Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

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By my count, in the relatively short history of our website, our firm's lawyers have blogged on the transfer of wealth by the boomers to their children on six separate occasions.  See, for example, this blog and this blog.  And our blogs reflect a trend to report on the subject as the dominant sociological issue in the business media.  See, for example, this piece by Jonathan Chevreau of the National Post.

Numerous surveys have been released as to the intentions of boomers with respect to their estate plans.  The fundamental characteristic is a focus (on those in their fifties) on enjoying quality time with their families and ensuring that their estate plan properly provides for their children both before and after they are gone.  Some have suggested that this "family focus" is a departure from previous generations although I think this is open to question. Nonetheless, the statistics are illuminating, particularly respecting inter-vivos gifts to children. 

Take, for instance, the findings of a Royal Bank of Canada Poll released in November, 2007:

1.  Fifty-seven per cent of Canadians in their fifties have received or are expecting to receive money  from their parents and in-laws;

2.   Approximately three in five respondents in their fifties expect to give money, during their lifetime, to their own adult children; of those, sixty-nine per cent say they will do so because they want to see their children enjoy their lives; seven per cent say that they would not, believing that their children need to earn their own way or wait until their parent dies. 

5.   When contemplating their legacy, seven in ten respondents want to be remembered as a person who enjoyed time with their family. This family focus is also reflected in the finding that four in five of those in their fifties believe that "their children are their legacy."

David M. Smith

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In considering causes of estate litigation sometimes you need not look further than to your extended family if the relationships within the extended family are acrimonious. 

An extended family can include a spouse, former spouse whether legal or common-law, children and their respective spouses (and former spouses), grandchildren and their spouses (and former spouses), siblings, nieces and nephews, extra-marital partners and other dependents, whether related to you or not. It is possible that any one of the above-noted people might bring a claim against the estate, or raise a dispute. Jealousy amongst family members and/or the anticipation or expectation that they are to or will receive all or a portion of the estate, however unwarranted, may lead to family members taking unreasonable positions with respect to claims they feel they have against the estate.

In making an estate plan then, it is critical to have any and all agreements that may affect your estate plan prepared before you die. These agreements could include separation, marriage, co-habitation, partnership, employment and shareholders agreements depending on the nature and make up of your estate.

While the secrets one has from a family may be extremely touchy, emotional or just difficult to disclose or deal with, their disclosure following death may lead to demands against the estate. An extra-marital relationship, an illness of whatever kind not known to the family, a relationship with a caregiver or promises made to caregivers regarding their compensation can be examples of such secrets. For instance, a friend or family member may be assisting with one’s errands or day to day care. If promises are made to the family friend or relative that they will be “looked after” upon one’s death, then they may make a claim against your estate following your death if their relationship with you and/or compensation is not clearly known.

The nature of your assets and the manner in which you deal with them while you are alive can lead to problems following your death. For instance, you may have an asset that can be designated to a certain beneficiary such as an RSP, insurance proceeds or a pension. If the intended beneficiary has passed away or alternatively, your family circumstances have changed such that you no longer intend for that beneficiary to be the designated beneficiary, upon your death a dispute may arise.

Another example might be where the major assets in the estate are real estate. The beneficiaries of those assets might well get into an unnecessary argument over the handling of such assets if there is not enough cash to pay for the liabilities (i.e. taxes, expenses) that might arise upon death. This circumstance could be avoided with the purchase of sufficient life insurance to cover these liabilities upon death.

Your choice of a personal representative for your estate should also be given serious consideration. The beneficiaries of your estate will no doubt be critical of the executor and trustee appointed under your Will if the executor and trustee are perceived to be biased to certain family members.

The causes of estate litigation discussed in yesterday’s and today’s blogs are not an exhaustive list. The causes discussed are not in and of themselves a legal basis to make a claim against the estate. Having said that, if one does not have a well planned estate plan, the causes discussed can often lead to family members or others who believe that they deserve or are entitled to a portion of the estate to look for a basis upon which to challenge your Will or bring a claim against the estate for dependent’s relief under the Family Law Act, breach of contract or perhaps constructive trust.

Have a great day.

Craig.

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Understanding frequent causes of estate litigation can help avoid an estate dispute.

As I mentioned in yesterday’s blog, in Ian Hull’s book “Advising Families on Succession Planning, the High Price of Not Talking”, he comments on a number of common causes of estate litigation.

In this and tomorrow’s blog, I will review some of these common causes.

A lack of understanding of the need for an estate plan, or the reluctance to seek advice, can cause a dispute. Regrettably, many people die without knowing what an estate plan could have accomplished with their estate or the disputes that a plan might have prevented. An estate plan should, among other things, ensure that your assets go to those people you intend them to go to.

Obtaining inadequate estate planning advice can also lead to an estate dispute. One should look for an estate planning professional, typically, a lawyer, an accountant, financial planner and/or insurance professional who also has experience with your personal circumstances or, alternatively, can be made aware of all of the details of your circumstances. It is perhaps trite to say that as families have very different circumstances from one another, an estate plan for one family’s circumstance will not be appropriate for or applicable to another’s.

If your circumstances have changed, an existing estate plan may no longer reflect your intentions regarding your estate. As such, it is important to keep your estate plan current with new circumstances. Circumstances that should cause you to review your estate plan are, amongst others, if a principal beneficiary dies, you marry, divorce or remarry, a child or grandchild is born, a beneficiary or dependent of yours becomes disabled, the value of your assets have significantly increased or decreased, your beneficiaries under your RRSPs, pension plans or insurance policies are redesignated or have their entitlements changed, you establish a secret trust, a business interest of yours has changed (i.e. a partnership has dissolved or a company has been incorporated), and/or tax or other legislative changes have occurred that might effect your estate plan.

In tomorrow’s blog, I will discuss several other common causes of estate disputes.

Have a great day.

Craig.