Accounting Concepts and Definitions - Hull on Estate and Succession Planning #121

Posted on July 16, 2008 by Hull & Hull LLP
Listen to Accounting Concepts and Definitions

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about accounting concepts and definitions after receiving requests from listeners to outline a more general framework for estate administration.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

Accounting Concepts and Definitions - Hull on Estate and Succession Planning Podcast #121

Posted on July 16, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #121 of our podcast on July 15th, 2008.

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada. From the offices of Hull Estate Mediation in Toronto, Ontario, Canada, here are Ian and Suzana.

Ian Hull: Hi, Suzana.

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

Ian Hull: I’m great. Just want to remind everyone to please feel free to give us a call on our call-in line, 206-457-1985.

Suzana Popovic-Montag: And the number of course, is also in our show notes along with our e-mail address which is hullandhull@gmail.com. And of course you can visit our blog at estatelaw.hullandhull.com as well.

Ian Hull: So we’ve been having some great responses from our feedback line, both by the phone and by the e-mail, and we try to answer as many, well we always answer every single one of the inquiries, it’s just a question of how fast we get to it. This week I just wanted to start off with a response to a general inquiry we got on the e-mail about the whole series that we’ve been doing on the accounts. The comment that was made is, is that we are going through what are technical legal issues and they weren’t complaining in the e-mail but they wanted us to maybe recap a little bit in terms of the general framework of estate accounts, and in particular, maybe drill down on some of the core concepts and definitions, more from a definitional standpoint. So, as we started off in our podcasts in this little mini-series, we reminded everyone to first go to the Will or the trust itself. That’s an important starting point.

Suzana Popovic-Montag: And then you want to also of course, check whether there are any Court Orders that have been made, somehow interpreting either the Will or the trust documents so that it may mean something a little different than the black and white that’s actually contained in the document itself.

Ian Hull: And then backing down, of course, drilling down on the main documents and that is if there are prior accounts in the past or prior judgments.

Suzana Popovic-Montag: And then you’re going to look at starting with an original list of the assets that comprise the trust and how they were actually broken down in terms of 1iquidity and the nature of the assets that are in there.

Ian Hull: So the best typical page we see in a formal pass of accounts are the summary pages itself and that’s an important document within the document itself, but the next core listings are what are typically known as the capital receipts.

Suzana Popovic-Montag: And that of course, is followed by the capital disbursements.

Ian Hull: And again, we’re focusing on definitions today, and receipts, of course generally, are both capital, whether it’s both capital and income beneficiaries, you’re going to see capital receipts and disbursements. And with respect to that you’re going to see revenue receipts and disbursements in terms of a format of the accounts. But a capital receipt…

Suzana Popovic-Montag: A capital receipt itself will include all of the monies that have been realized on the realization of original assets in the trust or the Will and the profits on the sale of any investments that have been made by the executors or trustees.

Ian Hull: Now, with regard to staying with definitions and receipts, we turn to, of course, the concept of revenue receipts.

Suzana Popovic-Montag: And just to be clear, then Ian, that’s the distinction between a capital receipt when there’s both a capital and income beneficiaries in a trust and that’s really the only situation where a trustee or an executor has to break that down, otherwise we will just see receipts and disbursements.

Ian Hull: And so the revenue receipt itself, it’s really just a statement of revenue, money coming in and includes income that’s been received on the original assets, on investments that have been made by the executors.  And these type of receipts are generally interest and dividends and the entries usually need to contain sufficient information so you can find out where the receipt comes from, what asset it has been generated from, whether it’s capital or whether it’s from the investment account. 

The next thing that we talk about is, of course, we’ve talked about the general assets that are there, that’s like the inventory so to speak.  Then we’ve talked about the capital receipts.  Then we’ve talked about revenue receipts. The other thing, of course, is what goes out, and that’s disbursements.

Suzana Popovic-Montag: And the disbursement account should typically show to whom the money was paid out and on what account it was paid, with enough detail in there to make the item self-explanatory and, of course, indicate the amount that was ultimately paid.

Ian Hull: So all vouchers are typically numbered and so when you see formal accounts, you’ll see a numbering system so every single entry is actually numbered itself.

Suzana Popovic-Montag: And then in terms of the definition for the capital disbursement account, that’s a statement of all the disbursements that have been made including the payment of debts or funeral expenses, legacies that are provided for in the Will or the trust, and expenses that are related to things like appraisals and valuations for those assets, as well as solicitor’s fees and other disbursements that relate to the actual initial administration of the estate.

Ian Hull: So in terms of the out and we’ve talked about the in and part of the out, the other part of the out is, of course, revenue disbursements. And that is the statement of the income where money goes out, reflecting payments out of income such as income tax, that’s an easy example. Or taxes payable on capital gains on the date of death when you file your terminal return, that’s typically a central tax that is paid and dealt with. And in our last podcast, of course, we talked about the investment account itself and the form of it.

Alright, now we’ve wanted to sort of go through this analysis and this sort of definitional approach today because we are coming to, nearing the end of our discussions on how we are to account as executors. And one of the fundamental things that we’ve talked about throughout is an important question and that is, do the accounts balance?

Suzana Popovic-Montag: And when you say that, Ian, I guess you’re suggesting or questioning whether the total of the capital in the revenue receipts, less the total of all the capital in the revenue disbursements will actually equal the investments on hand and the balance in the bank account. And that’s the formula to make sure that the accounts do, in fact, balance.

Ian Hull: I’m a bit mathematically challenged, let’s break that down just one more time. So we take, to make sure (a) we need the accounts to balance, as best we can. That’s the first thing a judge looks to when they pass accounts, and actually beneficiaries do. So if I’m trying to balance the account, I take the total of what we’ve called the capital, that’s a total of what came in, and take all of the capital receipts plus all of the revenue receipts.  And then what do I do? So I’ve got those two items added up.

Suzana Popovic-Montag: And again, if you don’t have a distinction between income and capital beneficiaries, if you have an outright distribution, then you’re really just looking at the receipts. So capital receipts and revenue receipts, less the total of capital and revenue disbursements, so everything that’s come in, minus everything that’s come out, should equal what you have invested on hand, together with the balance in the bank account.

Ian Hull: Alright, so that is really, I mean, we can’t overemphasize the importance of that because really the minimum expectation of the parties is to do that.

Suzana Popovic-Montag: And that, I guess, then takes us to the actual reason that most trustees or executors will in fact prepare formal accounts in addition to, of course, getting the Court’s stamp of approval, and that is the heading of compensation.

Ian Hull: And that’s really, I guess that’s the second last thing we want to talk about in this series is compensation. We’re going to talk about and continue to talk about compensation throughout our various podcasts, because it is such a central part of, there’s the obligation to account and there is the reality that people want to get paid to account. So, but when we’re looking at accounts, let’s talk a little bit about what we’re looking for in the context of compensation.

Suzana Popovic-Montag: Well the easiest starting point, of course, is to compare the totals in the accounts to the figures on the statement of compensation.  And what we mean by that is, because we’ve talked about on previous podcasts the fact that there is a sort of rule of thumb in terms of an entitlement to compensation based on the value of the estate. And when you do the calculation, you want to apply the right percentages to the right total amounts in order to break down the compensation and then be able to justify it at the end of the day.

Ian Hull: Alright, so just in general terms, we’ve talked about this in the past, but in general terms, you are expected to be paid approximately 5% for your hard work throughout the administration of the estate. And how is that generally broken down?

Suzana Popovic-Montag: In terms of the big picture, Ian, it’s 2½ % on all of the assets that have come into the estate and then 2½% on all of the assets that are paid out of the estate.

Ian Hull: Alright. And that figure itself, the actual percentage figure, is that something that’s fixed or how do I work with that number?

Suzana Popovic-Montag: It really is just a rule of thumb and the cases will indicate as much.  And so when you’re looking at accounts, and you’re sort of sitting back on the other side, from the beneficiary’s perspective and wanting to ensure that the trustee is entitled to the amount that they’re claiming, or want to submit that they’re not entitled to as much, you’re going to make the arguments that you need to, to suggest that reduced percentages should apply. And we can discuss some of those situations where we might want to say that less than perhaps 2½ % is what the trustee is entitled to.

Ian Hull: Alright, well I think we really need to talk a little bit about, we now have the general rule.  And as with law and life, every rule is made to be broken.  So I think in our next podcast, we should spend some time just talking about what will typically be looked at in terms of deductions from compensation, the changes to the general rule, whether up or down.  And most of the time it’s down but we can also talk about some of the developments in respect of the compensation being increased up. So why don’t we save that for our next podcast?

Suzana Popovic-Montag: Okay, Ian, that sounds good. Just a reminder of our call-in number to anyone who’d like to call in, 206-457-1985.

Ian Hull: And please keep the e-mails coming and go to our webpage at hullandhull.com and drill through all of the various source documents we have.  We have a ton of work that we’ve done and put on the web for passing accounts materials, but feel free to e-mail us at hullandhull@gmail.com.

Suzana Popovic-Montag: Thanks very much, Ian.

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

/mem

Tags: , , , , , , , , , , , , , ,

Delegation in Investment Accounts - Hull on Estate and Succession Planning Podcast #119

Posted on July 1, 2008 by Hull & Hull LLP

Listen to Delegation in Investment Accounts

 

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss delegation issues that arise when dealing with Investment Accounts and address a listeners question about the family cottage.

 

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

Delegation in Investment Accounts - Hull on Estate and Succession Planning Podcast #119

Posted on July 1, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #119 of our podcast on Tuesday, July 1st, 2008.

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada. From the offices of Hull Estate Mediation in Toronto, Ontario, Canada, here are Ian and Suzana.

Suzana Popovic-Montag:   Hi there, Ian.

Ian Hull: Hi Suzana.

Suzana Popovic-Montag: How are you today?

Ian Hull: I am great.

Suzana Popovic-Montag: That’s good.

Ian Hull: I think this podcast will actually be lodged into the internet through the mysteries of digital technology on Canada Day.

Suzana Popovic-Montag: Happy Canada Day everyone.

Ian Hull: Yes, big day here in Canada, and a big day for us as we continue our march towards our 200th podcast. That’s our next benchmark, I guess, in some ways. We’re now at 119.

Suzana Popovic-Montag: Just a quick reminder to anyone who’d like to call in and give us feedback, comments on the show, please feel free to call us at 206-457-1985.

Ian Hull: And feel free, of course, to e-mail us at hullandhull@gmail.com, or jump on our webpage at hullandhull.com and surf around, find our blog, find all of the backup information that we tend to be using for a lot of these podcasts.  And we’re hoping to put more on where this summer’s project is looking toward trying to get some more video on there and certainly keeping the white papers on the website as well. 

So, before we begin our further analysis of the ever-pressing issue of investment accounts, when you’re putting together Court format accounts, I just wanted to talk about an e-mail that we received last week on our discussion about the prudent investor rule. And we got a great e-mail, again this is tied into some specific advice they were seeking so I’m just sort of summarizing what was being asked of us.  And the focus of the question was, just how much of a balanced portfolio do you have to maintain or how important is diversity when you have the main asset of the estate being the family cottage? And remember, we talked about the unique quality of a family cottage as an illustration of the escape clause that the Act and the Courts have allowed trustees to maintain an asset that, on the face of it, looks like it isn’t prudently being invested in the sense that it may be a wasting asset or it may be costing more than it’s making. And this person e-mailed us asking us what happens if it’s a fairly modest estate and you have essentially the bulk of the estate is indeed the family cottage? 

So it’s a tough question and one that, as all lawyers have to say because we are right when we say it, it depends on the facts and it depends on the circumstances. We didn’t get into any more detail on what this specific question was, but I’m going to add one layer onto that and that is, is that let’s say it is a trust for a surviving widow.  So in this case, a happily married couple, they have Wills that say all to the other in trust, and on the death of the final last person standing, everything to the child or the children, in this case there’d be two kids. So in that kind of scenario we have a surviving spouse, she’s 84 years old, the trust is only, and when I say only it’s made up of $900,000, $800,000 of it is the family cottage and $100,000 of it is cash. Well, in that kind of scenario, if the surviving spouse needs the money, then in that kind of situation it may be that the Court would say, you know what, you do have an obligation to diversify. Notwithstanding the fact that the two children are probably chirping away saying don’t sell the cottage, mom, it may be that that situation where, as a fiduciary, you have to assess it as being a unique asset certainly, but when you need cash, you need cash. So, again, it would depend on the personal circumstances of the surviving spouse and if she had her own wealth she may say, don’t worry, keep it. So that scenario works well, I think, as an illustration, because if the surviving spouse has their own wealth, and chooses to say to the fiduciary, don’t sell, then you’ve got some comfort to hang onto, it’s completely undiversified portfolio. But, if the surviving spouse says, I need the dough, then you’re faced with a difficult decision. And the third question would be, what about the children of the children, i.e., the grandchildren?  And what would the representative, the legal representative of the grandchildren, say about that diversification question?

Suzana Popovic-Montag: And that also raises, of course, the issue of the even hand rule and how a trustee has to maintain an even hand between the income and the capital beneficiaries of the estate. And I know we’ve talked, Ian, on previous podcasts a little bit about that rule as well as how a trustee would go about exercising discretion in light of the fact that the surviving widow either does or does not have her own assets in her own estate.

Ian Hull: And there’s that other layer, of course, that we’ve talked about, is that we’re not actually as a fiduciary allowed to ask the surviving spouse typically what they have or don’t have. So you’re hoping there’s some co-operation and some discussion that is frank and maybe outside the boundaries of what we’re allowed to ask. But I have seen cases where you’ve got the even hand rule tugging away at you and then, and that being basically, look, we’ve got to balance these three generations.  That this is the trust, the trust says look after the income beneficiary, the surviving widow, look after the children and keep in mind the grandchildren. So, I’ve seen cases where government agencies that monitor the grandchildren’s interest have insisted that that is not a diversified portfolio and that you have to seriously consider, notwithstanding the provisions of the Act, seriously consider selling the cottage. So really, from our perspective, I think what’s important to keep in mind is, if you keep, if you really want to keep a special cottage issue, or a chalet, or some recreational property, unique characteristic property, in a trust after you die, you’d better think through what all of the competing interests are going to be, and think through what the Court’s going to say to you. Because you may end up forcing the sale of this cottage property inadvertently, because of these competing interests.

Suzana Popovic-Montag: It really does underscore the importance of planning with proper professionals before these kinds of situations can unfold, so that you can sort of not predict but certainly try to anticipate the issues that can arise and perhaps creatively plan around that so that at the end of the day, you do have someone upholding what you ultimately intended to be your intentions.

Ian Hull: So I think that, anyway, I really appreciated the input from our e-mail participant on that one.  But it’s a good dovetail into the next concept I think that’s worth flushing out, because at the end of the last podcast, Suzana, you talked about this mutual funds and delegation and the kind of twists and turns that come up in the investment account environment. Let’s talk for a few minutes, if we could, about this concept of delegation first of all, and then dovetail it into this investment account problems that get created.

Suzana Popovic-Montag: And generally speaking, what we start with is the fact that as fiduciaries, we are somewhat restricted in terms of the level and the extent of delegation that we can make in doing our fiduciary responsibilities.  And one of the things that, in particular as I was saying previously years ago was a big issue with mutual funds, to what extent trustees could hire mutual fund advisors to actually help them administer these pools of funds and these assets.

Ian Hull: So when we say delegation, I guess we’re saying that we can’t hand off even the littlest jobs of any responsibility as a fiduciary. For example, signing a cheque. There is some authority that says that as a fiduciary we can ask someone else to give a Power of Attorney and ask someone else to sign the cheques. So in this situation, where we’re talking about delegation, we would say, hey we’ve got, the fiduciary is actually out of town most of the time but we’re running a bank account here. That fiduciary can delegate the job of signing the cheques probably.  but what he can’t do is delegate the decision-making to sign the cheque. So every time, say there was an income payment that had to be made and the fiduciary was out of town and their lawyer, for example, was in charge of sort of making sure the cheques went out once a month. Every time a cheque is written and signed, it has to be on the express instructions of the fiduciary. Now the fact that the lawyer, under a Power of Attorney, may sign the cheque is probably okay, but that’s a good illustration of what we say delegating. As long as you don’t give up the mental and the judicious decision to have the cheque signed, although you’re passing on the actual mechanics of it, you probably haven’t breached the delegation rule. Again, twists and turns, depends on the facts, but that’s an illustration of this delegation. And your example is the perfect one, because with a mutual fund, that was sort of like the ultimate delegation from a fiduciary standpoint, where you were a fiduciary, you handed $100 to an investment advisor and that investment advisor turned that money over, bought into different funds.  In the old days, they’d buy a bit of IBM, a bit of Bell Canada and you’d give them direct instructions. Well, with a mutual fund, of course, you’re handing it over to a further person, that is the fund manager of the mutual fund. So you give it to your investment advisor, who then hands it off to a fund manager.  And until the Act was changed in Ontario, there was some concern that that was essentially over-delegating. You had pushed out the decision-making too far. And it’s a really important point when you come to the expectations of the investment account which we’ll talk about more in our next podcast, but an important step. 

So in summary, we’ve got the old fashioned broker-client relationship untouched, but then we twisted it, we pushed it one step further and now we have some statutory protection to allow this sub-delegation, so to speak.

Suzana Popovic-Montag: And just to close the loop on that as well, we always underscore the importance of actually reading the documents and here the trust instrument or the Will, because that can be something that’s specifically planned for and language can be put into these documents that can authorize things over and above what the statute or what the common law itself provides for. So just another thing that we try to keep in mind in these situations.

Ian Hull: Well that’s great, Suzana. Hopefully we’ve had a good discussion on the question of delegation and certainly answered the question that came in from the listener. So thanks very much Suzana.

Suzana Popovic-Montag: Thanks to you, Ian and thanks to everyone who has joined us.   Again, just a quick reminder of our call-in number for any questions or any comments that you might have on the show, 206-457-1985.

Ian Hull: And any direct feedback, go to our blog at estatelaw.hullandhull.com or our e-mail at hullandhull@gmail.com. Thanks so much.

Suzana Popovic-Montag: Thank you.

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

/mem

Tags: , , , , , , , , , , , , , , , , , , ,

The Formal Passing of Accounts - Hull on Estate and Succession Planning Podcast #113

Posted on May 20, 2008 by Hull & Hull LLP
Listen to The Formal Passing of Accounts.

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the specifics of what happens when you have to go to court to formally pass accounts.

Comments? Send us and email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

The Formal Passing of Accounts - Hull on Estate and Succession Planning Podcast #113

Posted on May 20, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #113 of our podcast on Tuesday, May 20th, 2008.

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada. From the offices of Hull Estate Mediation in Toronto, Ontario, Canada, here are Ian and Suzana.

Ian Hull:    Hi, Suzana.

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

Ian Hull: I am fantastic. Looking forward to lucky 113 on our podcast efforts.  And we finished off last week reminding our listeners to please feel free to contact us.  And the best way is to jump on our webpage at hullandhull.com and we have an easy navigation to our podcasts and our other sources we have on the webpage.

Suzana Popovic-Montag: And we had a couple of comments this week, Ian. People were looking for the article that we had referred to during our last podcast from The New York Times and I just want to remind people that they can actually find that link on our webpage under the News and Links icon at the very bottom of the page. We have started what we call sort of our recommended reading list, and it’s what I kind of call behind the doors, you know “the Oprah’s Book Club”. So there’s actually a link to the article there and so for anyone who’s interested, please feel free to go there.

Ian Hull: That’s great. And we’re going to try to build that link up a little bit. I had a great meeting the other day with one of Canada’s leading social media new members, and a great guy, Bob Berman, who is a lawyer up in Yorkville who does family law.  But he and I were talking about that and developing our own reading lists on our own webpages and he and I were sharing some books. Right now, I know, I’ve just finished “Blink” and “Tipping Point”, which were both excellent books and we’re going to put those on the link page.  And we’re also, I know, Suzana you and I are just starting through “Ground Swell”, which really now seems to be one of the “must reads” in the social media world in terms of getting a handle on marketing and working through the social media network. So that’s another great book.

Alright, we left off last week talking about accounting issues and I was speaking to a great friend of mine up in northern Ontario the other day, about this very topic.  And she’s a lawyer there and she said to me, “You know, Ian, one of the things that amazes me is that I’ve been doing this practice of law for many, many years, and I have never had to formally pass my accounts”. And we talked about yesterday, the last podcast, how we had talked a little bit about the informal expectations and the way you can resolve the question of your ongoing obligations to account as a trustee informally. We’ll give some more ideas on that as we work through, but the point sort of struck me that here’s a lawyer that’s been practicing for 20 years in a busy estates practice.  And most people just don’t force their hand of going to Court and having what is called essentially a Court audit, where the judge essentially has to go through line by line. Now having said that, in our practice, we see a lot of it, and it’s one of those things that this lawyer pointed out to me was that she wished that she had more or had seen a bit more of it because it is becoming more and more prevalent. One is, is that people are expecting this standard of good record keeping and if you don’t have it, they’re pushing you on to Court. And number 2 is, is that we can’t forget that where there are minor children’s interests or interests beyond the scope of able-bodied adults, we have to pass our accounts in any event. 

So we thought, Suzana and I thought it would be a good exercise to go through some of the details and specifics of what happens when one passes their accounts, when they have to actually draw that short straw and go to Court.

Suzana Popovic-Montag: And as we were discussing during our last podcast too, Ian, and I think that with the increasing size of estates that are out there now and this huge transfer of tremendous wealth, we are dealing with bigger estates and more at-risk, so to speak, when you are the executor of an estate, and different kinds of beneficiaries.  And so it’s not surprising that we will probably see more and more of the formal passing when a trustee ultimately says, “Well what’s the downside, why wouldn’t I get the Court, you know, seal of approval on my administration, why would I forego that opportunity if I don’t have to?”

Ian Hull: Well that’s for sure and so let’s talk a little bit about what the process is. Now, we’re going to talk a bit about some of the Ontario centric steps, but I know certainly across Canada and in most of the jurisdictions in the United States, the process is almost identical, in that you go to Court and you file what is called a Notice of Application to pass your accounts. It’s a formal bound copy of a couple of very important things. One are the accounts themselves that you want the Court to audit; the other is a copy of the Will or the trust that is involved, the kind of core document. And number 3 is you file what you hope to be the final Order, the final result you look to achieve.  So you give everybody sort of the information, you give them the basics of the documents that you need to work from and then you say this is where I want to land, I look forward to your comments, so to speak.

Suzana Popovic-Montag: And as part and parcel of that Notice of Application, it’s going to certainly quantify the period of time during which the accounts are being passed and it’s also going to refer to the compensation, specifically that the trustee is looking for, as well as the legal fees to which he or she is seeking, on basically on an unopposed basis. And then there is, certainly in Ontario, there is provision for the costs and what that amount would be for anyone who has actually reviewed the accounts.  It’s usually either half or three-quarters of the amount that the executor would otherwise be entitled to.

Ian Hull: So we have this application and the form of it is basically we’re going to the Court to say, “We want our accounts passed” and we say it in a more legalistic way, but that’s the long and the short of it. The second part of it, though, is in the Application material, is in the Affidavit of Verification. And this Affidavit, you have to, as the executor, swear to the truth and accuracy of the accounts attached.  So that someone, basically the information you’re putting to the Court, sticks to you from an evidentiary standpoint. The form of that Affidavit is, there’s sort of two approaches: One is a very straightforward, one sentence long that says, “I attach the accounts and I swear them to be true and accurate”; and the other is one where, if you’re looking and you’re seeing a fight on any of the issues, you may want to flush out your position a little bit in some of the facts.

Suzana Popovic-Montag: And that’s, I think, more the unusual circumstance but one that we certainly see and I think it ultimately helps a Court who is dealing with the situation know the facts up front and know what’s sort of coming down the pipes before the parties actually show up in Court to argue those issues.

Ian Hull: So this expanded Affidavit of Verification, the form of the first one is obviously simple enough to do.  Obviously you hope that the accounts are accurate and true, prepared typically by a third party, someone who has a specialty in estate format accounts, but the comprehensive Affidavit in support will typically tell the story. So, for example, say you have an estate that has a large amount of assets in it and you are looking for significant compensation. You may want to, in the Affidavit of Verification, set out some of the detail of your work. Sometimes, for example, the Court likes to see copies of your dockets that you kept track of your efforts over the years in administering the estate, so that they have a sense of the time. They also may want to put a sense of the complexity and the background in it. This is just one example of what you can do to expand your Affidavit to help tell a better story to the Court, and also, quite frankly, to sell it to the other side.

Suzana Popovic-Montag: And that’s particularly so, I think, when you’ve got beneficiaries of an estate who are not familial members. So when you have, you know, third parties who wouldn’t know necessarily the extent of the work that the executor is doing, like a charity for instance, or another beneficiary who is far removed from the process, and it can only help to have all that information put to them sooner rather than later.

Ian Hull:  So if you’ve got your package ready, another thing that you want to keep in mind is, I think, I always tell my clients, is that watch your timing. This process takes a lot of time.  In the grand scheme of things, it may not be a lot of time if you’ve administered an estate for many years, but in Ontario and in most other jurisdictions, there is a substantial amount of time that people have to respond. For example, when you send out your Notice of Application in Ontario, and you serve everyone who has an interest in these accounts, what we call a financial interest, they have at least 45 days to respond.  So you’re looking out, you prepare the materials, take some time, then once you serve it you’re still looking at another 45 days minimum to have the accounts audited by the Court.

Suzana Popovic-Montag: And if the beneficiaries actually reside outside of Ontario, you’re looking at 60 days as the minimum service requirement. And that basically gives the parties hopefully enough time to review the accounts, to seek advice if they need to do so, and at the end of the day, ultimately the expectation or the hope being by the trustee, that they will consent to the accounts.

Ian Hull: So we’ve got it out there, we know it’s going to take some time. In our next podcast, we’re really going to flush out what our, I mean, you can never say typical in our world, but what are traditionally the areas of objection. But the procedural step is once you serve the account on those with a financial interest is you will then…they have an opportunity to file what is called a Notice of Objection, so a complaint, formally with the Court. And this is done either typically not in Affidavit form, but it is filed through the form of the Court and there they set out the nature and extent of the objections. So in our next podcast, I think it would be helpful for us to just take a little bit of time drilling down on some of the, what we call the low-hanging fruit issues, the issues that are often criticized in a passing of accounts so that we can help get better prepared for that inevitable day and hopefully have done our work before, to sell the Volkswagen to the beneficiaries.

Suzana Popovic-Montag: Well, thanks very much, Ian.  I look forward to our next podcast, and I remind our listeners who are interested in providing us with some feedback on this or any other podcast, to feel free to visit our webpage at hullandhull.com and leave us a message.

Ian Hull: Thanks very much, Suzana.

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

/mem

Tags: , , , , , , , , , , , , , , ,

Battle Brewing Over Heath Ledger Estate?

Posted on March 13, 2008 by Hull & Hull LLP

Recently departed actor Heath Ledger (A Knight's Tale, Brokeback Mountain, The Dark Knight) left behind a young daughter.  But based on news reports, Ledger appears to have neglected to include his daughter in his Will, perhaps unintentionally.  It appears Ledger last filed a Will in 2003, before the birth of his daughter Matilda in 2005 and before his hit film Brokeback Mountain.  This Will reportedly leaves Heath Ledger's estate entirely to his father, mother and sisters, obviously with nothing to little Matilda.

Heath Ledger's father Kim has stated that little Matilda "will be taken care of".  However, Kim himself has been in litigation with his brothers, who accused him in 1994 of mishandling their grandfather's estate to the extent of $2 million.

This intriguing story also illustrates the importance and difficulty of valuing an estate.  News reports contain estimates from $2.5 million to $20 million, quite a range for an estate that spans at least two countries. 

No word yet on whether litigation will be launched on little Matilda's behalf against her exclusion from her father's estate.  Of course, other Wills may emerge...

Stay tuned.

Chris Graham

 

 

Tags: , , , ,

The Perfect Storm?

Posted on March 10, 2008 by Hull & Hull LLP

It's About the House's Current Market Value, Stupid.

One of the first steps in any estates litigation matter is valuing the estate assets.  Most assets are easy to value: RIFs, bank account, etc.  But for many estates, the major asset is house.  This is particularly true in the GTA (Greater Toronto Region, for our U.S. readers), where baby boomers who bought modest homes decades ago have seen the value of their house skyrocket.

The twist for both estates lawyers and litigants is that house valuations are inherently less precise and more subjective than most assets.  Accurate information on the market value of a house can be crucial. 

The subprime fiasco in the U.S., a potential serious recession and Toronto's new land transfer tax may possibly create the unthinkable horror: a decline in the housing market.  I am far, far away from being an authority on real estate, but it may be prudent to consider attaining current appraisals where there is doubt about a home's value.  That is especially the case for matters that have dragged on for years.  Obtaining an appraisal from a reputable appraiser, for instance one certified by the Appraisal Institute of Canada (see: http://www.aicanada.ca/e/index.cfm), is one option to consider.

The information gleaned may be invaluable in driving a better settlement.

Thanks for reading and have a great week.

Chris Graham

 

Tags: ,

Assets and Liabilites - Hull on Estate and Succession Planning #102

Posted on March 4, 2008 by Hull & Hull LLP
Listen to Assets and Liabilities

This week on Hull on Estate and Succession planning, Ian and Suzana expand on last week's discussion about determining value. They also discuss taking an inventory of an estate's assets and liabilities.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985 or leave us a comment on our blog.
Tags: , , , , , , , , , , , ,

Determining Value - Hull on Estate and Succession Planning #101

Posted on February 26, 2008 by Hull & Hull LLP
Listen to Determining Value

This week on Hull and Estate and Succession Planning, Ian and Suzana talk about values and appraisals. They specifically look at some of the issues related to assigning value to assets such as jewellery, automobiles, antiques and artwork.

Comments? Send us an email at hullandhull@gmail.com, leave us a message on our blog or give us a call at 206-457-1985.

Determining Value - Hull on Estate and Succession Planning Podcast #101

Posted on February 26th, 2008 by Hull & Hull LLP

 

Suzana Popovic-Montag:  Hi, and welcome to Hull on Estate and Succession Planning.  You’re listening to Episode #101 of our podcast on Tuesday, February 26th, 2008.

 

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by

Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada, from the offices of Hull Estate Mediation in Toronto, Ontario, Canada.  Here are Ian and Suzana.

 

Ian Hull: Hi Suzana.

 

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

 

Ian Hull: I’m just great, thanks. I just want to remind anyone who’s interested that we have set up our comment line: 206-457-1985. That’s 206-457-1985.

 

Suzana Popovic-Montag: And we’ve also got our gmail address for anyone who’d like to send a comment by way of gmail. And that is: hullandhull@gmail.com.

 

Ian Hull: Terrific. Well, we have the pleasure of making this one a perfect podcast because we’re at 101 and we’re re-recording. For some reason, our last one didn’t catch.

 

Suzana Popovic-Montag: And that’s a rare occurrence, I can assure you.  Re-recording with Ian Hull.

 

Ian Hull: So we’ll get it even more perfect this time. But again, great fun being able to leap over the 100 podcast mark and really enjoy doing these podcasts with you. Had a good topic last week which I butchered, no doubt, without you, but we talked about valuation issues. And I tried to focus on the real estate issues in particular. So for today I thought it might be useful to take it that next step and talk about some other issues relating to valuation because my theory is this is actually the cornerstone of any administration and can be the source of many, many problems in a contested environment.

 

Suzana Popovic-Montag: And I think in terms of starting with the different types of appraisals, we’ll start with my favourite, and that is, jewellery appraisals.

 

Ian Hull: Yes. And those of you who don’t know, Suzana is an expert in jewellery. If you do see her in person, you’ll notice that instantly.

 

Suzana Popovic-Montag: I don’t know anything about appraisals though.

 

Ian Hull: But she knows value. So what about the jewellery appraisals? There seem to be, sort of two aspects of this issue.

 

Suzana Popovic-Montag: I think what you’re referring to there, Ian, is the fact that the appraisal in terms of the ultimate value of that bequest to whomever it’s ultimately left to at the end of the day.  And then the second side of that would be, of course, the value that’s added to certain jewellery owned by the deceased on the date of death for the purposes of probate tax.

 

Ian Hull: Absolutely. And I was also thinking of a third, now that you mention it. So I have now three ideas, and the third is, is that the special nature of the asset itself. Like real estate, where you might have a cottage which has got tremendous personal and emotional issues tied to it, real estate is only one aspect of administration that does that, of course.  And another is easily identifiable, certainly in our experience, is jewellery. A piece of jewellery brings with it perhaps the source of great frustration in litigation unfortunately.

 

Suzana Popovic-Montag: And that’s really because of the sentimental value that can be attributed to a piece of jewellery that may not have a very large financial value to it at the end of the day, but in terms of the sentiment, the emotion behind it can really be a flashpoint during the course of any particular estate administration.

 

Ian Hull: So like a real estate appraisal, it seems to me worthwhile to really address where your source of the appraisal is coming from. Are you using a reputable jeweller? Or are you using a pawn shop sort of analysis of what it’s worth. And, of course, that brings about the important question as to does it really matter? Does the valuation really matter or is it just a question of allocating this piece to one person and that piece to another person?

 

Suzana Popovic-Montag: I think just to follow up on that thought, Ian, also many times people will insure jewellery for the purposes of having, you know, the requisite or the appropriate amount of insurance on something. And those appraisals, as we know, tend to be a little bit higher than perhaps the actual value of the piece of jewellery. And so that’s something else that we might want to keep in mind if, as you say, the value actually does matter at the end of the day.

 

Ian Hull: That’s a good point as well. Really, from my perspective, the inventory of the jewellery itself is so crucial.  And any early steps that can be taken to ensure that you’ve got your assets under control in any estate administration are important, but jewellery can be something that if you lose a ring here or there, can be a big problem for an executor.

 

Suzana Popovic-Montag: And I know you’ve mentioned in previous podcasts the possibility of videotaping certain things within the home of the deceased and I think that jewellery is one of those key things that you may want to consider actually having pictures of or videotaping because it can be really difficult to identify a gold ring amongst ten of them; some with diamonds, some without, some with other stones. Not that I’m speaking from experience …

 

Ian Hull: You’re hearing this from the expert, let me tell you. Just looking now how many gold rings she has on. They all look the same to me.

 

Suzana Popovic-Montag: That’s a man for you.

 

Ian Hull: Alright, so the jewellery issue is one.  What’s another issue on the appraisal side that we want to think about?

 

Suzana Popovic-Montag: I would suggest that the automobile appraisals at the end of the day are also quite important.

 

Ian Hull: That’s for sure, because the automobile itself needs to be dealt with and sometimes it can be a very valuable asset of an estate. Or other cases, it really can be a pain in the neck. I noticed recently an advertisement for a car dealership that says, “We’ll take any car, you don’t have to come buy a car from us, we’ll buy any of your cars off your back”, so to speak, and get that off your list.  And it even says for estates to feel free to call the dealership because we’ll buy your car. And I thought that was a great hook because really, from a standpoint of an executor in most estate administrations, dealing with the car is a bit of a pain in the neck because the value is often, by the time the person has passed away, a modest amount.

 

Suzana Popovic-Montag: And also, by the time it’s actually administered because there’s always that little bit of a delay from the time of death to the time assets are actually transferred, and of course, we know that cars don’t necessarily, unless they’re collector cars, appreciate over time. Most will depreciate.

 

Ian Hull: Yeah and that’s right. And this is really one of those assets that is a not… this is like a wasting asset, as opposed to some, you know, for example, if the real estate market’s going up or jewellery becomes more valuable over time, that could be either way on jewellery, but it’s important to really get it and manage it quickly, make sure that the car is insured instantly so if someone does steal it out of the driveway and go for a joyride or something like that, there’s no liability to the estate trustee in that regard. I had an interesting case once where the car was left in the driveway for a year and a half. The oil had leaked out onto a gravel driveway and it created an environmental problem because the oil and gas had been leaking out of the car in a situation where there was no environmental problem. Now it wasn’t huge, they were able to clean it up.  But when they went to sell the house, they had an additional liability that’s just, as I say, it’s something that shouldn’t be taken too lightly and it’s easily administered. So the Courts are not going to be very sympathetic to an executor who hasn’t moved quickly to deal with an automobile because it is so readily marketable and so easily dealt with.

 

Suzana Popovic-Montag: So Ian, any other things that you think would be important to value at the date of death?

 

Ian Hull: Well, I think the other two that come to mind anyway are antiques or more globally, just artwork as such.

 

Suzana Popovic-Montag: And do you find that many estates have either antiques or artworks just as a general rule?

 

Ian Hull: Well it’s hard to tell. And you’re right, I mean, you don’t see a lot of antiques or artwork that come into an estate of great value. But it falls into the category of jewellery which may become much more important to the individuals because this corner table always sat by mom or this was where dad always smoked his cigars and you had great discussions with or something like that. There’s some emotional value to it as well as the antique value to it. So yeah, I think it’s one of those things that you mentioned earlier, videotape your assets, go through the house, go through the place wherever the assets are…lock it down so that you know where things are. If something goes missing, a painting goes off the wall, I mean it may not be a Van Gogh and you may not have lost a lot in the process of one of the beneficiaries coming over to the house to clean it up and then take the painting with them. But you might have created an emotional issue that you’re underestimating how the other family members will react to and you’ve created new problems for yourself.  Because the obligation as a trustee is from the moment of death, you are charged with control and custody of the assets of the estate. And sometimes you’ll see cases where executors are told by, for example, a trust company or someone will go right in and change the locks quickly to a house. Well it seems to be to a lot of people, people will think, “Oh my gosh, that’s terrible. It seems very draconian, very over the top”. But it really isn’t in most cases because of this onerous obligation to account.

 

Suzana Popovic-Montag: I think that’s a really good point and just sort of thinking of other assets that might be flashpoints. You know there’s often times like silverware or, you know, other kinds of things that were owned by the deceased that to a third party trustee may have almost no value at all.  But the sentimental value to certain family members can really not, you know, we can’t underestimate that and so the suggestion of taking some kind of picture or video of it seems to be probably the best way to deal with that.

 

Ian Hull: So just to recap the valuations issue, there’s two main points as far as it seems that we’ve been trying to focus on in the last two podcasts. One is, of course ,what level of valuation do you want undertaken? Do you want a belt and suspenders careful valuation with any of these assets by a qualified valuator and at the Cadillac level, so to speak? Or do you want the sort of drive-by ad hoc valuation because it doesn’t really matter? For example, the jewellery items, there’s twenty of them, they’re all relatively modest in value and you don’t want to go to the expense of incurring it. Those are the kinds of considerations you need to look at, I think, from the starting point on the valuation.  And then the second part of valuations is, as you say, making sure you get control and custody of all the assets so that you are indeed valuing the assets as of the date of death in a professional way, in a way that no one can criticize you for having messed up on.

 

Suzana Popovic-Montag: Well that’s great Ian. I think that sort of wraps it up for today anyways. And so I just wanted to remind anyone who’s listening, if they would like to send us some comments, they can certainly feel free to call us at 206-457-1985 or send us an e-mail at hullandhull@gmail.com. That’s hull, h-u-l-l-a-n-d-h-u-l-l @gmail.com. And, of course, you can feel free to visit our blog which is at www.estatelaw.hullandhull.com. Thanks again, Ian.

 

Ian Hull: Thanks Suzana.

 

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

 

To listen to other Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

 

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

 

/mem

Tags: , , , , , , , , , , , , , , , ,

Valuations and Appraisals - Hull on Estate and Succession Planning #100

Posted on February 19, 2008 by Hull & Hull LLP

Listen to Valuations and Appraisals

Ian celebrates the 100th episode of Hull on Estate and Succession Planning.

He discusses the question of valuations and appraisals and how these affect estate mediation.

Comments? Drop us a line at 206-457-1985 or send us an email at hullandhull@gmail.com.

Valuations and Appraisals - Hull on Estate and Succession Planning Podcast #100

Posted on February 19th, 2008 by Hull & Hull LLP

 

Ian Hull:  Hi, and welcome to Hull on Estate and Succession Planning.  You’re listening to Episode #100 on Tuesday, February 19th, 2008.

 

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by

Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada, from the offices of Hull Estate Mediation in Toronto, Ontario, Canada.  Here are Ian and Suzana.

 

Ian Hull: Hi and welcome to another episode of Hull on Estate and Succession Planning. I’m Ian Hull and today unfortunately I am doing this alone because Suzana Popovic-Montag is away.  So I’m going to carry this solo and I want to remind you that if you want to be heard on our podcast, you can participate in our discussion by leaving a comment.  Please feel free to call 206-457-1985.  Now the number is also in the show notes and our webpage at: hullandhull.com. It’s an easy source to link to our blog and e-mail address for our podcast is hullandhull@gmail.com.

 

Today I wanted to talk about a couple of things. First and foremost with great pride, I can announce we’re at 100. Those of you who listen to the Canadian Podcast Buffet would know that this means that we’re in the Century Club which we intend to advise our good friends at the Canadian Podcast Buffet about our status at hitting 100. This has been quite a ride. Suzana and I began this challenge in March of 2005 and we’re here today having hit #100. As I say, I’m here alone but Suzana is here in spirit.

 

So today the issue I wanted to talk about is one that really, I think, underlies many, many of the problems that we face in an estate administration and that is, the question of valuations. Now this isn’t just going to be sort of a comment or discussion about valuations, about very big properties and very expensive properties. This is about valuations globally and how it affects an estate administration.

 

The first thing that somewhat comes to mind with valuations is real estate. And one of the things that an executor, once you’re appointed executor is put to task right away at, is to deal with real estate typically. And most estate administrations you’ve got the house or a cottage or something like that. And the valuation issue becomes a primary concern. Let me just pause at this moment on the real estate issue and let’s just save for the comment that I want to talk about right is… let’s say classic residential property. When you’re an executor, you really need to look around, check out the lay of the land and see who your beneficiaries are. Often you’ll have at the table people who may want to buy the property and there may be deals that you want to make directly with the beneficiaries to avoid commissions and so on. But in almost any event, there is the need to determine what the value of the residential property is. And there’s two central approaches. One is to get the valuation done by what I call a drive-by appraisal. And that’s getting a reputable agent or getting a few reputable agents, two or three, to give you a drive-by appraisal of the property. You need that at minimum for probate fee purposes in the sense that if you’re going to be paying the probate tax in Ontario. But just to get an understanding of the value of the assets you want to, I think, I tell my clients to consider first of all is the drive-by. Within the real estate agent gambit is also the possibility that they will go and just do a full inspection and give you a valuation on that basis. So it’s more than a drive-by. But it’s done by a real estate agent. And it’s essentially done on testing the market and so on, in that approach.

 

The other important delineation is if you want to really lock down the value of the property is to get a certified appraisal, I’ll call it. In Canada, there’s a certain association of certified appraisers. They have to be qualified and so forth. And you get what is essentially a more fulsome report on the appraisal value. That appraisal though, is typically obtained in situations where there is going to be some dispute as to the value. Maybe it’s the value from the taxing authority, they want to know what the value is for capital gains purposes. Or maybe it’s the value determination within the beneficiaries. More often than naught, the drive-by or walk-through appraisal through an agent is enough for an estate administration. But I always tell my clients to consider the possibility of doing a formal appraisal. And I think, I mean, two things come from this. One is, is of course the obvious is that when you get a drive-by or you get an agent to do the appraisal, it costs some money but it’s typically something in the modest range. I mean, my experience is that somewhere around… sometimes they’ll do it for free, sometimes they’ll do it anywhere up to fifteen hundred dollars. To do a proper, certified appraisal though, you’re looking at anywhere between two and five thousand dollars depending on the residential property. Now you get more of a seal of approval, so to speak, a more qualified opinion with the more expensive, but it’s a totally get-what-you-pay-for situation.

 

So that’s something, I think, that you’ll want to really consider is, is that whether or not, if you have real estate, you want to proceed to get the informal appraisal or proceed to get the more formal appraisal through the certified process, through a certified appraiser. I can think of a thousand reasons to do one and a thousand reasons to do the other and so to guess at it right now doesn’t make sense. I just think that what I will say though is, is that typically people stay within the ambit of working with agents to get it and don’t go to the full level of the appraisal.

 

I just want to talk a minute about commercial properties. Now in my example I think of, a nice woman dies, she dies with a cottage that needs to be appraised for CRA purposes because they want to know what the capital gain is, they want to appraise the house because the house is to be sold, the proceeds are to be split between the two children. And thirdly, they own a little retail property around the corner that they bought 50 years ago and it’s for a convenience store at this point, with a little tenant on the top of it. I mean that kind of scenario. And really, I mean, starting with that, when you get into a commercial property, then I tell my clients we’ve got to really seriously consider getting the certified appraisal.

 

Now like anything though, I make sure that we’re getting the appraisal from experts. People who know the area, the property, it’s the same as residential. You don’t want to get someone to give you an appraisal that works out of Whitby, when their specialty is Whitby and the property is in Saskatoon. But the same thing goes with commercial properties. There are specialties within their different framework of commercial properties that you want to look to, to get the right person to get involved with the appraisal process.

 

Now from a government taxing standpoint, CRA, the appraisal on a commercial property is very important and it also can be very important from the standpoint of a disposition ultimately to the beneficiaries. So we’ve got this appraisal process and I want to take it to another level in a sense, another tier of appraisal problems and that is, is that whether or not it’s just a Mac’s Milk and a tenant on top property or it is a series of buildings or it is something more substantial, different buildings and some vacant land and a whole mixture of residential and commercial properties. Obviously you need to have them carefully appraised just for the taxing authorities’ standpoint alone. But it seems to me anyway, you want to take a look at the properties and determine what you will ultimately want to do with these properties. If, for example, some are going to be split up amongst the families, each property given to one child or something like that, what we call a direct gift of the properties through the Will, then that may affect how you’re going to approach the appraisal. If they’re going to be sold, that may affect your approach to the appraisal.

 

I notice now in my practice many more times what’s happening is, is that you’ve got situations where you’ve got say, six or seven buildings, some bigger than others, a portfolio of a few million dollars in real estate and you may want to unload them all collectively to a group. And there are obviously people who are interested in investing in collections of properties. I know Suzana and I have dealt with over the years situations where there’s such a large collection of properties that you can even find that some of the pension funds and other very big investors are interested in getting the real estate properties into their portfolio. So what’s important, I think, is to look at the end game, determine what kind of property we’re dealing with. Are we dealing with residential only? Are we dealing with a mix? Are we dealing with small commercial property? Or are we dealing with larger or middle-sized commercial properties? Seek out the appropriate advisors and where I say that is, is that I typically say to my clients, “Look, go to…for a commercial property situation where you’ve got multiple commercial properties…go to two or three of the big brokers, get some analysis done by them (a) on the valuation side but (b) on what they think they’re going to do to market these properties to get them sold. And they’ll often put a bit of a pitch together, so to speak, and go to the executors with some sort of framework as to how they think they can put the properties out on the market and ultimately sell them.

 

So it comes down to a real question of due diligence and, I think, anyway from my perspective, you can never spend too much time getting the valuations organized because they can be a tremendous source of litigation at the end of the day if you’re not careful.

 

Alright, well that’s just some thoughts on valuations. There’s many more issues that we can talk about in Episode #101 when Suzana gets back, so I will save that for her. As I say, it has been a great thrill and an honor and a pleasure to be able to work with Suzana on these 100 podcasts. I’m looking forward to another 100 podcasts and I know that if we combine these plus all the Hull on Estates podcasts that we’ve done over the years, we’re well over 100, but today does mark an important and a bit of a monumental day in my podcasting career, only sad to be doing this alone.

 

Alright, so thanks again for joining us and this brings us to the end of this week’s discussion. Thanks for listening to me today. We look forward to hearing from you and again, our email is at hullandhull@gmail.com or our comment line 206-457-1985. I’m Ian Hull and until next week, so long.

 

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

 

To listen to other Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

 

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

 

/mem

Tags: , , , , , , , , , ,

Asset Particulars - Hull on Estate and Succession Planning #98

Posted on February 5, 2008 by Hull & Hull LLP

Listen to Asset Particulars

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the importance of keeping track of asset details.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

 

Asset Particulars - Hull on Estate and Succession Planning Podcast #98

Posted on February 5th, 2008 by Hull & Hull LLP

 

Suzana Popovic-Montag:  Hi, and welcome to Hull on Estate and Succession Planning.  You’re listening to Episode #98 of our podcast on Tuesday, February 5th, 2008.

 

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by

Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada, from the offices of Hull Estate Mediation in Toronto, Ontario, Canada.  Here are Ian and Suzana.

 

Ian Hull: Hi Suzana.

 

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

 

Ian Hull: I’m just great.

 

Suzana Popovic-Montag: That’s good.

 

Ian Hull: So just as a reminder, we have set up easy to get access to our daily podcasts and blogs. Go to hullandhull.com for that, but we’ve also set up a call-in line.

 

Suzana Popovic-Montag: And what we’re hoping to do is to hear from you there at area code 206-457-1985.

 

Ian Hull: So we encourage it and hopefully we’ll get some people interacting in this over the weeks to come.

 

Now we’ve been working through and looking at questions of really, estate administration techniques that we can help assist our lawyers and assist ourselves in the process of trying to work through an estate administration. And of our checklist or things to do in getting things organized before we pass away, one of the things that I keep harping on is trying to keep a running total of your assets and so on. But let’s spend some time today talking about particulars of what we want to have on that list.

 

Suzana Popovic-Montag: One of the things that I certainly encourage people to keep a list of, Ian, is their insurance policies. Things like insurance on their vehicles, on their home, on their personal belongings, so that these things are put into one place or are easily accessible or at least, you know, you have an opportunity to know that you’ve found everything that you’re actually looking for.

 

Ian Hull: And that… can be very important. One of the things that people forget is that just because you paid the premium doesn’t mean that the insurance company is going to pay the claim. And you need the policy. This is particularly important with life insurance as well. It’s best to have the policies located in one single spot or easily found in some way, shape or form so that it takes a lot of the burden off your executor when the time comes that they have to move quickly. For example, if you’ve got a car and you don’t know whether or not it’s insured, that’s going to be an urgent issue that you have to deal with.

 

Suzana Popovic-Montag: And certainly when you’ve got real estate, there are situations where the death of the owner of the insurance policy is going to affect whether or not that insurance company will continue to insure that asset. And so you want to make sure that if there is the requirement for some vacancy permit or something like that, that the insurance company is notified of the change in circumstances so that the insurance does continue to be effective.

 

Ian Hull: One of the questions that people often ask is, “What do we do with the house now that it is unoccupied if the person has passed away?” And it’s a case-by-case answer and it depends on almost every situation. It depends on the insurance company itself but typically what an insurance company will say is, ‘we don’t want to continue to insure a house that is vacant except if you’ – and then this is where it is case-by-case – ‘except if it is properly being monitored.’ And they’ll often say, ‘we want to make sure there’s first of all there’s maybe a security system in place.’ Another idea that often they say is, is that you guarantee that you’ll check it every day. That way you can preserve the property in the interim while you’re going to get it ready for sale or distribution to the beneficiary but at the same time keep it well insured.

 

Suzana Popovic-Montag: And just in terms of being well insured, I think that just sort of tweaks me to the fact that if the personalty, or the things that are within the house, that are valuable had otherwise been included in the value of the home for the purposes of insurance and now those things are no longer there, then you want to make sure that what you do have in place is adequate insurance for the house.

 

Ian Hull: Okay.  So let’s talk just more about this real estate and how…we’ve talked about the insurance aspect…but how we deal with real estate generally.