This week on Hull on Estates, David Smith and Natalia Angelini talk about the duties an estate trustee he or she is charged with from the moment of a testator's passing. Duties include locating the will, making funeral arrangements and being responsible to see the intentions of the testator preserved.

Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.

Dealing with Estate Issues That Arise Immediately Upon Death - Hull on Estates Podcast #135

Posted on November 4^th, 2008 by Hull & Hull LLP

Natalia Angelini: Hello and welcome to Hull on Estates. You’re listening to Episode #135 on Tuesday, November 4^th, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.  Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and wills. Now, here are today’s hosts.

David Smith: Hi and welcome to another episode of Hull on Estates. I’m David Smith.

Natalia Angelini: And I’m Natalia Angelini.

David Smith: If you want to be heard on Hull on Estates, you can participate by leaving us a comment. E-mail us at hull.lawyers@gmail.com or you can visit our blog at estatelaw.hullandhull.com. Hello, Natalia.

Natalia Angelini: Hi David. How are you?

David Smith: You know I’m okay. I’ve got a bit of a cold so my voice is about an octave lower than usual, but we’ll do our best today. So today, Natalia, we thought we were going to talk about the issue of what duties an estate trustee is charged with from the minute the deceased passes away.

Natalia Angelini: Right. It’s a really interesting topic because it’s a time when I think the estate trustee has to act fairly quickly to do a number of things, and I think the first of those is locating a Will.

David Smith: That’s right and I suppose at the outset too, we should give a little plug to Paul Trudelle of our office who has given a paper.  And there’s a webcast available on the website dealing with this issue as well. We’re, in our podcast, going to try and explore in a little more detail some of the issues that Paul touched on in his discussion.  So we commend that webcast to you. So I guess, what’s the first issue that usually arises for the estate trustee?

Natalia Angelini: I think the first can definitely be finding the Will of the deceased, because the first thing the estate trustee wants to ascertain is what the deceased’s testamentary wishes were.  And so that’s definitely an important thing to look for.

David Smith: That’s right and of course, you know everybody keeps their stuff somewhere different. In some cases, it’s a safety deposit box. In other cases, it’s a filing cabinet, under the mattress. It will depend on the person.  So if the executor is charged with the responsibility to look for the Will, they’re going to look in the obvious locations, and hopefully be able to find the Will.  And of course, the lawyer plays a role, because if the lawyer is known, he or she might have a copy of the Will.

Natalia Angelini: Right, exactly, so it’s a good idea to make inquiries with the lawyer of the deceased if you know who that lawyer is, or perhaps looking through the deceased’s personal papers, you can determine who the lawyer is and contact him or her that way.

David Smith: Right and you know, if you get into a situation where there’s just no luck finding a Will, you can advertise in the Ontario Reports.  That happens on occasion, we all see lawyers do that on the odd occasion.

Natalia Angelini: Right.

David Smith: When someone says, yeah, I knew so and so had a Will but I didn’t know who drew it.

Natalia Angelini:  Um hm. So I think aside from finding the Will, and probably one of the next things that the estate trustee is going to definitely be thinking about is making funeral arrangements.

David Smith: That’s right. And in the cases of an unexpected death, obviously that’s going to probably be a situation where the executor’s got to take some action of their own accord. Of course, with older people and people who are contemplating their own death through illness or what-have-you, or some other really sad situation, we’re seeing more and more that people will prepay their funeral or have them organized ahead of time.  But in most instances, the estate trustee is going to have to deal with this, you know, obviously rather unpleasant task, and certainly it’s the foremost concern.

Natalia Angelini: Absolutely.  And with respect to payment of the funeral, I think it’s helpful to note that those costs are of priority payment and come out of the assets of the estate.  So if it’s not prepaid then at least the estate trustee hopefully has assets available to make that payment.

David Smith: Well that’s right and it’s probably worth just making the point at this stage too, that the government provides a death benefit of $2,500.  And really that’s there primarily to fund the cost of the funeral or to contribute towards the cost of the funeral.

Natalia Angelini: Right, that’s a good point. In dealing with the funeral, I think this is a real interesting one, especially if you’ve maybe got a dispute between family members as to how it should happen, and potentially that may even differ with what the deceased has set out in his or her Will, and you’ve got a really interesting situation about how this deceased person is going to be put to rest.

David Smith: Well you’re right Natalia and we’ve seen situations where it’s potentially very emotionally volatile. You can have a situation where you have religion sometimes clash with the intentions of the testator. There’s one case where, the name escapes me, but Rick Bickhram of our office recently, I think a couple of weeks ago, blogged on a case where a deceased person named her boyfriend as executor. He was charged with acting as executor and intended to cremate her remains. The family, for religious reasons, opposed that and this matter ultimately went to Court and the Court decided that it was in the authority of the executor to make that decision.

Natalia Angelini: Right, and during Paul’s talk, he went through a few cases dealing with this issue and it seems to be that the consensus of the Court is that the duty of an estate trustee includes that duty to dispose of the body and that the estate trustee really has final say.

David Smith: Right, and you know that really seems to be a very settled law. Unfortunately, I think you’re still going to see cases go to litigation on this in the odd instance, not because the outcome is ever really going to be in question because the law seems so settled that the estate trustee can do what he or she wants.  But I suppose if I’m a bit cynical, for settlement purposes, someone might start that litigation in the hopes of arriving at some kind of compromise. So you know, certainly that’s an issue which regrettably can result in litigation on the odd situation.   But, you know, we keep repeating the same refrain which is that the executor has that responsibility.  And it’s worth also mentioning I think, Natalia, that you can say whatever you want in your Will about how you would like your remains to be disposed of; the reality is that the executor does not have to follow those, does he or she?

Natalia Angelini: Absolutely.  He or she does not, but interestingly though, his or her duty is to dispose of the body in a manner suitable with the estate of the deceased.  So even though the estate trustee may seem to be able to do whatever he or she wants, there’s definitely going to be criticism of a trustee who just, you know, goes ahead and, for instance, has an elaborate $50,000 funeral where the deceased has a fairly modest estate.

David Smith: Right. I think generally it’s expected that the funeral will be commensurate with the size of the estate, so I think that’s a really good point.  And also, there’s just a moral duty, I think, in this situation, where you’d expect the executor to do what the testator wanted.

Natalia Angelini: Right.

David Smith: It’s probably worth doing a little segway here, while we’re on this topic. I mean, this has to do now with the issue of donation of body parts.  And, of course, there’s legislation in Ontario that deals with that, right Natalia?

Natalia Angelini: There is. It’s the Trillium Gift of Life Network Act and it’s an interesting piece of legislation that allows a person to consent to the donation of their own body, or body parts, upon death.

David Smith: That’s right. So we’ve all sort of seen the situation where the consent card is kept quite often with someone’s driver’s license and this is an important priority.  And, of course, it plays an important role in given the success of transplant surgeries and what have you, that this is obviously an important legislative prerogative that this kind of intention can be preserved, even if it’s not contained in the Will.

Natalia Angelini: Right. And a spouse or other family members can also give their consent, even if the deceased hasn’t done so during his or her lifetime. So the difference here, I think, with the ability to dispose of the body, is that the family members seem to get priority over the wishes of the estate trustee.

David Smith: Right and it’s obviously a specific situation but it’s important to know because it’s the one significant departure from the common law rule that the executor’s decisions are paramount. 

Natalia Angelini: And frankly, it makes sense to me anyway.

David Smith: Oh, absolutely. I don’t see how we can quarrel with that. So you know, harking back to our topic for the day which is the executor’s duties, again it all boils down to fiduciary duty, doesn’t it Natalia? I mean really the executor’s got to make sure that he or she does what is necessary to see the intentions of the testator preserved.

Natalia Angelini: That’s right and I think it’s important to note particularly with this issue of disposing of the body, the estate trustee has to do so in a dignified way.  And so I think that’s in keeping with fulfilling his or her fiduciary duty. 

David Smith: Good point. Okay, so I guess we should move on to a couple of more issues, just given our limited amount of time that’s left.  And we were going to touch on children and pets, in that order. So let’s talk about children briefly speaking. It’s possible in your Will, isn’t it, to speak to guardianship?

Natalia Angelini: That’s right. Under the Children’s Law Reform Act, you can appoint someone to have custody of your child upon your death, and I think sometimes people do this, and they put this provision in their Will and I’m not sure that they’re always aware that this has some limited value.

David Smith: That’s right. The appointment is valid for 90 days but, of course, it’s important to note that if anybody else is entitled to custody and is not named in the Will, that that person obviously has a right to exercise custody and it might be pointed out that an application for custody can be commenced within that 90 day period.  And so, to some extent the wishes of the guardian, with respect to their children in their Will is somewhat precatory, isn’t it, in that it’s subject to other considerations.

Natalia Angelini: That’s right, but I think it may give some assistance to the family and to the children, really, so they know I guess who they’re going to be spending time with, at least in the short-term.

David Smith: True. And I guess the important point too is, in all likelihood, the custodial parent in their Will will say that if they die, in all likelihood, they’re going to appoint the other parent as the guardian of the children. I suppose you could have a situation where there are two parents, where one parent dies and provides in his or her Will that the guardian for the children is someone other than the other parent.  And obviously in that situation, the other parent is going to have something to say about that. 

Natalia Angelini: Absolutely, I’ve seen that type of case and I think, unsurprisingly, the other parent proceeded with an application in the Family Court for custody and that issue was resolved that way.

David Smith: Now the last point is in keeping with our concern about issues arising immediately upon death, of course, lots of people have pets.  And lots of Wills provide for pets as beneficiaries.  And pets need to be fed and watered, so obviously the executor’s got to look after that.

Natalia Angelini: That’s right and like you said, that’s definitely got to happen at the get go because we don’t want pets to be neglected.  And they’re usually, especially if they’re in a Will, very near and dear to the deceased’s heart.  So it’s important to make those arrangements.

David Smith: Right. And that’s going to also require the executor to act quickly as you pointed out. So good point as well, and Paul, in his paper, talks about crops and perishables. If you’ve got a business that’s running fresh produce for instance, and the business owner dies, any other perishable products, obviously it’s important to keep the electricity on, to keep things refrigerated and all of those sort of important things that have to do with ensuring that any inventory of the estate does not go to waste, because ultimately, the executor is going to be accountable to the beneficiaries, right, for what happens.

Natalia Angelini: Exactly. And I think, I guess the one thing to remember is, it’s so important for the estate trustee, I suppose to know, as far in advance as possible, whether he or she is a trustee and what the assets of the estate are and what the circumstances are so they can do their best to act as quickly as possible.

David Smith: Absolutely. That’s the biggest part of good estate planning, isn’t it? And it makes the job so much easier. And we should point out, too, that if it’s just an insurmountable job for the executor to take on, maybe you renounce.

Natalia Angelini: Right, or get a, if the estate assets can justify it, get a trust company in place or instead.

David Smith: Especially if there’s a business there, yeah, so I think that’s an important point to leave our listeners with is, you know, if you’re named as executor, you’re not duty bound to take on the job at all costs. If it’s not a realistic possibility for you to carry on the task, consider renouncing.

Natalia Angelini: Absolutely. Good point, David. So, I think that brings us to the end of this week’s discussion. Thanks for listening and thanks for joining me today, David.

David Smith: It was a pleasure, Natalia. I really look forward to podcasting with you again soon.

Natalia Angelini: And we look forward to hearing from our listeners. You can send us an e-mail at hull.lawyers@gmail.com. Be sure to visit our blog at estatelaw.hullandhull.com. where you’ll find even more information and discussion on today’s practice of estate law. We hope that you enjoyed the show. I’m Natalia Angelini.

David Smith: I’m David Smith. Until next week, so long.

This has been Hull on Estates with the lawyers of Hull & Hull. 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 podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.

Our theme music is Upper Structure by DJ AKid  and is courtesy of the Podsafe Music Network.

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This week on Hull on Estates, Megan Connolly and Sean Graham review the Golubchuk case out of Manitoba and discuss the Health Care Consent Act of Ontario.

Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.

The Golubchuk Case and the Health Care Consent Act - Hull on Estates Podcast #123

Posted on August 12^th, 2008 by Hull & Hull LLP

Megan Connolly:  Hello and welcome to Hull on Estates. You’re listening to Episode #123 on Tuesday, August 12^th, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.  Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills. Now, here are today’s hosts.

Megan Connolly:  Hi and welcome to another episode of Hull on Estates. I’m Megan Connolly.

Sean Graham: And I’m Sean Graham.

Megan Connolly:  If you want to be heard on Hull on Estates, you can participate in our discussion by leaving a comment. Give us a call at 206-350-6636. The number is in the show notes along with our e-mail address which is hull.lawyers@gmail.com or you can visit our blog at estatelaw.hullandhull.com.

Sean Graham: Hi Megan, how are you?

Megan Connolly: I’m fine, how are you?

Sean Graham: Pretty good thanks. Well we thought we’d start off today by speaking about the Golubchuk case out of Manitoba and then segway into discussion of the Health Care Consent Act of Ontario which would have applied in the Golubchuk case had it been an Ontario case, but of course, it was Manitoba. So maybe Megan, if you can just sketch out the Golubchuk case it might be helpful.

Megan Connolly: Sure. The case arose at the end of 2007 in November, where an elderly man was admitted to the hospital and was severely ill. At the time he was admitted he couldn’t breathe on his own, he was on a ventilator, there was a tube down his throat, his brain was functioning but not very well; he couldn’t walk, he couldn’t speak and as a result of a cardiac condition, his heart wouldn’t beat properly.

Sean Graham: And it seems that the doctors, or some of the doctors at least, seem to have been pretty sure that Mr. Golubchuk was not going to recover and that continued life support measures, or extraordinary measures, whatever term you want to use, were not benefitting him and it seems as though the doctors, most of them at least, were of the view that life support should be discontinued. On the other side, it looks as though some of Mr. Golubchuk’s children felt differently and wanted to prolong his life.

Megan Connolly: Right. So what the doctors wanted to do, as you said, was remove the patient from the ventilator which isn’t an unusual thing to do when doctors have decided the person is not going to get better and, of course, when the family agrees. Now in this case, the elderly man’s children said first of all, that the removal of the ventilator or the withdrawal of the life support would require the consent of the children, that the removal of the ventilator or life support by the doctors would constitute assault and would constitute battery, in that it would, at a minimum, hasten the elderly man’s death. Another issue that was raised was the fact that the withdrawal of the life support would seem to contravene the man’s religious beliefs. He was an Orthodox Jew, and the analogy they used was imposing blood transfusion on a Jehovah’s Witness. I guess the religious belief for Jehovah’s Witnesses would preclude the use of a blood transfusion.

Sean Graham: So I understand that it looks as though the hospital was of the view that the family did not understand adequately at least, the seriousness of Mr. Golubchuk’s condition, that the conclusions reached by the doctors were acceptable and conformed to the standards the doctors felt themselves needed to apply, that the withdrawal of the medical treatment could well be in Mr. Golubchuk’s best interest, even if it meant that he would succumb to his illnesses, and that the decision to withdraw medical treatment is that of the physician and not that of the patient or the Courts. And so it was quite an argument that was set up in this case between the family and the medical professionals.

Megan Connolly: Now, in November 2007, the family won a Court injunction preventing the doctors from withdrawing life support and a few weeks later the Court ordered that the matter be set down for trial. Now, while this took a toll on the family, it also took its toll on some of the doctors at the hospital. A number of them resigned, saying that their personal conscience and their professional ethics prevented them from continuing to provide medical interventions that, in their mind, would harm a patient without any prospect for future benefit. 

Sean Graham: Even though the matter was set down for trial, it never made it to trial because Mr Golubchuk died. And so the delays we often encounter in the trial system in this case really meant that there was a tremendous amount of controversy and difficulty and stress, and in fact that the system did not end up giving the parties the chance to argue the matter and find out what the Court would have believed at the end of legal arguments.

Megan Connolly: Now the family had originally brought a law suit against the hospital, although last week I saw an article saying that they’d since abandoned the law suit.  So I guess with respect to this matter, nothing further is going to happen in the Court system.

Sean Graham: Yeah, it looks that way. And I think it’s helpful to turn to the Act in force in Ontario that would cover some of these issues, and that’s called the Health Care Consent Act. And Section 10 of the Health Care Consent Act talks about needing consent before treating a patient.

Megan Connolly: And what that Act says, is that when a doctor, or I guess a health care practitioner, proposes treatment for someone, they can’t administer their treatment unless the person consents to it.

Sean Graham: Now the question, of course, is what’s consent?

Megan Connolly: Um hm.

Sean Graham: And so the Act helps us out there also by stating out the elements of the consent, and there’s four elements. I’ll just go through them. The first is that the consent must relate to the treatment, so that’s fairly self-explanatory. The second is that the consent must be informed so the patient must have some understanding of exactly what they’re getting into. Third, and this is kind of obvious I think, but it’s there anyway, the consent must be given voluntarily.  And then finally, which is also obvious, the consent must not be obtained through misrepresentation or fraud.

Megan Connolly: And this goes into, I guess, the next aspect of consent, which means it has to be informed consent. Now the issue of informed consent has given rise to enough litigation although it’s probably the purview for today, but I guess, basically put, the patient needs to be provided with sufficient information about the treatment so that they can, in a knowledgeable and informed way, consent to it.

Sean Graham: And the statute goes into a little bit more of a definition stating that the consent is only informed if, before giving it, the person consenting received the following information, and there’s a list in subsection 11(3) of the Health Care Consent Act. There’s six items. The first is that the person needs to know sufficient information about the nature of the treatment; (2) is the expected benefits of the treatment; (3) the material risks of the treatment; (4) the material side effects of the treatment; (5) alternative courses of action; and then (6) the likely consequences of not having the treatment. 

Now in Mr. Golubchuk’s case, I’m not sure that would have ever been possible for Mr. Golubchuk.  It’s not clear to me whether he had any chance really, before he was in the position that led to this case, whether he had any chance to obtain treatment.  But certainly by the time this case came to the forefront, he did not have capacity and so a different section of the Act, which is entitled “Consent on Incapable Person’s Behalf” would have applied, and maybe you can just take us through that, Megan.

Megan Connolly: Right, so as you said, I mean it’s great for someone to consent, but it’s not unusual for someone to just not be able to consent, and in this case I think the man was in a coma and couldn’t speak and didn’t really understand what was going on around him.  So you can’t have informed consent, but obviously it doesn’t make sense to say, well we’re just not going to treat someone if they can’t consent. So when somebody is incapable of consenting to treatment, and that doesn’t mean they won’t consent to it because they don’t want to but they’re mentally or physically incapable of providing that consent, the Act provides for a list of people who can give or refuse consent on the person’s behalf. There are eight different people, starting with the person’s guardian of the person or their attorney for personal care, if they have one. They don’t always have one. The next person to be able to give consent is somebody who has been appointed as the incapable person’s representative by the Consent and Capacity Board.  After that it would be the incapable person’s spouse or partner.  Next it would be the children or parents of the incapable person.

Sean Graham: And if there is the Children’s Aid Society or it’s a situation where the Children’s Aid Society has lawful authority to give that consent, they can stand in the place of the parent. And it’s noteworthy that this paragraph does not include a parent who has only a right of access.  So this could have family law ramifications as well if spouses are in the course of or have completed matrimonial litigation.

Megan Connolly: So the parent who only does have a right of access may have the right to give the consent to treatment on the person’s behalf but not if there’s a parent who, I guess, has custodial rights.  And after that it’s a brother or sister, then any other relative. Now like I said, this is a rank order, so number one is the person’s guardian of the person and then you go down the list if no one else can provide consent.

Sean Graham: Now one aspect I found that was interesting in this is that the meaning of spouse is defined, and it makes a certain amount of sense because it needs to be clear that a spouse making this choice has to be a spouse under an ongoing relationship. Subsection 8 of Section 20 states that “two people are not spouses for the purposes of this section if they are living separate and apart as a result of the breakdown of their relationship”. I think it’s pretty clear why that section is in there.

Megan Connolly: Now when it comes to giving or refusing consent, the person just can’t do it arbitrarily. There are certain principles that they have to take into consideration when making a decision.

Sean Graham: Now that’s someone appointed under this section.

Megan Connolly: Yeah.

Sean Graham: An individual deciding on their own, my understanding is as long as they are capable, they in fact, could be arbitrary.

Megan Connolly: Right.

Sean Graham: But, a substitute decision-maker is a different kettle of fish.

Megan Connolly: So the first thing they have to take into account is whether they are aware of any wish the person has made previously that would deal with situations where consent had to be given.  So when capable, had they always been clear that if they were incredibly ill and weren’t going to recover, maybe they’ve stated while capable that they’d want support withdrawn. Alternatively, maybe they’ve said the opposite.

Sean Graham: There’s a list in Section 21 of the Act that sets out the factors to go into this. I think that, for the purpose of wrapping up, I think that maybe one of the best principles to come out of this is to be very careful in choosing an attorney for personal care because that is really the only way that someone can exercise any kind of control in planning for a situation where someone else is going to have to make the decision for them. I guess you can tell your family members but you’re not really sure who’s going to be around and who’s going to be making that decision.  So it seems to me the best way to try to have some control over these types of decisions is to appoint an attorney for personal care to make them on your behalf and then have a long heart-to-heart with that person, maybe more than one, as the years go on, in order that they will have some background in order to help them make that decision.

Megan Connolly: Right. So thank you very much. It’s been nice talking to you, as always, Sean.

Sean Graham: Yeah, thanks a lot, Megan. It was certainly a pleasure and I look forward to podcasting with you again soon.

Megan Connolly: Well I think that brings us to the end of this week’s discussion. Thank you for listening and thanks for joining me today. And we look forward to hearing from our listeners, so you can send us an e-mail at hull.lawyers@gmail.com or just pick up the phone and leave us a message on our comment line at 206-350-6636. Be sure to visit our blog at estatelaw.hullandhull and the and is a-n-d not ampersand .com where you’ll find even more information and discussion on today’s practice of estates law. We hope you enjoyed the show. I’m Megan Connolly.

Sean Graham: And I’m Sean Graham, until next week, so long.

This has been Hull on Estates with the lawyers of Hull & Hull. 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 podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.

Our theme music is Upper Structure by DJ AKid  and is courtesy of the Podsafe Music Network.

/mem

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.

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 1^st, 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 200^th 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.

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Posted on May 13^th, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi and welcome to Hull on Estates. You’re listening to Episode #110 of our podcast on Tuesday, May 13^th, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.  Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills. Now, here are today’s hosts.

Suzana Popovic-Montag:        Hello and welcome to Hull on Estates. It’s Suzana Popovic-Montag here with Ian Hull. Hi, Ian.

Ian Hull: Hi, Suzana, how are you doing?

Suzana Popovic-Montag: I’m good, thank you, how are you?

Ian Hull: Great, happy to be on Hull on Estates this week and want to just remind everyone that we have a, encourage of course, a call-in number, at 206-350-6636.

Suzana Popovic-Montag: And that number you’ll find also in our show notes as well as our e-mail address which is hull.lawyers@gmail.com if you’d like to send us your comments by e-mail.

Ian Hull: Well, Suzana, we’ve got a couple of things we want to cover this week on Hull on Estates and our companion podcast dealing with estate administration issues right now. We’ve been talking about how an estate should be administered and giving some thoughts and sort of a mini-series on that. And I thought it might be fun today to talk about a couple of things relating to the dialogue that we think we should encourage and we certainly encourage with our clients, both before death and after death, before death with their family and then after death with the beneficiaries. But before we get to that, why don’t we spend a minute or two here talking about the

wonderful news about our good friend, Terry Fallis.

Suzana Popovic-Montag: Terry has self-published a novel and that’s a really impressive accomplishment on his behalf which has now won him the Leacock Award.

Ian Hull: Now for those of you who don’t know anything about the Stephen Leacock Award, it’s called the Stephen Leacock Medal for Humour and Stephen Leacock, who, actually in his day, he was described as someone more famous than Wayne Gretzky is today to Canadians. He was known throughout the world. In the early 1900s when you spoke of Stephen Leacock, many people around the world would have heard of him before they would have heard of a prime minister in Canada. But, obviously a great novel writer and a humourist, and every year there is an award that is handed out in his honour. Terry Fallis was short-listed and then ultimately won the Leacock Award for his book, “The Best Laid Plans”.

Suzana Popovic-Montag: And Terry’s book is actually a story about a reluctant political candidate who consents to run in a federal election on the condition, of course, that he won’t campaign, give any kind of media interviews or canvass door-to-door.  And it’s an amazingly well-written book that really does deserve, in my humble view, this wonderful award.

Ian Hull: And one of the neat things about this is, one of the many neat things is obviously Terry’s a terrific writer and a great humourist.  But what he did was, the classic publisher route he did not follow. He went the social media route and Terry’s obviously on the cutting edge of social media work, generally, and a real mentor to us in the podcasting world here for us. But he self-published his book.  He also has his book on the Internet for free in audio form.  So he has all of the chapters which he read and published on the Internet.  And the remarkable thing, obviously, of winning the Leacock Award is tremendous, but to be coming out of a self-published environment is unheard of, and really a testament to what Terry has been able to do in the social media world. I know the president of Thornley Fallis, Joe Thornley, is another incredible social media expert and I understand that he is going to be speaking out in Calgary where Suzana is also a speaker in the fall, at what looks to be one of the leading social media conferences for professionals and for others who are interested in getting into the social media workforce with a business slant. But Terry turned the business model to perfection because he talked about his book, he blogged about his book, he self-published his book, he published the book in audio, he did all of the sort of core steps that the social media environment allows for. So, tremendous success for him and an exciting time for him, no doubt and him and his family.

Suzana Popovic-Montag: Congratulations, Terry. We’re very, very happy for you.

Ian Hull: Alright, so what we thought we might talk about today was something that we’re going to get actually put on to our webpage.  And it came out of The New York Times.  It was a special section on wealth and personal finance. It came out on Tuesday, March 18, and I was alerted to it before it came out and picked up a copy of The New York Times because it looked like it was going to be a fascinating special section.

Suzana Popovic-Montag: And it really is, Ian. Flipping through it, it really is a great synopsis of our whole area and it captures all the main headings in terms of the estates and trust planning, the inter-generational transfer of wealth, and finance management, and I just highly recommend it to anyone who is able to pick up a copy or to refer to it on our website.

Ian Hull: And we’ve been talking a lot in our other podcasts, but also in this one, that, you know, from our perspective anyway, communication is crucial and this pull-out section from The New York Times really is a great summary. As I say, we’ll get it up on our webpage in the next little while. It’s a great summary of the different approaches that are going on. We’ve also always said and it appears to be as true as we’ve said it, is that the U.S. are so far ahead of us on talking about wealth management, wealth and inheritance talking in that sense, and really talking about the values of money. The first article in the section is entitled, “Breaking the Silence”. And talking, really, from a standpoint of motivating the family.

Suzana Popovic-Montag: And what I thought was amazing is the statistic that is actually set out there that says that there is going to be the largest inter-generational transfer of wealth in American history now underway.  And the Boston College Centre on Wealth and Philanthropy has actually estimated, Ian, that $41 trillion is going to change hands by the year 2052.

Ian Hull: So, you know, given these numbers in the U.S., we continue to obviously pale in comparison in terms of the Canadian experience.  But, you know, we continue to encourage our clients to talk about, you know, getting into, entering into discussions because these discussions need to take place against the backdrop of changing estate and tax laws, innovative tax instruments that are now available and, you know, using what is out there, and that’s the sort of an army of newly trained and well trained wealth advisors.

Suzana Popovic-Montag: We also have to recognize the fact that the reality is that there is a lot of upheaval and family discord that’s out there, and this complicates the planning mechanisms that are actually implemented by these advisors.  And so the reality is there is going to be divorce, there is remarriage, there is adoption, there are different kinds of domestic partnerships that have become sort of the norm, and all of this is taken into effect and into consideration in the planning mechanisms.

Ian Hull: And you look at it, and in one of the articles in the pull-out section there’s a…Patricia Angus is quoted and she’s a principal of a wealthy advisory service in New York and this is a classic definition. She defines wealth as the following: The definition, she says, is broadening to include not just financial capital but human, social and intellectual capital.

Suzana Popovic-Montag: And then she says that the professionals used to think that it was just, how do I go about transferring my financial assets at the lowest tax cost? Now actually people are asking, well what’s the purpose and the meaning of what it is that I’m doing here and how do I want to pass this down to the next generation or further generations?

Ian Hull: And she makes a great point that it really…it’s not about death, it’s about an experience in life and an opportunity to talk to your family about purpose and values that might not otherwise come up.

Suzana Popovic-Montag: And for people who just write a document and put it in a drawer to be opened up then on their death, it doesn’t foresee or doesn’t take into account the opportunity that you can have that would arise by speaking during your lifetime about your plans.

Ian Hull: So as we work through this section, you know, obviously we’re struck by a couple of the other articles. There’s a great article talking about, it’s entitled, “Protecting Children From Their Money” and the sort of parental distress that comes with situations where parents have accumulated a fair amount of wealth and have indeed begun to pass it down. But there’s a wonderful article as well that sort of works through this whole breaking of the silence of inheritance, and the author goes through specifically and talks to wealthy individuals. There’s one point in the article, a Mr. Rothenberg who had received $10 million in the sale of his company, the company I think was called Syracuse Language Systems that they refer to. And he then set up a charitable foundation and a community foundation for his three children to run, and that was set up with just under $5 million.

Suzana Popovic-Montag: And then with some of the remainder of his funds he started a company that he actually called the Glottal Enterprises which makes speech aids for people who are hearing impaired.  Again, it’s a small company that loses money, he called it, at the time.

Ian Hull: But he wanted to do something different and he even notes in the article, he’s quoted, he jokes about the fact that he’s sure his children wanted more of the money themselves, but he has created two separate foundations. He’s created an important legacy from his perspective. 

So, anyway, as I say, we’re going to put this on the webpage so that you can have an opportunity to enjoy some of this, but feel free, obviously, The New York Times online, and as I say, it’s on the March 18, 2008 pull-out section called “Wealth and Personal Finance”. But I highly encourage it and good reading, (a) because I think the topic is really well worked through by the various writers, but (b) it’s always good to see what the U.S. experience is and in particular, how the U.S. experience is being, they even deal with this, impacted on a more fragile U.S. economy and how that’s affecting this inherited wealth scenario.

Suzana Popovic-Montag:  Well I think, Ian that brings us to the end of this week’s discussion. Thanks for listening to me and for joining me today.

Ian Hull: So thank you Suzana, it’s a real pleasure and I look forward to podcasting with you again soon, and remind people that our call-in number, 206-350-6636, is always available for phone calls.

Suzana Popovic-Montag: Or again, feel free to send us an e-mail at hull.lawyers@gmail.com or visit our daily blog at estatelaw.hullandhull.com. Thanks very much.

This has been Hull on Estates with the lawyers of Hull & Hull. 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 podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.

Our theme music is Upper Structure by DJ AKid  and is courtesy of the Podsafe Music Network.