets into a situation where, you know, they don’t even want to show their family the Will.  Or they don’t want to show their family the corporate structure of the family.  Or they don’t want to show their family the shareholders’ agreement that their kids, or minor kids, are involved in or whoever.  It’s about transparency and you know putting those documents on a safe cloud, you know and having access to the internet is one methodology that we found clients will do.  And we try to download the information exchange, have it available to the family to look at, as of when they feel they want to look at it.  So you have it accessed in a private way through the internet.  And again, I mean it’s just about, you know, the feeling that at least it’s there, it’s there for me to read or understand.  If I want to I can choose to hire professionals to help me understand it.  But if we can download that information, make it available, it again, in a paperless way, can help tie the bonds together and make sure that people get rid of some of these basically superstitious feelings about suspicious behavior on the part of any of the family members.

Suzana Popovic-Montag:  And it does still bolster that whole team work environment or that feeling within the family that, you know, those documents, that information, that dialogue can be exchanged with everyone who wants to participate in the process. 

Ian Hull:  So we have taken a little bit of a world of business and tried to import it into a world of family and estate planning.  And we’ve learned some good lessons in the business community, business environment that we can, we think, translate well in our efforts to effectively and properly estate plan.  So thank you very much Suzana.

Suzana Popovic-Montag:  Thanks to you too Ian and I look forward to our next 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. 

 Listen to: Managing Expectations

This week on Hull on Estates and Succession Planning, Ian and Suzana discuss managing the expectations of the surviving spouse.

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.

Suzana Popovic-Montag - Click here for more information on Suzana Popovic-Montag.

Managing Expectations – Hull on Estate and Succession Planning #214

Posted on October 13, 2010 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.  You’re listening to episode #214.

Suzana Popovic-Montag:  Hi there, Ian.

Ian Hull:  Hi Suzana.

Suzana Popovic-Montag:  How are you today?

Ian Hull:  I’m well.  And yourself?

Suzana Popovic-Montag:  Good thank you.

Ian Hull:  Fantastic.  Well we have got a busy fall and we’ve been out and about doing some mediations and doing our case load and so on. And one of the things that we keep running into and bumping into is managing expectations of the surviving spouse.

Suzana Popovic-Montag:  That’s a good introduction to this podcast, Ian, because we are, as you say, seeing more and more of these kinds of situations where people recognize that there is a surviving spouse but would rather not have to deal with what comes about as a result of that.

Ian Hull:  Absolutely.  And so we look at this and first of all, spouse – the definition of spouse – is in Ontario and in most jurisdictions, is a broader definition than just simply a married spouse.  But the spouse or the person who is left standing in the relationship has significant claims. And we’ve talked about those claims.  Dependant relief claims, Succession Law Reform claims, that way and the Family Law Act claims.  But we wanted to talk a little about today is more about how do we deal with that reality?  And looking at it from the perspective as the family members, the survivor’s family members and looking at the perspective as being an executor.  Because it is really an important…we find…a very important part of the process is managing that spousal claim.  So first of all, let’s talk about who’s a spouse?  Go ahead.  Why don’t you talk about...when we’re looking at, when we think of spouses, what conventional wisdom, sort of, are we looking at there?

Suzana Popovic-Montag:  And as you say, Ian, our definition is a lot broader than it used to be. And we’re talking about married spouses in the traditional sense and we’re also talking about common law relationships that meet a defined period of time after which, you know, the Courts will recognize someone as a common law spouse here in Ontario.  And you may also be extending the claim to the individuals who are in same sex relationships who similarly have met the timelines for those kinds of relationships to be recognized at law.

Ian Hull:  Absolutely. So we’ve got this person who has left and they’re typically in a high emotional state when their spouse dies, whether it’s a husband, wife, same sex partner.  And they are then faced with sometimes urgent financial circumstances, whether or not they have access to the money and so on, if the other spouse was looking after the money.  And they’d go see a lawyer fairly quickly.  And at some times we find our clients who are on the other side of it, are the beneficiaries, the children of the deceased or the executors, they get a little huffy about the fact that the surviving spouse has gone to their lawyer so quickly.  But there are time limits that the surviving spouse is stuck with and there’s a good reason to go see someone quickly…I mean, go see a lawyer quickly.

Suzana Popovic-Montag:  That’s right.  And that’s even if you have a Will that specifically provides for that spouse as well, because they want to make sure that they’re protecting themselves right from the get go.  And so when we talk about timelines, we know certainly here in Ontario that it’s a six month limitation period from the date of death within which to bring a claim for equalization under our Family Law Act.  And then there’s also a six month limitation from the date that you obtain probate or a Certificate of Appointment of Estate Trustee with or without a Will here again in Ontario, for which time you can bring a dependant’s relief application under our Succession Law Reform Act.

Ian Hull:  So generally speaking, you’re looking at months.  And that can turn into literally days.  And most of us who have organized estate plans still have contingent liabilities out there.  For example, tax liability or maybe you’re involved in a business operation and you’ve got an outstanding piece of litigation or something. So to crystallize what is really available for that surviving spouse can take and often takes more than six months from the date of death.

Suzana Popovic-Montag:  And factor into that a grieving period.  I mean, you are really going to be talking about days at the end of it when it comes right down to that number crunching and when it gets done, and when reasonable or rational decisions can actually be made.

Ian Hull:  And that’s so true.  You know, the emotional side of it…you forget that sometimes.  As a lawyer, you sort of think clinically we’ll get on with it.  But it may be that say, money isn’t a pressing issue right away.  That surviving spouse needs some time before he or she is ready to go sit down with a lawyer and to get and take in advice as to what his or her options are.

Suzana Popovic-Montag:  That’s for sure.

Ian Hull:  So talking about the management side of it then.  Again, that’s really what we wanted to touch on because we are struck on the litigation side by the high emotions on both sides.  And not to oversimplify but as I say, I mean it’s typically the surviving spouse is devastated by the loss of a lifetime partner, or even a short-term partner or a long-term, medium, whatever term partner. And the family are typically devastated by that loss but are typically devastated and react badly to the gold-digging, surviving spouse.

Suzana Popovic-Montag:  And just to give a little bit of context to that, I think Ian when you called it gold-digging, surviving spouse we’re really looking at a situation where there’s step family members involved.  And so it’s a lot easier for a child to be adversarial against a step-parent than their own parent.  I’ve even seen situations where even that has come into it as well.

Ian Hull:  And sometimes the lawyers, through no fault of their own, just in the process of protecting the surviving spouse aggravate the situation. And a letter that says I want to see all of her assets and I want to see any joint accounts and I want to see any insurance policies is perceived by the family or by the lawyer whose acting for the family as aggressive steps as well.  And again, if they can sit back and just look at…and as I say manage what the expectations of that person are versus your expectations in the context of the law, we have to accept the fact that there’s been a general trend towards equalizing or more fairness for the surviving spouse. So those kinds of questions are almost always legitimate.

Suzana Popovic-Montag:  But they’re not very well received…

Ian Hull:  Never.

Suzana Popovic-Montag:  …because so many people would be focused on the intention.  The deceased intended for you to get so much and you should be happy with that, and you should want to uphold that testamentary intention and leave things alone.  But when you take the law and you intersperse that into the intention and people’s rights outside of the terms, the four corners of a Will, it becomes a very different situation.  And I think that’s where we see the most tension that arises.

Ian Hull:  You’re absolutely right.  I think the intention, expectations on both sides are the driving force in a lot of these lawsuits because as you say, you’ve got black and white that says this is what Dad intended and this is what the surviving spouse got, so they should live with it.  And when the surviving spouse is not given anything, that surviving spouse is angry typically at the deceased…

Suzana Popovic-Montag:  That’s right.

Ian Hull:  …who hasn’t got organized.  And when you sit back at it and the Courts will, you know, analyze it as they see fit. But a lot of the times the Courts are sort of a little bit grumpy with these testators or these deceaseds who are not closing that loop.  They can have this wonderful relationship and if it’s an end of life relationship or a long-term whatever, but they don’t close the loop with…and especially with a non-married spouse.  And in Ontario and most jurisdictions you are still treated differently and preferred in some respects if you entered into a marriage relationship as opposed to a common-law relationship. That’s just a cultural diversity there that exists and the law supports married relationships in many respects more than non-married and that’s just the fact of the way the laws have evolved over time.  So anyway, we’ve been really struggling with these and we’ll continue to.  And what we try and encourage our clients is to get in that situation where a judge isn’t gonna be critical of you not organizing your affairs, and not explaining your affairs to all parts of the puzzle before death.

Suzana Popovic-Montag:  That’s right.  And you know, we also see a lot of tension… and you eluded to this at the very beginning with the executors as well…because they’ve got now the four corners of a Will and they’ve sort of got their marching orders and the directions in terms of how to distribute this estate.  And then suddenly when they’re faced with these extremes they may or may not have expected, it does throw, you know, a curve ball into the whole system.

Ian Hull:  Absolutely.  So we can…all we can do is tell our clients until we’re blue in the face - get this organized as best they can so that we don’t have to face these inevitable tensions without some parameters of realistic wealth being transferred to the surviving spouse and realistic wealth being transferred to the surviving family.

Suzana Popovic-Montag:  That’s for sure.

Ian Hull:  Alright.  Well thank you very much, Suzana.  It was great to see you again today.  And we look forward to our next podcast.

Suzana Popovic-Montag:  Thanks very much.

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. 

Listen to: Planning Estate Administration – Part #4

This week on Hull on Estates and Succession Planning Ian Hull continues the discussion on estate administration. Specifically, he examines liabilities and accounting obligations.
 

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.

Planning Estate Administration – Part 4 – Hull on Estate and Succession Planning #213

Posted on October 6, 2010 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.  You’re listening to, and possibly watching, episode 213.

Welcome back.  I am doing another solo podcast without my compatriot, Suzana.  But we wanted to continue with our ongoing theme of estate administration issues that can rise, bubble up and create tension and possibly litigation or the like.  So we were talking about some of the things we’ve been doing.  I just had my first tour of my old alma mater, North Toronto Collegiate.  They tore it down, or they’re about to tear it down and they built a new school right beside it.  And I was touring it last night, enjoyed that.  It was a great thrill to be in the school.  But I had a chance to, as I talked about in my last podcast, I had a chance to chat with my son’s accounting teacher.  And we were talking about some of the basic accounting models and so on that they’re teaching a course at the high school level. And it really struck me as one of these things that it’s one of those life skills that carries on forever. And whether you’re balancing your own cheque book when you’re older and these are the sorts of issues that arise in the estate administration world. 

And before we get into the second part of the equation, and that is liabilities or issues that arise out of liabilities when you’re doing an estate administration, I’m gonna talk a little bit about some of the accounting obligations too.  Because when we sit down…and what we’re trying to do in this mini-series is talk a little bit about what is it…what’s it like to be an executor (a) and (b) where are the issues that can arise that may bring some criticism upon me as the executor or upon my clients.  And the one area that we see time and time again is not bringing in all the assets.  And we talked about that in my last podcast, that’s the credits.  The credits aren’t all brought in or they’re not all identified like the teacup illustration that we used.  Or you missed an account or so on.  The other part of it is, is that once we start to bring in, how are we tracking it?  Are we keeping vigilant, clear and unquestioned records, financial records?  And, of course, depending on when we see our clients, that question can change and that answer can change.  Because what we try to tell our clients is once you’ve been given the job…and one of the things, certainly in Ontario and throughout Canada is, is that you…once the person passes away, as executor named in the Will you have responsibility from that moment on.  Now that’s important obviously because that executor has control of the body and has to deal with those sorts of funeral issues.  But it also means right from the get go you’re required to produce and undertake comprehensive accounting. 

So when we go out and do our due diligence and we go and flip through every piece of paper that we think we need to look at to determine all the credits, we need to track that.  And we need to identify, once we get that bank account, we need to put that bank account into a separate estate account.  And once it’s in that account, identify the entry, the journal entry that we learned in high school accounting.  Make sure that journal entry is identified each time with the supporting document behind.  Now this is sort of 101 accounting but it is crucial that whenever an executor takes on that business role, that the accounting obligation is paramount because that is where your Achilles heel can come at the other end of the day when criticisms arise of your work.  And it’s not always gonna happen but it always diffuses it if you can put together even informal accounts for the beneficiaries from time to time.  We’ve talked about in the past on lots of these podcasts the need to keep the beneficiaries up-to-date and identify what’s going on in the estate administration.  And one of the easy ways to do it is, of course, just do an informal accounting.  You’re doing it anyway and produce it maybe once a month or every few months to the beneficiaries so they see where the money is coming and of course where it’s going.

So I’m not gonna focus too much on the estate accounting issues other than the harsh reality of if you don’t do it right from the get go, you will create tremendous stress on your own administration and ultimately you may well get criticized and you may well have to go to Court to defend your actions.

Alright, so that’s the three-part component.  We’ve got the assets, bringing them in.  We’ve got the accounting obligations throughout.  And the other part of it, concurrent with all this of course is what are the liabilities?  What is the debit side of estate accounting?  And it’s not just paying the Visa bill.  Not just paying the lease payments off or those sorts of things, obvious things on the date of death.  Someone dies, they’ve accumulated liabilities.  It’s also looking at in real detail what’s gonna happen in this estate?  And what I tell my clients often is I say look, start, sit down and make sure you’ve got enough credits and you’ve got not enough debts so that you’ve got a solvent estate.  Determine right from the outset if that is even going to be an issue.  I take a deep breath and I think easy question to ask – hard question to answer because lots of time you don’t have that information at the outset.  And lots of times unfortunately you find out that the estate is gonna be under water and it is not gonna be able to fulfill all of its obligations, both its current obligations like paying Visa and so on, and secondly, the obligations under the Will.

So I call that sort of the grey area administrations.  And, of course, we have to be very mindful of that.  And as executors I tell my clients we have to make sure that everybody understands that.  Again, just be transparent.  The case law actually insists that if you’re gonna be an executor to the extent…and we won’t get into all the detail…but basically the case law says make sure you’ve identified all your creditors as soon as possible that you are not solvent.  Or that you may have trouble paying all of the creditors’ bills.  And the same goes to the beneficiaries.  Say the estate has $100 and the bills are $80 and there’s only $20 left.  Well you’ve only got $20 to pay out whatever the Will has asked you to pay out.  So the sooner we tell the beneficiaries hey, here are the fixed credits, here are the liabilities fixed, and here’s what’s gonna be our profit so to speak at the end of the day, here’s our capital that’s gonna be left to be distributed in accordance with the Will.  I like to tell my clients to push that information out as soon as possible.  And certainly when you’re in a grey area administration, when you can see right from the outset that this is gonna be close, it’s so important to disclose and communicate that status.  Not just the detail but the reality that although they’re named in a Will, it’s a fantasy.  They’re not gonna get the kind of distributions they thought they would get under that Will because there simply isn’t enough money, after we pay off the debts.

So the liabilities identifying is crucial.  And so when we get an executor’s role, sometimes we get a little fixated on well, what’s the credits?  What’s out there?  What are the assets?  Well we need to be…I tell my clients we need to be just as vigilant to take out the debts and look at where we’re going with the debt side. And as I say, lots of estate administrations aren’t in the grey area.  We’re not always sort of bumping around zero or plus one in terms of the net assets.  But sometimes we’re surprised.  And we’ve been involved in this office many times with multi-million dollar estates that turn out to be below zero. And so we just try to assess that as we can, going along as early as we can.  So particulars of the liabilities again is something that is a paramount obligation of the executor and we need to…I tell my clients we need to pull that together as fast as we can.

So we’ve got the three part components here of the credits, the accounting obligations, the journal entry work that you’re gonna have to do and the debits.  That gives us a little bit of background in terms of…and maybe it’s an economic analysis…in terms of our business role as executors.  So thanks again.  We miss Suzana for this podcast again but we know she’ll be back soon.  And we appreciate always you watching and listening.  Thanks very much.

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. 

Listen to: Estate Administration

This week on Hull on Estates and Succession Planning, Ian continues to discuss estate administration. Specifically, he examines problems that may arise and how to avoid them.
 

If you have any questions, 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.

Estate Administration – Hull on Estate and Succession Planning #212

Posted on September 28, 2010 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. You’re listening to, and possibly watching, episode 212.

Well, welcome back.  We’ve had a little bit of a blip in terms of getting downloading our podcasts and you can see I’m the solo one today.  But we wanted to keep the momentum going.  And one of the things that I wanted to continue to discuss is problems that come out of estate administrations.  Before I do that, I wanted to report out that we just finished up…Suzana and I just finished up presenting at a really interesting Law Society course.  It was presented by Suzana.  She was the Chair of the Practice Gems seminar.  And then our colleague, Jordan Atin, did afternoon seminars on Powers of Attorney. I got to talk about insolvent estates and some of the issues that arise out of that.  But today I’m gonna talk about hopefully…and we may overlap a little bit…in the insolvent estate problems.  But we want to continue to sort of focus on and talk through today is, what about these estate administrations, and (a) what are some of the issues to watch out for and (b) what are some of the problems or what kind of fights arise out of estate administration?

Now typically most people, when they come to see us, would be normally coming to see us about a fight over an estate. Now what does that mean?  And what are those categories?  Obviously, a challenge to the Will is the most prominent one.  But a lot of fights and a lot of difficulties in estates comes out of the administration of the assets themselves.  And that, of course, means that once the executor is appointed, what problems arise.  So we wanted to step back in terms of looking at solutions and identifying some problems.  And one of the things that we did in the previous podcast was talk about glitches in estate administrations.   Well how do we avoid them?

One of the ways that we want to turn to now is the download of information at the outset is so vital because both at the time of giving your Will, when you give your Will instructions, but most importantly at the time of death when you’ve been appointed executor, you’re coming in to see the lawyer and you want to determine the assets of the estate.  One of the core questions, of course, is what are the particulars of the estate assets?  What do we have to deal with?  And my son who’s just learning accounting principles in school tells me all the time about debits and credits and reconciliation and all those sorts of things.  Well obviously the in, the credits, is the key starting point when we’re dealing with an administration.  

So the particulars of the estate itself, talking about, trying to identify and the executor goes out and pulls together as much information as they can about the core assets.  Obviously bank accounts, locations of accounts, bank certificates, stocks and bonds and the like. The next thing is to step back and one of the early stages of downloading the information is the particulars of the real estate.  And this is the one issue that sometimes brings about some of the twists and turns.  And that is, of course, people who die, before they die maybe do or do not know exactly how the real estate is held. And of course it could be held jointly with right of survivorship with someone, between two spouses, transfers over to the other spouse – no questions asked.  Or it can be held in different ways – tenants in common and so forth. Sometimes the clients don’t even know that when they’re telling their lawyer their instructions on how to do a Will. And sometimes you get surprises. So I always tell my clients at the outset when you’re giving instructions, make sure that you give me a copy of the deed or you let me go search the deed.  And we can do that now in Ontario all electronically, so it’s not a big undertaking, to make sure that we know exactly how the real estate is held.

Now, of course, that applies and the same problem applies with bank accounts.  And when we get the information, we want to determine whether or not they’re held jointly or they’re not held in some sort of trust or some sort of arrangement that the deceased hadn’t really fully disclosed to the lawyer when he or she does their Will.  But you’re estate trustee.  Your obligation is to bring in the credits and are they credits and how are they held.  And the details of those credits is crucial because, of course, then you can identify whether or not there’s gonna be some twists and turns, whether or not an asset is gonna fall into the estate or it’s gonna fall into a jointly held scenario.  So the particulars of that and chasing down those details is important. 

Other assets, of course, other real estate, other holdings…we have estates where some client had a tremendous holding of gold bars, literally holding gold bars.  And that was the way she felt that she would hold onto her investment.  So we had to go, and it was a big undertaking in terms of trying to track down where exactly the gold bars were and so on.  But there are a variety of assets that can come about.  And the thing that we really touch on and make sure that we’ve carefully canvassed is the…maybe not gold’s worth something, but maybe the stuff that’s not worth so much.  And those particulars of those assets can be a big, big issue.   As an estate trustee, when you’re charged with the obligation, you’re charged with bringing in all of the assets.  And personal property, or the teacups, of course, can be a really, really important flashpoint to the beneficiaries.  So if I’m the estate trustee, one of the things I will typically do and tell my clients to do is, when you’ve got to go into the apartment, grab a video camera, do something…a still camera…take a ton of pictures. Make sure you’ve identified the starting point.  And it ties into, of course, the starting point with estate accounting.  We want to start with our opening balance.  Well the opening balance, and we’ve seen too much litigation come over this over the years, can be all about where’s the teacup?  Or where is that one statue that…it was a mini statue or the Royal Doulton.  Where are those assets?  And the executor, if they’re not there on the date of death, the executor can get blamed. 

So one way to help avoid that or reduce your risk as executor is, of course, to videotape the whole apartment or the whole house.  You’ve got a record of what is or isn’t there and then secondly, we often will say look get a professional to come in and inventory all of the assets, so that nobody can say hey, you gave Johnny the Royal Doulton  - you shouldn’t have.  The Will didn’t provide for it.  And your answer is, well it wasn’t even there so why are you saying I’ve done anything wrong?  Well, litigation can ensue out of that.  So these other asset categories, obviously the bank and the cash and the investment accounts is one cornerstore of what you have to bring in.  And that means sometimes going through all of the paperwork of the deceased.  The second is the real estate and that you can get some help through the searching through…most, as I say, most in Ontario certainly you can search on-line for that.  And then thirdly are these sort of other assets, and assets which on the face of it may not seem like important to the executor at the time.  It’s not worth a lot.  Who cares about it?  But that couch all of a sudden becomes a flashpoint for tension, which is the thin edge of the wedge, which opens up other issues and which starts to bring up the potential for discord and for fighting in that regard.  So when I sit down with my executors, I really hope that we try to see them as early as we can after death.  And that can be literally within days sometimes to make sure that we’ve got full control over the assets.

So as I say, talking about the fact that I’m learning more and more about basic accounting through helping my son with homework from time to time, those are the credits and then of course the liabilities.  And what do those liabilities bring to the table in terms of tensions and problems? And at my next podcast, I’m gonna talk a little bit about that side of the ledger to talk through and identify some issues for an executor so that we can come to the table clean and ready to go, with limiting the potential for claims against me or my clients as executors.

So thank you for joining me.  We missed Suzana today as always and we’ll look forward to seeing her hopefully back at our podcast soon.  Thanks very much.

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. 

This week on Hull on Estates and Succession Planning, Ian and Suzana continue their discussion on estate administration. Specifically, they examine what would happen if one did not have an affidavit of execution during an estate administration.   
 

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.
 

Suzana Popovic-Montag – Click here for more information on Suzana Popovic-Montag.

 

Estate Administration – Part 2 - Hull on Estate and Succession Planning #211

Posted on August 25, 2010 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.

Suzana Popovic-Montag:   Hi and welcome to Hull on Estate and Succession Planning.  You’re listening to episode 211 of our podcast.

Hi there, Ian.

Ian Hull:   Hi Suzana.

Suzana Popovic-Montag:   How are you today?

Ian Hull:   I’m good.  How about you?

Suzana Popovic-Montag:   I’m good, thank you.  You always stumble on that one, don’t you?

Ian Hull:   I do.  It’s a pressing concern of mine always.

Suzana Popovic-Montag:   I’m sure it is.

Ian Hull:   Alright, let’s move on to our podcast.  Our mini-series on administration and estate administration, and the kinds of things you can expect should you have the joy of administering an estate.

Suzana Popovic-Montag:   And we started with a little bit of the background and a fact scenario in the last podcast and we set up a situation where we’ve got someone whose going to see a lawyer with a Will in hand, and wondering what it is that an estate administration actually entails.

Ian Hull:   And we have that person is there on behalf of his uncle, which has just passed away. So we’ll try to dovetail that fact scenario into all this.  Alright, we talked…at the end of it, we finished up saying okay, after getting the core information then let’s make sure we’ve got the vital information of what Wills matter or what Codicils exist and so forth.

Suzana Popovic-Montag:   And one of the things that we just wanted to add to that was the fact that when you apply for probate and you take this document to the Court for validation, one of the things that you’re required to provide is an Affidavit of Execution.  And that Affidavit is an Affidavit that’s sworn by the witness to the Will saying I was there, I saw the document signed and it was signed properly essentially.  And that document is really important to the Court and hopefully something that you’ll find with the Will when you go through that whole process.

Now I just thought we might take a few minutes and just talk about what happens if you don’t have that.  If you don’t have that Affidavit of Execution what then do you have to do?

Ian Hull:   Well, I’ll look to you to answer that.  Because I know what I would do.  I’d run out of the room crying – no I’m just kidding.  But seriously though, what do we do if we don’t have the Affidavit of Execution?

Suzana Popovic-Montag:   Well in that case what we’re gonna do is we’re gonna have to actually locate one of the witnesses to the Will and have them swear an Affidavit along the same kind of lines to the effect that they were present when the testator signed the Will, that they signed at the same time in the presence of the other witness and the testator at the same time. And then that document will be filed with the probate application with the Court.

Ian Hull:   And then one layer more is that if you can’t find the witnesses, what do we do?  And that’s where we get what we call a banker’s Affidavit or an Affidavit from someone who can verify the signature of the deceased.

Suzana Popovic-Montag:   Right.

Ian Hull:   And that’s sort of like the last tier down although there’s more tiers down but we won’t get into every doomsday scenario.  But that’s another way that we can chase down that information.  And what’s important, why it’s so vital is of course in Ontario…not every province though, of course…but in Ontario, we have such strict requirements for execution that this document, this Affidavit of Execution, becomes a vital, almost deal breaker document.  Certainly a deal breaker document to get probate.

Suzana Popovic-Montag:   That’s right.

Ian Hull:   Okay, so we’ve got our Will, we’ve got no Codicil.  We’ve asked and there are no Codicils, no handwritten notes.  We open the page up, the first page and start reading.  And what are the some of the issues that start to concern us?

Suzana Popovic-Montag:   Well, first of all, we want to see what the executor appointment actually provides, whether it applies to specifically that individual who’s sitting across from you, or that individual jointly with someone else or jointly and severally with someone else.  And so we want to make sure that you’re dealing with the person who actually has the authority as they’re named in the Will.

Ian Hull:   Alright. And the question of course ties into who the individual is and in our scenario the nephew has come to see us. The uncle has died and the nephew lives…let’s just add another layer to the facts…the nephew lives in Florida.

Suzana Popovic-Montag:   And so another part of the fact-finding process is to get all the specifics about that individual.  So we’ll need his occupation, his place of residence, the address, contact information, phone numbers, that kind of information is really going to be important for the probate application.

Ian Hull:   And in your last podcast, you mentioned the fact that we’ve got to track down names of beneficiaries, ages, dates of birth and contact information, again hoping that our client has come with that.  If not, we’re gonna send them back to pick up the pieces in that regard.

Suzana Popovic-Montag:   That’s right.  And one of the easy things, of course, is to identify the minors because we all know that at certain age in whatever jurisdiction, they’re going to be qualifying as minors or as adults if they’re over that age limit.  A more difficult thing that we have to press with our executors is capacity issues because we’ve got requirements, certainly here in Ontario, that if a beneficiary is not capable within the meaning of our legislation, then we have to serve the Public Guardian & Trustee’s office, or similar government agency on behalf of that incapable person in other jurisdictions.

Ian Hull:   That’s a really good point.  When you’re pulling the information out of your client for just what you think is basically clerical, you know, contact information, we have to remind ourselves that we’ve got to dig down a little bit and just find out, okay are there issues of capacity, are there issues of there being minor children and things like that.  Are they 17, are they 16? And you know, put your mind to it, just so that we can make sure that the ultimate goal of a smooth application for probate goes through without any glitches.

Suzana Popovic-Montag:   That’s right.

Ian Hull:   Alright.  The other thing is, of course, in terms of the administration. And when you ask for this information or not is up to the individual lawyer but sometimes I like to press at this point, too, is that once I’ve got the core Will and Codicil or not Codicil in our case, I like to also press in terms of who was, if anyone, a Power of Attorney for the individual before they died.

Suzana Popovic-Montag:   And why do you do that, Ian?

Ian Hull:   Well, I mean, the truth is that as executor, you’re charged with the obligation instantly on the moment of death to bring in the assets of the estate, pay the liabilities and distribute.  One of the problems that can arise is if someone else was the Power of Attorney and they have basically been the executor for the deceased for whatever period of time.  You have to co-operate and you want to co-operate legally.  But you have to co-operate in terms of the transition, the flow of information, so that you’re dealing with the starting balance that is accurate from your administration forward.

Suzana Popovic-Montag:   And as part of that process, there’s really two options. And one is that you can compel that Power of Attorney to pass their accounts so that you’ve got the sanction of a Court Order saying that this is the starting balance for you as the executor picking up the end of the administration of the attorney. Or you can try to do that on a consensual basis provided that you have the consent of everyone with an interest in the estate who is capable and of age.

Ian Hull:   And that is often the case.  Most of the time you’re able to sort of smoothly transition the good work of the Power of Attorney into the estate and then at the end of your estate administration steps, you’re able to get a release from the beneficiaries who will say, look you did a fine job bringing the assets in, including the assets that were under administration by the Power of Attorney.

Suzana Popovic-Montag:   That’s right.

Ian Hull:   Alright.  So we’ve got ourselves in a good starting point.  What’s another twist ,once we’re reading through the Will that we want to, in terms of information gathering, that we can do and maybe the client won’t do but we may have to do our own digging on?

Suzana Popovic-Montag:   Well in many cases we’ll see gifts that are made to charities or charitable organizations.  And unfortunately many times too we’ll see improperly named or not as carefully named institutions or charities as we might like.  And so to the extent that we can get information from the executor about who the ultimate intended recipient of that gift is, that will certainly help us to determine who it is that was meant when they have an improperly named organization.

Ian Hull:   And we talk a lot about that in some of our previous podcasts about what we can do when we have a name that isn’t correct and what the steps are taken under the Cy-pres rules and so on.  In Ontario, we have a very streamlined process that we’ve been able to create statutorily so we’re able to fix some of the typos or the wrongly named charities fairly quickly.

Alright, well look, before we wrap up then, we’ve got really our ducks in order to the starting point.  But, of course, we haven’t even begun the important thing, and that is how much is involved, and what’s going where?  So the estate assets and bringing in the assets we’ll talk about in our next podcast.

Suzana Popovic-Montag:   Great.  Thanks very much, Ian.

Ian Hull:   Thank you.

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. 

This week on Hull on Estate and Succession Planning, Ian continues his discussion on what happens when words in a will are not clear and explains the various methods that can be used to seek interpretation.

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.

Suzana Popovic-Montag - Click here for more information on Suzana Popovic-Montag.

Interpreting Ambiguity in a Will or Trust - Hull on Estate and Succession Planning #208

Posted on August 10, 2010 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.  You’re listening and possibly watching episode 208.

Well, welcome back.  And again, I’m on a solo mission here because of Suzana’s holidays.  We are forced to go it alone.  But I will endure and hopefully it will be an interesting podcast on a solo basis. 

I wanted to, in the last podcast I started with the announcement of the reminder to many of us who knew him well the passing…the sad passing of Professor Whiteside from the University of Windsor, Ontario Law School. 

I also want to talk about, not that this is going to turn into an obituary podcast, but the death of who I think is a really fascinating guy and an interesting book that I just read, and that is George Carlin.  Now George Carlin is known to most of us as a comedian.  Fascinating guy, though, beyond that and he wrote a book.  In the last 10 years of his life he was writing an autobiography.  He passed away in 2008 so he didn’t actually get to complete it.  But he worked with the co-author on the book and it’s called “Last Words”.  And I just finished reading the book this summer, fascinating book and a really interesting read because George Carlin was so much more than just a comedian.  I mean, he was the guy that branched out into comedy at a level that nobody had seen before in the 70’s.  He had wild days of lifestyle choices during the 70’s and then the 80’s and then he became a children’s show expert and became a really interesting philosopher. And if you check out Google, some of the best comments about life, some of the most philosophical comments about life from a modern day philosopher, so to speak, or famous philosopher, are from George Carlin. And so anyway I just wanted to emphasize that I really enjoyed reading his book. And it’s called “Last Words”.  And he passed away, as I say, in June of ’08.

Alright, before we were talking about interpreting Wills. And again, it’s important to me because I thought it would be a helpful analysis to consider when one does a Will, what can happen.  We’ve talked about how it can go astray because family fights.  We can talk about solicitor’s negligence where you draw the wrong word, you put the wrong words in. What we haven’t talked about a lot is what happens when the words aren’t clear.  And I talked about in my last podcast the matrix, the steps that the Court will take in coming to its understanding and ultimately its decision as to what the words mean.

And where I’d left off was I had walked through the fact that we read the Will as a whole.  I walked through that if we can get a plain meaning out of the words, we stop there and we finish the analysis.  If we can’t, there’s still some ambiguity in the language of the Will, then we go to the next level and that is, look at the surrounding circumstances of the factual matrix.  And I just wanted to spend a few minutes digging down a little bit on what we mean by how deep we can go because it’s often said that, you know, it would be helpful  - obviously it would be great if you are trying to interpret if the person who drew the Will was around.  Well they’re dead, so we can’t use them.  And so a lot of people think intuitively, well let’s go talk to the lawyers or the doctors or the people that were around, you know, around the deceased when this was all happening. And there’s layers of admissibility.  There’s a whole bunch of rules of evidence that come to play in that regard.  But what was important, and it’s really interesting the way the Courts have approached is that they’ve said look, we’re gonna look to what is really easily identifiable evidence. And when I say that, I mean, documents, letters, codified notes, things like that that were created contemporaneously at the time the trust was made, at the time that the Will was made.  They’re gonna also and in rare occasion, they’re gonna listen to and, you know, in a sense, enhance their knowledge of the surrounding circumstances.  Remember, I talked about the armchair rule.  Get a real feel of the deceased’s thinking by sitting in the big chair and thinking it through.  By looking at, on rare occasion and sort of the lowest level of evidentiary admissibility is the idea of talking to the lawyer themselves, if they’re still alive.  Getting their direct evidence today.  So putting to that lawyer, saying well what did the testator mean when they said this?  And do that by way of examinations in respect of the lawyer.  Now that’s an option as well and really what the Courts have said is we discourage that a little bit. We’d rather source it from the concurrently made documents at the time that the Will or the deed was being drafted.  That’s sort of position A, if we’re gonna look at the surrounding circumstances, or we’re gonna look at the factual matrix.

So that food chain of review and that sort of…again, it’s an interpretation matrix.  We talk about a factual matrix.  That’s the interpretation matrix that the Courts will typically step into when sitting down and being asked to answer what specific words or a trust mean.

So in the context of that, of course, are situations where you want to say okay, well if we have an interpretation that needs to be undertaken here, what’s the process?  And I’ll just tell you briefly what the process in Ontario is.  And it’s similar across Canada and most of the United States, where interpretations are necessary.  You go to the Court…when I say, you, typically the estate trustee reads the Will and says I don’t know what that means.  It’s ambiguous, I’m not sure what steps to take from an administration standpoint.  Do I pay it to A? Do I pay it to B? I’m not sure, it’s not clear.  You bring an application for advice and direction.  You go to the Court and you say to the Court look, this is what it says, that is what it could mean, this is what it also could mean.  We need you to help us interpret this.  And when you set up this system, it’s typically three parties.  The one party, the neutral trustee that says look, I can’t understand these words. It could mean this, it could mean that. And then what happens is this and that get lawyered up.  This and that get represented.  So if the trustee says well, it could be that I pay all the money to A, but it could be I pay all the money to B, A gets a lawyer to advocate strongly that it comes to A and B gets a lawyer to advocate strongly that it comes to B.  So you can see how the litigation matrix unfolds and that is, is that a mutual proposition is put to the Court and then it’s worked out and analyzed and argued in respect of, you know, either side with the benefit of having the Court have at least started the process with an analysis that’s sort of neutral.  And it’s sort of like, well look, these are all the possibilities there are.  Now you’ll hear from all of the others as to what they think is the right one.  I’m not saying it’s the right way, your Honour.  I’m just….[inaudible]

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. 

This week on Hull on Estates and Succession Planning, Ian and Suzana focus on Will challenges. More specifically, what a lawsuit or litigation would be like if those involved resided outside of Ontario. Issues examined include when more than one Will is left such as a primary and secondary Wills, what happens when someone gets married, summary judgments and costs.

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.

Suzana Popovic-Montag - Click here for more information on Suzana Popovic-Montag.

Examining Litigation in Ontario – Part 2 - Hull on Estate and Succession Planning #207

Posted on July 28, 2010 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.

Suzana Popovic-Montag:   Hi and welcome to Hull on Estate and Succession Planning.  You’re listening to episode 207 of our podcast.

Ian Hull:   Hi Suzana.

Suzana Popovic-Montag:   Hi there Ian.

Ian Hull:   Okay, well we’ve now gotten over the World Cup effect and we’re deep into the summer.  Just came back from the wonderful town of Barrie, Ontario.  And again, harking back to my desire to talk about international perspective coming back from Barrie, we weren’t in Toronto.  And let’s continue our discussion about what it’s like to be a litigant.  I used in the last podcast Germany.  Let’s use this time Russia.  What’s it like to be a litigant from Russia looking into Ontario and what can you expect?  And we talked a little bit about litigation that ensues out of probate tax in our last podcast.  So let’s turn now to another kind of core area that we see in Ontario as, you know, giving rise to litigation and giving trouble.

Suzana Popovic-Montag:   And I think what you’re referring to is the use of perhaps a Will challenge in a situation where an individual has died here in Ontario, leaves a Will that affects a foreign beneficiary.  And so what kind of things do beneficiaries in those circumstances or potential litigants have to think about?

Ian Hull:   Absolutely.  So you’ve got that great scenario where your aunt who came to Ontario and amassed some wealth and you live in…well, we were using Russia.  You can live anywhere in the world.  But you live in Russia and you got a gift under her Will.  But all of a sudden this Ontario lawyer is telling you you’re not gonna get it for a long time because there’s a Will challenge.  And on what basis that has arisen.  So that’s the classic scenario and without getting too deep into the Will challenge, it’s litigation that ensues that really the Court is looking to determine whether or not the last Will of the deceased is the last, true, valid Will of the deceased.

Suzana Popovic-Montag:   And in terms of just adding a quick layer of complexity that we see more and more these days, many times we’ll find that people are dying with more than one Will.  And I say more than one Will in the sense that they’ve got a primary and a secondary Will for instance.  Or perhaps a domestic and a foreign Will as well.  So just add that into our discussion.

Ian Hull:   Well that’s a great point.  I mean, we have in Ontario under the Succession Law Reform Act a form for an international Will, which nobody uses.

Suzana Popovic-Montag:   That’s right.

Ian Hull:   We have primary and secondary Wills which we’ve talked about in the past which helps us avoid our probate tax.  And then we have exactly what you’re saying.  So if I’m in Russia and I have assets in Ontario and I have assets in Russia, we’ll usually say to our clients do two Wills.  But make sure that they deal just with the separate assets and that you don’t revoke the other Will.

Suzana Popovic-Montag:   That’s right.

Ian Hull:   So if I do one in Russia and I fly over to Ontario to visit and I want to do a Will here, that I don’t go and revoke that Will over there by citing in the opening recital “This Will revokes all other Wills”.

Suzana Popovic-Montag:   That’s right.  And in these circumstances, we also typically will suggest to clients that they consult domestic counsel so that we make sure we do the best that we can for our clients and their assets here in Ontario and that experts in the foreign jurisdiction will do the same in terms of those assets.

Ian Hull:   Absolutely.  If you don’t have that special expertise, the local expertise.  And we had a case recently where they were Greek assets and my client was in Ontario and we ended up in litigation but the problem was, Greek law and how to deal with it, even once the litigation was done, we had to go over to Greece and retain counsel in Greece, how to administer it, the special circumstances.  And we were really relieved because the Greek Will was done properly.  And so the transfers occurred in accordance with their law.

Suzana Popovic-Montag:   That’s good.

Ian Hull:   Another interesting sort of twist in Ontario that we always like to keep in top of mind is what happens when someone gets married with a Will.  And tell us about the rule.

Suzana Popovic-Montag:   Well the rule is that a Will is revoked by marriage unless, of course, there are other circumstances that will set aside that otherwise presumption basically.  And so this, again, also arises in many situations where someone will come from a foreign jurisdiction, they’ll get married, they’ll think that they’ve got their ducks in order and yet upon that marriage, that Will is revoked.  Or if they were to re-marry later in life, they think they’ve already had a Will once and that it’s still gonna carry effect to the end of the day, and that’s just not the case.

Ian Hull:   Alright.  Finally, and I don’t know if we’ll get through this…these are two heavy topics…but one’s that we’re running into a lot more is the perspective in Ontario Courts about summary judgment and about costs.  So why don’t we just spend a moment on this.  What is summary judgment? And then talk a little bit about the perspective of the Courts.

Suzana Popovic-Montag:   So when we’re talking about summary judgment, Ian, what we’re really referring to is the process whereby we can sort of fast forward the litigation and try to get to a resolution from the Court, a determination by the Court, or some kind of resolution in an expedited fashion without going through the traditional full litigation steps.

Ian Hull:   So, hence, the summary process of a judgment.

Suzana Popovic-Montag:   That’s right.

Ian Hull:   Cool.  Okay.  And so in Ontario we’ve just recently changed our rules so the Court has a different perspective.

Suzana Popovic-Montag:   And the truth is that now it’s expected to be much easier to be able to get a summary determination on a Will challenge or in a matter as long as the evidence is, you know, put forward, put forward quickly and that determination can be made based on whatever evidence is available.  It’s an excellent mechanism to expedite the process and hopefully save some costs along the way as well.

Ian Hull:   Alright.  And then finally you say the word “costs”, we can’t help but talk about costs.

Suzana Popovic-Montag:   That’s for sure because that’s always top of the mind for every client, whether domestic or foreign.

Ian Hull:   And what…sort of in summary form, how are the Courts dealing with costs in Ontario?

Suzana Popovic-Montag:   Well all Wills seem to be following the old traditional, you know, costs will follow the determination at the end of the day.  And so a successful party will be able to get their costs normally.  An unsuccessful party will have to pay the costs of the litigation.  Always exceptions because costs are completely discretionary to judges, but with the advent of making summary judgment easier and making the cost determination a little bit more predictable in the sense that we can say to clients a bit more definitively well if you’ve got a really strong case, then chances are you’ll get your costs.  But, you know, with the qualification that you just never know for sure.

Ian Hull:   Awesome.  Alright, well I think we’ve got a little better understanding.  If I’m sitting in Istanbul and I have a great aunt who has an asset, a Muskoka cottage, what kind of issues I’m gonna have to look to and can see are going to arise.  So we welcome all those from Russia, Istanbul, Spain and all the other countries that I’m not naming to help people get a little bit of a perspective in a summary way, a perspective of what they can expect when they get into litigation in Ontario.  So thank you very much, Suzana

Suzana Popovic-Montag:  Thank you, Ian.  And to all of our listeners, please feel free to send us any questions or any comments you might have in response to our podcast.  We’re always looking for some feedback in order to keep them timely and of interest to you.  Thank you.

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. 

Listen to: Examining Legislation in Ontario

This week on Hull on Estates and Succession Planning, Ian and Suzana talk about what a lawsuit or litigation would be like if those involved resided outside of Ontario. Issues discussed include knowing what to expect, what the system is about and how it works.
 

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.

Suzana Popovic-Montag - Click here for more information on Suzana Popovic-Montag.

Examining Litigation in Ontario - Hull on Estates and Succession Planning #206

Posted on July 20, 2010 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.

Suzana Popovic-Montag:    Hi and welcome to Hull on Estate and Succession Planning.  You’re listening and some of you may be watching episode 206 of our podcast.

Ian Hull:    Hi Suzana.

Suzana Popovic-Montag:    Hi there Ian, how are you?

Ian Hull:    Great.  Excited. This is our first podcast since the World Cup.

Suzana Popovic-Montag:    Yes, that’s right.

Ian Hull:    So in honour of the international component of the World Cup, we’re gonna talk about international issues.

Suzana Popovic-Montag:    Well and I thought we decided bringing the winner of the cup on.

Ian Hull:    Oh, that’s true.  We should be celebrating Spain.  That was a great win.  I watched it from a bar in Baysville, Ontario. 

Suzana Popovic-Montag:    That’s great.

Ian Hull:    So I wasn’t exactly in Madrid at the time when it happened but must be exciting to be there.  We’re really excited about today’s podcast because as I say we wanted to try to bring in this international flavor that the world has been experiencing with the World Cup and talk about what is it like if you are looking into Ontario?  So if you’re someone…and the joy of the Internet is that some non-Ontario people might be listening and watching our podcast…if you’re involved with a lawsuit or litigation related to an estate and you don’t live in Ontario.  So you don’t really know what to expect, what the system is about and how it works.  So we thought what we would do is look at some of the issues that would be of consequence or of importance to someone who would be from outside coming into our system in estate litigation.  And we wanted to start with first this concept that Chris Daven, a great lawyer down in the Niagara Region taught me and a neat idea is that this idea that remembering he does a variety of litigation.  He said, remember Ian, when you get into estate litigation, the fundamental difference between estate litigation and all other litigation wherever you are in the world is that you have chosen to sue blood, right?  I mean you can sue your wife, you can sue your…well you can choose to have a marriage breakdown might be contentious and so on…but in this case, we have chosen to sue blood.  So that’s the environment that we all live and breathe in every day. But let’s add another layer to that, and let’s have someone looking to our world of litigation.  And what are some of the issues that I would want to know about that exist in the estate litigation field.  So obviously what is of most importance is the client understands the threshold that you’re gonna meet, and that is, this could be aggressive and emotional litigation.  But one of the first questions I always ask my client who may be in Germany who is involved with an estate in Ontario, well what are their personal circumstances.  What are they…where are they at before they get involved in what can be heavy duty litigation?

Suzana Popovic-Montag:    And the truth is, Ian, we have more and more of these kinds of clients these days.  Thank goodness to technology being as it is.  And our own Law Society here in Canada and particularly in Ontario has imposed obligations on us as practitioners right from the get go in terms of these retainers.  And they start with the requirement that we actually have to identify and verify the identity of our clients.  And so before we even get into exploring what it is that they want to do, we are already working up some energy being expended on finding out exactly who they are and verifying who they say they are so that, you know, at the end of the day, we’ve got the protection in knowing that we’re acting for who they say they are.  And they have the protection of knowing that they’ve got reputable counsel that’s representing them in their matter.

Ian Hull:    Well that’s a really good point.  An important starting point that a lot of clients who are from outside of Ontario don’t understand that we have these strict rules.

Suzana Popovic-Montag:    Right, right.

Ian Hull:    Alright.  Well then let’s talk about some of the legal issues.  And one of the ones that generates a tremendous amount of estate litigation, and the purpose of this miniseries is not to rehash too much of the detail of these legal issues, but just identify them.  The purpose…one of the big issues, of course, is what about probate taxes?  And how does that affect…we have a special tax in Ontario.  First, what is it?  And then how does that affect litigation?

Suzana Popovic-Montag:    Well certainly I think if we step back, it causes a lot of litigation.  We sort of see the end result of people who are being very creative in their estate planning trying to avoid what, at the end of the day, really turns out to be a minimal tax when you compare it to the fees that are incurred in either trying to avoid it or thereafter disputing it and trying to deal with the litigation that comes about as a result of that.

Ian Hull:    Okay, but…so it’s bad, that part of it.  But first of all, what is the probate tax?  What are talking about?  If  I’m in Germany and someone is saying, what’s a probate tax?  Or I’m in Spain hopefully ‘cause they’re gonna be watching this, no doubt.

Suzana Popovic-Montag:    Well obviously when you’ve got an estate here in Ontario, the government will tax an estate trustee, the estate, when someone dies and you’re applying for probate.  So if you’re applying to the Court to get authority to administer an estate as the named estate trustee, whether in a Will or on an intestacy, there’s a requirement to pay a probate tax, an estate administration tax we call it here, that’s a graduated tax that is a cheque that basically the estate trustee has to submit with their application in order to get the Court approval of their appointment.

Ian Hull:    And it is truly a death tax.

Suzana Popovic-Montag:    Yes.

Ian Hull:    In the US, they have death tax…all over the world they have different varieties of death taxes.  But in Ontario we have, you know, they can call it what they want.  The government can call it what it wants, but it’s a death tax.

Suzana Popovic-Montag:    That’s right.

Ian Hull:    And as you said earlier, it’s a modest tax and people tend to overreact to it, but it’s still a tax.  And if you plan well, you can avoid it but you can also create new problems. 

Suzana Popovic-Montag:    That’s right.

Ian Hull:    So, let’s talk a little bit…first of all, it’s a modest tax in the sense that it’s a graduated tax but roughly about 1.25% of the assets are taxed.

Suzana Popovic-Montag:    And that’s the key, the assets of the estate.  And so you’re looking at personal property that’s owned here in Ontario by the deceased and real property. And the only liability interestingly enough that you can deduct from the value of the estate is any mortgage on real property. And so that’s something we keep in mind but even though the estate may have a whole bunch of liability, you’re still gonna pay tax on basically the gross value less any mortgages on real property.

Ian Hull:    Absolutely.  And so once we realize it’s a tax, so we’re gonna take our steps to try to avoid it, the litigation that can tend to ensue from it ties into this planning that is done maybe a little too quickly and little haphazardly.  And the classic is the joint account scenario.

Suzana Popovic-Montag:    That’s right.  Well any claims for a constructive trust or resulting trust can also arise from these kinds of situations and so it’s clearly not a Will challenge that’s gonna arise out of the estate administration tax, but different kinds of litigation that still can be quite contentious and involve people from the outside.

Ian Hull:    So just to wrap up this point then on the probate tax types of litigation, the joint account…what exactly…what are the mechanics?  Why does that…how does that give rise to litigation?

Suzana Popovic-Montag:    Well here in Ontario, if you have someone on title with you jointly there’s the concept of right of survivorship.  And so even though two people can be on title jointly with right of survivorship, on the death of one of those individuals, the other would take the whole property by right of survivorship.  And so the question becomes, you know, was that in fact what was intended?  Was it intended to give a gift of the whole value of the particular asset on death?  Or was it really just sort of a trust arrangement where that individual was on for maybe convenience purposes and holding that property in trust at the end of the day for the estate?

Ian Hull:    And, of course, if it lands in the estate, it’s taxable.  If it doesn’t, it isn’t. 

Suzana Popovic-Montag:    That’s right.

Ian Hull:    Alright.  So that’s just one other perspective.  And I think we’re gonna wind up on that point and come back in our next podcast with some other twists and turns of a litigant.  A foreign litigant looking to Ontario, what can they expect?  So thanks so much Suzana.

Suzana Popovic-Montag:    Thank you.

Ian Hull:    And again, congratulations to Spain.

Suzana Popovic-Montag:    Thank you very much Ian.  And I look forward to our next 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. 

This week on Hull on Estate and Succession Planning, Ian and Suzana continue the discussion on mediation, settlement and the ADR process. Topics discussed include: what is crucial to a case, good preparation, and the purpose of an open session.

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.

Suzana Popovic-Montag - Click here for more information on Suzana Popovic-Montag.
 

Settlement and the ADR Process – Part 2 - Hull on Estates and Succession Planning #205

Posted on June 16, 2010 by Hull & Hull LLP

Suzana Popovic-Montag:  Hi and welcome to Hull on Estate and Succession Planning.  You’re watching and some of you may be listening to episode 205 of our podcast.

Ian Hull:   Hi Suzana.

Suzana Popovic-Montag:     Hi there, Ian.  How are you?

Ian Hull:   Great, thanks.

Suzana Popovic-Montag:     That’s good.

Ian Hull:   Just came back from a Law Society Seminar on File Destruction and File Maintenance.  An interesting seminar.  The Law Society has come out with a guideline for us in Ontario here on how we can manage those files.  And giving it some really good heads-up on some of the issues.  And one of the things that struck me with the seminar was that there isn’t an easy answer.  That’s what law is all about.  And we wouldn’t be at the seminar if we thought there was an easy answer.  If the question was just destroy your file on a certain date and walk away, we wouldn’t have had to have the seminar.  So great guideline there.  Highly recommend to people to get on the Law Society, get looking at that guideline, if you’re interested in that issue.  And I’d been fortunate enough to participate as one of the speakers at it and had some fun with the whole issue of special issues relating to Wills and Estates.

Suzana Popovic-Montag:     Actually it’s really funny, Ian, that you call it the File Destruction Program.  Because if I have any recollection of the title of the program, I thought it was File Retention.

Ian Hull:   Ah, did I say Destruction?

Suzana Popovic-Montag:     Obviously see where your bent was.

Ian Hull:   That’s right.  Well file destruction in the Wills area, of course, is it lasts forever because we have the curse of really…and I mentioned this at the seminar, when you think about it in this day and age, in the electronic age, the only original document that actually matters anymore is a Will.  There’s really nothing else out there.  Now, I mean, that’s an over-statement.  Some crazy hearsay rule of some judge might want to tie in original documents record but typically on balance, the only hard copy document that matters anymore is the Will.  And it was an interesting discussion we had about that.  And a couple of other things came up, but you’re right.  It isn’t file destruction; it’s file retention.  So caught me on my grammar and she’s good at that. 

So let’s turn now back into our Estate world of ADR and mediation.  And we talked about in our last podcast the idea that we are in Toronto anyway, but in many jurisdictions, going to mediation. And we’re trying to get people to get the feel of what it’s like to be at the mediation day.  Sort of give you a heads-up to what you’re getting yourself into.  And one of the discussions is on getting the ducks in order, that whole idea. And it’s a legal concept but it’s a very colloquial term.  What are we getting at when we say for mediation, we want to get the ducks in order?

Suzana Popovic-Montag:     Well Ian, as you say, in Toronto anyways, we’ve got mandatory mediation.  And so you’re required as a litigant in an Estates and Trusts matter to actually go to mediation.  So it’s part of the Order that you get at the very initial, beginning part of the litigation when you set up the litigation.  It’s called an Order for Directions and will include a provision that the parties must attend for mediation.  In other jurisdictions where it’s not mandatory, the parties can still choose to go to mediation and we say that’s quite a good choice when you had the right case to do that.  And as part and parcel of that preparation for getting ready for the mediation, you want to get the best understanding of your case possible.  So you want to have done all your homework.  You want to get all the medical records in support of a Will challenge, for instance.  You want to speak to all the witnesses that are going to make or break your case.  You’re going to want to speak to the professionals who were involved and maybe interview the lawyers or the accountants or the investment planners, whoever it is that’s crucial to your case.  You want to make sure that you’ve got as much of your evidence and the facts supporting your case as possible, before you get to a mediation.

Ian Hull:   And you use that…I love that word, crucial to your case.  Because too often people think that, you know, we’ve got to find out everything before we go to mediation.  And that’s not our experience. Our experience is that we try to get out there and find that core evidence.  Like, for example, what’s the lawyer gonna say?  Or what’s the doctor gonna say?  Bring that to the mediation so that’s not a guess.  I don’t mind guessing at what the next-door neighbor is gonna say or Aunt Molly used to call me or whatever.  But what you don’t want to guess on is the core, crucial evidence.  And that ties into the next part and sort of the legal concept is getting the ducks in order.  And that is, everyone go with a financial interest.  You mentioned that at our last podcast and you talk about it because in our Order for Directions we have started the lawsuit by chasing down everyone with a financial interest, chasing down anyone named in prior Wills, making sure they’re all on notice, making sure those on an intestacy are on notice.  So that we can say to the mediator, you know what, we’ve invited everyone and if they didn’t choose to come, that’s okay, we’re gonna still press on.

Suzana Popovic-Montag:     And sometimes that’s actually a hard thing for clients to understand the importance of that, because they just see it as more money being wasted because you’re bringing more and more people to the table.  But the truth is, it only takes one person to scuttle a deal at the end of the day.  So one person can stand up and say well, you guys settled an Estate but I wasn’t there and I have an interest, or I have a claim against the Estate, I should have been there.  And then that whole settlement can go by the wayside and all the time, the energy, you know, the resources expended in getting to that stage are going to be totally wasted.

Ian Hull:   And the classic example of that is when people don’t invite, for example, if there’s a situation where minor children have an interest in the Will and they don’t tell the office of the Children’s Lawyer, the children’s advocate, the government agency here in Ontario. They don’t tell them and you have a mediation and you get a deal and you put it to them and they say well, you know what, if we were there we would have said this and this and we’re not gonna take that deal.  You can have just scuttled all of your efforts in it.  Now the other part of that is, so let’s presume we’ve done our good work and we told everyone that needs to be there and we put them on notice and those people are told about it.  One of the other choices that we find is often that we push back a little bit if we know that someone isn’t gonna show up.  For example, if one of the parties says I’m only sending my lawyer, I’m not coming myself.  Or one of the sisters says I’m not coming, but we know that sister is actually a crucial element.  Maybe not legally but maybe one of the people who can tie this thing together.  Maybe she’s the one who’s in the middle and helps hold this thing together from outside in, those kinds of things.  And often what we’ll do is before a mediation we’ll find out, test the waters, who’s coming, who’s not coming.  Are you bringing your wife?  Are you bringing your husband? Is that gonna upset people? Who’s at the table?  And sometimes I’ll go as far as to say, draw a little map of a table and say okay, who’s going to be sitting there?  And let’s talk it through at our pre-meeting that you talked about.  Let’s talk about who’s gonna be there, who isn’t gonna be there and if they should be there.

Suzana Popovic-Montag:     Right.

Ian Hull:   Alright, so we’ve done the legal angle on it, who’s gonna be there.  We’ve done the practical side of who should be there.  And now we’ve got everyone at the table.  So we’re sitting at the table and the mediator is at the end of the table, the hourly clock is on and away we go.  We talked about the open session.  Now the open session is dealt with in different ways.  And let’s talk a little bit about the open session.

Suzana Popovic-Montag:     Well the open session really…the purpose of it, as I see it to be anyway, is that you’ve got the mediator who’s going to introduce his or her understanding of the case.  And it’s an opportunity to make sure that the mediator understands the nature of the case, understands what the parties’ respective positions are, and understands the crucial facts.  I don’t necessarily think that the mediator is expected to know every single fact because the truth is, at the end of the day, it doesn’t matter.  But even stepping back from that, it’s just not possible.

Ian Hull:   Not realistic.

Suzana Popovic-Montag:     And, you know, same with a trial.  Mind you, at the end of the day, a judge doesn’t necessarily know every other fact either, but that’s a different…whole different ball game.

Ian Hull:   Yeah but you raise a good point, and that point there is that we, you know, sort of laugh sometimes.  But I mean judges make decisions on a very small part of the case.  No matter what people say, they only know a small part of the case.  They’ve only heard a little bit.  Same problem with the mediator.  So to the extent that we’re advocating, we don’t want to dump tons of information at that mediator.  The mediators are only so smart and have only so much retention. And so we’ve got that one day and we want again…we talk about the crucial witnesses.  I don’t want to fill that mediator’s head with what Aunt Betty is gonna say.

Suzana Popovic-Montag:     Right.

Ian Hull:   If Aunt Betty doesn’t mean anything to this case but it sort of grinds at the other side, I don’t want to waste people’s time.  I want them to know what Dr. No says.

Suzana Popovic-Montag:     And the key thing that I think in terms of preparation, Ian, that we didn’t mention is how important a good mediation brief is.  And I think you’re getting at it by highlighting the kinds of evidence that is really going to get a mediator excited.  And that’s the kind of  stuff that we want to make sure that we’ve put into our briefs for our client’s benefit.

Ian Hull:   Absolutely.  And we don’t…you know, again let’s put on our hat as mediators.  And we find that if we get sent stacks and stacks of materials, we’ll read them, first of all it’s at the expense of the people sending them.  But more importantly, the expense aside, is that again, what are we going to retain?  We want to retain the crucial elements of it and to the extent that we can be sent to that direction or that when I mediate, I point the mediator to that direction as fast as I can.  Even if the materials don’t jump out and I can tell because the mediator either has just not got my pitch at that open session, I’ll say I look forward to chatting with you in caucus, not in front of  everyone else because it will just stir the pot.  I want to chat with you in caucus and tell you a little bit of some of the highlights.  But, you know, let’s get on with the show.

Suzana Popovic-Montag:     And I mean the truth is that first session probably has to be managed very carefully by a good mediator because you don’t want to inflame the situation anymore than you already probably have with mediation briefs that could be a little bit more inflammatory than otherwise.  Just because that really is the first moment when the client really feels that they’ve had their say, you know, apart from the Affidavits that they’ve prepared in advance. This is their moment to sort of put a culmination of their case before someone and to get their best foot forward from their perspective.  So to be able to sort of step out of that and have a mediator say okay, I understand your positions.   In caucus you can really explore that in much more detail, give you that opportunity to have your say.  But for the purposes of the opening session, let’s just take it and rise above it.

Ian Hull:   And you know it’s interesting you say that because I was at a mediation with one of our junior lawyers and a great mediator. We settled the case but at the end the mediator looked at us and said you know what was wonderful about this whole mediation was neither lawyer inflamed with their brief.  And they said that really was a big leg up to getting the process of healing going.

Suzana Popovic-Montag:     I think so, that’s so true because it’s such an emotional…

Ian Hull:   It’s an emotional day.

Suzana Popovic-Montag:     Emotional kind of day.

Ian Hull:   Absolutely…sorry to interrupt you on the emotion.  We got double emotion there.  Alright, so listen, thank you so much for joining us today.  It’s been a lot of fun having you back.  Welcome.

Suzana Popovic-Montag:     Thank you Ian.  Thank you.

Ian Hull:   We’ve got ahead… a busy, busy time coming up ahead so we’ll have some more interesting reports of what’s happening on the field and we’ve got some more discussion maybe we can work through.  We’re gonna talk about maybe a bit about the choice of mediator in our next one and then work through a bit more of the mediation day.

Suzana Popovic-Montag:     Great.

Ian Hull:   Where we’re getting a perspective of the mediation day.

Suzana Popovic-Montag:     Super.  Thank you very much, Ian.

Ian Hull:   Thanks Suzana.

Suzana Popovic-Montag:     Thanks.

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss settlement and the ADR process. This topic was spurred after the ILCO Conference in Quebec City that Ian and Suzana co-presented at.
 

Also, Suzana announced that a “Best Of” CD is available. This CD is a compilation of all the “best” podcasts over the past year. To get a copy of the CD email Suzana with your contact information at: spopovic@hullandhull.com.
 

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 to learn more about Ian Hull.

Suzana Popovic-Montag - Click here to learn more about Suzana Popovic-Montag.

Listen to: 21 Year Rule – Hull on Estates and Succession Planning - #203

This week on Hull on Estates and Succession Planning Ian continues the discussion surrounding different issues trust arrangements can bring about and solutions to these issues. The specific issue discussed in this episode is the 21 Year Rule. Ian discusses how it creates problems and possible solutions to look to.
 

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.
 

21 Year Rule - Hull on Estates and Succession Planning #203

Posted on May 25, 2010 by Hull & Hull LLP

Welcome to Hull on Estates 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.  You’re watching and possibly listening to episode 203.

Well, welcome back. And again as a solo performance on my podcast today for Hull on Estates and Succession Planning, it’s Ian Hull. 

I want to keep flushing out and talking about some of the problems that trusts arrangements bring about and how we have been able to start to look to different solutions.  And the last day we talked about a very creative and maybe controversial model, avoiding the trust by using two different insurance products, the annuity and the life insurance product.

Today I want to talk a little bit about a slightly different twist on that, and that is, talk about the 21 year rule and how does that create problems and what solutions can we look to? 

So the 21 year rule is this - and as we’ve talked about on trust law many times, someone will take and we’ve been using an example.  Take $1,000,000 and decide you want to create a trust for the benefit of your surviving spouse and your children to basically enjoy the income from that $1,000,000 for their lifetime.  And then on their death, all the rest should go out to what will be effectively your grandchildren.  So it’s a nice legacy to leave.  It’s tax efficient, it’s creditor-proofing.  All those sorts of things it brings with it.  The difficulty is, one of the tax issues that arises with all trusts is that in Canada, after 21 years, CRA says you are deemed to dispose of the assets.  You are going to now pay the capital gains on that trust asset after the 21 years.  Basically, the rule is set up so CRA can somehow catch all of the taxes and that you can’t shelter your tax benefit forever.  And so they say, 21 years is the maximum a trust can last for tax purposes. 

Now it’s not the maximum a trust can last for trust purposes.  And let me explain that.  Obviously CRA is wanting their tax money as often and as quickly as they can. And so they say we don’t care what documents you enter into.  We don’t care what arrangements you’ve entered into by way of a contract, by way of a trust, by way of a handshake.  It doesn’t make any difference to us.  We want to get our fair share of our taxes in a timely way.  So if you’ve entered into at trust arrangement, you only have 21 years of the tax benefit that gets created by that.  And essentially you’re going to be sheltering some of the growth in the trust and some of the benefits, the tax benefits.  But after 21 years, you have to pay the piper and Revenue Canada makes sure that happens.

Now there are, of course, ways to avoid what we call that deemed disposition on the 21 year point in time.  And we’re not the tax experts in terms of the methodology of it but the nice thing is, is that it’s not necessarily the end of the day. CRA doesn’t necessarily get all of your money.  When I say all of your money, all of the tax owing on your money after the 21 years.  But having said that, what we find often as an important tool is proper estate planning, knowing we have a 21 year rule out there and knowing that it is not easy to avoid paying those taxes after the 21 years.

So what will often happen is we look at the estate arrangement and how we can use the estate planning arrangements to help manage the 21 year rule.  And the easiest and most obvious result is to create an estate plan, not a trust, but an estate plan that accomplishes a pay out of those assets before the 21 years come into place.  And one of the ways we can do that, of course, is to incorporate an early pay out of the money before the 21 years hits.  And one of the classic arrangements is that someone will put in their Will that part of the money comes out when their children hit 18, another part comes out when they hit 25, and the rest of it comes out when they hit 35.  Something like that.  That is a tailing off of the money so that within 21 years, the children are not getting it all at once but they’ve enjoyed the chunks of money over time.  That’s a classic arrangement.  Many, many Wills across Canada and in the US many trusts provide for that trickling out effect, therefore avoiding the 21 year rule.

The other classic scenario to help us defer taxes and not get caught up on this definitive 21^st anniversary of the trust being established is using a Will and providing for a spousal roll-over of the assets, so that in a sense you are just simply taking the assets of one spouse, rolling it over for the lifetime of the next spouse.  So what you’ve done is, you’re not necessarily in a trust arrangement.  You’re simply providing in the Will that all of my assets roll over to my wife - another classic scenario.  But what it’s doing is it’s giving another tax deferral, and that is that the wife doesn’t have to pay the tax owing on…and an easy example of this would be an RRSP.  Husband and wife own an RRSP.  The husband owns one for $500,000 and dies.  Well, there’s a deemed disposition that would typically be paid on that.  And all of the capital gains within that RRSP are paid right away, essentially.  That’s rough tax law, very 101 basics.  But to avoid that, you roll it over automatically to the spouse.  And CRA says that roll-over is okay.  And therefore the spouse then enjoys that RRSP, doesn’t have to pay the tax immediately, there’s no deemed disposition when it comes into the wife’s hands.  And that wife can enjoy the trickle out of the RRSP monies during her lifetime.  So it’s a classic deferral between the death of the husband and the death of the wife.  No trust arrangement has been created and you’ve avoided a deemed disposition.  You’ve taken more time for the deemed disposition to occur.  And that is, again, 101 tax planning to the extent that you can do it.  And that is, avoid paying the tax until you absolutely have to.  And that’s why the 21 year rule is there because eventually CRA says to you finally now look, you’ve wasted my time long enough.  You finally now have to pay the taxes.  And the easy scenario is the classic roll-over that accomplishes the same result.

So waiting and pushing out the payment of taxes through non-trust techniques is, as I say, another useful tool to avoid some of the draconian and problematic issues that arise with the 21 year rule and with trust arrangements generally.

So I think that covers off two easy solutions that we’ve talked it through at CALU.  We enjoyed the conference tremendously and really had a good time talking with the advisors who then also fed into us different insurance solutions within these parameters. But one of the central themes was sure, a trust works, but not necessarily.  And as we’ve learned a long time ago, each client comes with their own special assets, their own special needs and just automatically turning to the trust format as the solution isn’t, in my view, the answer.  You need to, in my view, look at other options and see if they fit your client a little bit better.

So thanks again for taking the time and joining our podcast.  We look forward to our next one.  I’m almost certain that that one Suzana will be at. But it’s been great, I’ve enjoyed it and thank you.

You have been listening to Hull on Estates 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 o

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. 

Listen to: Avoiding Trust Issues - Hull on Estates and Succession Planning #202

This week on Hull on Estate and Succession Planning, Ian discusses ways to avoid the trouble a trust creates by using insurance products.

If you have any questions any comments, send us an email at hullandhulll@gmail.com or leave a comment on our blog.
 

Ian M. Hull - Click here for more information on Ian Hull.

Avoiding Trust Issues - Hull on Estates and Succession Planning #202

Posted on May 18, 2010 by Hull & Hull LLP

Welcome to Hull on Estates 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.  You’re listening to, and probably watching, episode 202.

Welcome back.  It’s Ian Hull here alone again, but that’s okay.  We’ve got Suzana out in the…she’s actually on vacation this week in the wild blue yonder.

Alright, so we’d spent some time in our last podcast talking about a really interesting creative tool that we’d heard about at the conference…that I’d heard about at the CALU conference that I had attended in Ottawa. And the idea was, how do we avoid the trouble that a trust creates by using insurance products?  And the idea that we put forward was, as a suggestion, take a million dollars that the trust is going to be settled with or created with in any event during your lifetime, take some of that money and buy an insurance policy on yourself so that on your death, the grandchildren are gonna receive something for sure. And take the rest of it and buy an annuity, so that during lifetime or even on your death, depending on what kind of annuity you buy, the income beneficiaries. and in our example it was the surviving wife and your children, would enjoy an income and a fairly, and what I would suggest a very tax efficient way of dealing with it.

So that idea seemed a bit novel.  It’s used lots of times in planning but what came of it and why the idea was resonated in my mind was that it addresses – doesn’t solve all your problems – but it addresses that ongoing tension that exists between income beneficiaries and capital beneficiaries whenever you establish a trust.  Establishing a trust is a great idea in the right circumstances.  Obviously in our example that we used in the last podcast, we have a million dollars that someone wants to use and they want to put it into a trust and they want it to go out, in part, to the income beneficiaries and then at a certain point in time, down to the what our example said, the grandchildren.  The tool is tax efficient, it certainly creates tremendous protection from creditors and so on for those who are not going to actually receive the money.  For example, if one of your children had some creditor issues and the money is to flow out on a discretionary basis, the trustees decide well, if they’ve got money issues and there’s creditors haunting that child, maybe they don’t give that child any money.  And it’s a creditor protection technique.  Tax efficiencies are created there as well and it’s a conventional tool, the trust tool, as a domestic tax planning issue but as a conventional estate planning tool. 

We just throw out the idea of why would you want to get around that?  What’s the problem…what are some of the problems with that trust arrangement?  And why would we go so far as to, for example in our example, create an insurance result, an insurance solution, to avoid a trust?  Well let me tell you a couple of things that we’ve ran into.  One of the great tensions between any trust is, of course, the idea that in most trusts they say in the terms of the trust they say, you’re entitled to encroach on the capital. So you’re entitled to use some of the grandchildren’s money from time to time, should your surviving wife or children need more money than the income is producing.  And in these low interest period times, that’s a possibility.  In our example of a million dollars, a million dollars is not gonna create necessarily enough interest income to assist all of your children plus your wife.  So the trustees are typically given the power to encroach.  And that power to encroach, and we talked about this at the CALU conference, brings with it its own dynamics.  And interesting dynamics because the Courts for hundreds of years have said, if you’re a trustee and you have to decide whether or not to give more, take some capital up into the hands and hand it to the income beneficiaries.  If you decide to eat away at the capital as a trustee, you’re supposed to do that and make that decision judiciously.  So you’re like a judge in that situation.  Well, like a judge, you have to consider all of the circumstances. You have to…in my view we recommend to our clients, take lots of good notes.  Make sure that you are making a judicious, sensible decision before you start eating away at the capital and feeding it to the income beneficiaries.

The other thing the Courts have said is that you can’t have what we call

male fides.  You can’t have bad intentions when you make this decision.  So your decision has to be motivated by all good intentions.  Again, it sounds sort of silly that we…of course, every trustee should make their decisions and not be motivated by bad intentions.  But it can happen and one of the interesting twists is a trustee, in some of the case law, has said also a trustee is not supposed to consider the financial circumstances of the income beneficiary. They’re not supposed to look at whether or not the surviving spouse or wife has money before you feed an encroachment payment.  Now it all sounds sort of complicated and a little counter-intuitive but the point is is that the Courts have created some parameters of what it means to encroach on the capital and when you’re gonna take that money out of there, take capital and give it to the income beneficiaries. 

Where is the obvious tension?  Well the obvious tension is that the capital beneficiaries are gonna say hey, there’s now less money in the pool for me because you trustee encroached.  And that tension is always there because if there is a power to encroach, the truth is, the income beneficiaries…there’s never enough for them. And they’re gonna put tension on the trustee to go encroach. And the capital beneficiaries are gonna put pressure on the trustee to say don’t touch the capital, they don’t need it, there’s not gonna be enough for us at the end of the day. So an easy tension which is identifiable…it’s intuitively identifiable where the trick was and what we spoke about at the CALU conference intensely was, is that because that tension exists, litigation can and unfortunately often ensues.  So we thought as we were talking through it at the workshop, is there a way to get around this?  Is there a way just to simply avoid any of that tension?  And that solution…that insurance solution was put on the table as an option.  It doesn’t work for everyone.  But it eliminates the chance of someone complaining as between the income beneficiaries and the capital beneficiaries because they are buying an annuity.  It’s a fixed payment. There’s no debate as to what that person is gonna get and you’ve bought an insurance policy which comes into play.  So the capital beneficiaries know someday a fixed amount is gonna come their way.   So as I say, interesting, creative tool to avoid that ongoing tension as between the income beneficiaries and the capital beneficiaries.

And I don’t want to understate what that tension can bring about.  And it can bring about literally thousands…tens of thousands of dollars’ worth of litigation just to balance out those two interests between the income beneficiaries and the capital beneficiaries.  In the Courts, the interesting test there is the Courts are saying that the trustee up here has to act with an even hand.  And I talked about earlier, they have to act making judicious decisions. But they have to act, subject to some nuances that depend on the terms of the trust.  You always want to look at the terms of the trust. But typically the Courts say you have to act.  You Mr. or Mrs. Trustee have to act independently, even-handedly, judiciously when trying to balance these two interests.  So the trustee is stuck in the proverbial rock and a hard place.  It is a tough job and quite frankly, can be underpaid in many respects because of the amount of work that has to go into trying to balance these interests.  And so we started to look for other alternatives beyond just the simple trust arrangement, for the right family for the right circumstances.

Alright, well in terms of the solutions that we talked about at CALU, we also talked a little bit about what were some of the Canadian domestic tax planning issues in the context of Estates.  And I’m gonna save that for our next podcast because we came up with some more interesting thoughts and some really fun ideas that came out of a group of really highly-charged professionals.

So thank you again for joining me and we will look forward to our next podcast.

You have been listening to Hull on Estates 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 o

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.