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Listen to Applying for Probate

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the applying for probate. They discuss some of the ways that estate administrators can simplify the process.

Comments? Send us an email at hullandhull@gmail.com, post a comment on our blog at http://estatelaw.hullandhull.com/ or leave us a message on our comment line at 206-457-1985.

Applying for Probate - Hull on Estate and Succession Planning Podcast #105

Posted on March 25^th, 2008 by Hull & Hull LLP

 

Suzana Popovic-Montag: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #105 of our podcast on Tuesday, March 25^th, 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: Just great, thanks. Glad to be podcasting again with you. Missed you last week.

 

Suzana Popovic-Montag: Sorry about that.

 

Ian Hull: No it’s – these things happen.

 

Suzana Popovic-Montag: They do.

 

Ian Hull: Don’t forget to all those who are listening, feel free to call us at 206-457-1985.

 

Suzana Popovic-Montag: Or if you’d like to drop us an e-mail at hullandhull@gmail.com or, of course, you can visit our blog at estatelaw.hullandhull.com.

 

Ian Hull: Okay, we’ve been trying to follow through the process of an estate administration per se, and what it takes to get the job. One of the things that we talked a little bit about, not at the last podcast but the one before, was the application for probate itself. And I thought what we could do today is, sort of, talk about some of the things that might come as a surprise to people just how much notice you have to give to the beneficiaries.  And just who needs to be given notice in the application process and some of the other, sort of, what I might consider more mundane steps you have to take in the process. We talked, not in the last podcast but the one before though, about the bonding requirements in Ontario anyway, the probate tax that gets calculated.

 

Suzana Popovic-Montag: And we didn’t mention the fact though, Ian, that when you don’t necessarily know the exact value of the estate and you can’t necessarily calculate the administration tax that will be payable, you can still file on the basis of an estimated value for the estate, as long as you provide an undertaking that our statute here in Ontario provides for.

 

Ian Hull: That’s right.  It gives us some flexibility and so it means that you don’t have to know the numbers right down to the dollar.

 

Alright one of the next things that I think of whenever I’m applying for probate is I think of the Affidavit of Execution.  And that’s because you need it, it is such a vital document. I mean, when you’re dealing with an estate, to administer an estate, you have to have a valid Will and you have to prove that it was properly executed with two witnesses in the room at the same time as the deceased. So the Affidavit of Execution is something you want to track down and sometimes that’s not as easy as it sounds.

 

Suzana Popovic-Montag: And that Affidavit, for people who aren’t familiar with it, is an Affidavit by those witnesses to the Will saying that they were actually present for the signing of the Will and that all the formalities required by the legislation were abided by.

 

Ian Hull: And some difficulties can arise because, for example, say the Will was done 20 years ago and you don’t have any real information about the Will and the Affidavit wasn’t signed at the time, you can get into some trouble with the Affidavit of Execution in the sense of trying to track it down. So I always remind my clients whenever they do sign their Will up, make sure that they have asked their lawyer where the Affidavit of Execution is and make sure it’s in a secure place, because it is a vital part of the application itself.

 

Suzana Popovic-Montag: That’s for sure, Ian. And then once you’ve got all this documentation in place and this information all put together, then what you’ll typically do is actually meet with the lawyer and have the documentation signed up.

 

Ian Hull: Now in Ontario, and I think it’s a useful exercise to go through because when you do this for the first time, I find people are often surprised at just what needs to be involved in an application for probate. Now let’s talk a little bit about some of the people that get notice of the application itself.

 

Suzana Popovic-Montag: And that basically is all of the beneficiaries who are named in the Will. And so if you’ve got a beneficiary who’s actually a charity, in that instance, you have to serve not only the charity itself but also possibly the Public Guardian and Trustee as well.

 

Ian Hull: And people forget that when you have made a gift of a charity, what you’ve done is you’ve created a new layer of bureaucracy in the probate process and in the accounting process, if the gift is part of the residue, and we’ll get into more of that later. But the point is, is that it’s wonderful to give to charities in the Will but I notice in the last 10 years certainly, the taxing authorities in Canada have started to encourage us to gift during your lifetime. You get better tax advantages than you used to for that gifting and, quite frankly, on death, the gift to a charity can be a bit cumbersome. It’s not overwhelming, but it’s just another layer in the process.

 

Suzana Popovic-Montag: And another government institution that you serve with this notice of application, if you have minors who are beneficiaries of an estate, is the Children’s Lawyer’s office here in Ontario. And that is, again, if you’ve got a minor who’s a beneficiary of an estate, you’ll serve the Children’s Lawyer on their behalf, as well as the parents of the minor.

 

Ian Hull: So we can’t forget, too, because a lot of these Wills will have what we call is a gift-over provision and they will have a situation where there may be a trust or something of that nature, and so there are minor beneficiaries’ interests that need to be protected. And the governing authority gets a copy of it, opens a file and then is in a position to audit your administration, so to speak. So you put them on notice of the Will and you put them on notice of the financial interests.

 

Suzana Popovic-Montag: And if you have beneficiaries who are actually not capable, whether if mentally or otherwise, you may have to also, in those circumstances, serve their guardian of property or their attorney for property, if they’ve got one that you are aware of.

 

Ian Hull: That’s a really good point because sometimes people overlook that aspect of the administration.

 

Now the final step, of course, is to go up to the Court and file the application itself, and that can be done by your lawyer or it can be done by yourself, it depends in your circumstances. So let’s just take a minute now and we’ve filed for the application, we’ve covered off and maybe been a bit surprised at who all knows about the information.  And I say that because, in Ontario anyway, we’re required to say and provide a copy of the Will to the individual who’s a beneficiary. But we’re not necessarily required to put the amount of the estate. You actually file an Affidavit of Execution with the Court and you also file an Affidavit verifying the amount of the assets when you file in Ontario, so that it’s a public document, but it is not necessarily produced in this first series of disclosure steps. So it’s one of those things that I often will say to my clients “Look, you know what, it’s a public record. Maybe you want to go up to the Court, get a copy of the Affidavit that they file in support because in it will tell you the value of the estate and you might get some answers very quickly as to what’s going on.”

 

Alright, so we’ve got our Certificate of Appointment and now what do we do? This is the document we’ve all been waiting for, so to speak, and we are in a position now to start to show it to third parties to start to meaningfully administer the estate and get access to certain aspects of the assets that we haven’t been – we’ve been prevented from getting until we got this famous probate document.

 

Suzana Popovic-Montag: And so one of the first things that my clients will normally want is to have a couple of copies, notarial copies, you know, our Court of approval or seal of approval on that document, indicating that it is a valid probate document that they can then take and use with the authorities who actually require it, in order to help them collect and administer the assets of the estate.

 

Ian Hull: And that lets you get into various… gets access to various assets. It’s like getting into a safety deposit box, for example.

 

Suzana Popovic-Montag: And also closing out bank accounts as well.

 

Ian Hull: And we talked about in other podcasts and the problem is, is that the banks and third parties will not necessarily deal with you as executor without this formal order.  And banks are classics for that and the brokerage companies are classics for that because they want to know that they’re dealing with the right person before they start to release the funds to the estate bank account. Often the bank will also insist on probate before they’ll even open an estate account. So that’s case by case, but that’s something that, you know, as I say, it’s great to have the document now, get lots of notarial copies of it, use them properly and you’re in a position to start to really meaningfully administer the assets.

 

Suzana Popovic-Montag: And that’s particularly important when you’re trying to collect life insurance policies which typically are in large denominations. And so you’ve now got that Certificate that you can give to the institutions in order to be able to get those funds.

 

Ian Hull: Another one asset that we sometimes run into glitches on is RRSPs, here in Canada, and again, with our probate documentation, we can usually complete that transfer fairly quickly.

 

Suzana Popovic-Montag: As part and parcel of that, too, just other kinds of securities where you have to provide the transfer agents with proof of the fact that you’ve got authority to deal with those assets. And again, you’ve now got it in hand and you can give that to them in order to collect those assets as well.

 

Ian Hull: And, of course, one of the fundamental assets that you have to concern yourself with is the transfer of real estate. And with many different jurisdictions, it is mixed in terms of whether or not you need probate or not. But I would say, sort of, as a good general rule, probate is almost always required. And so now we can start to transfer and sell real estate.

 

Okay, now one little twist that some people don’t often think of the beauty of probate and before we get into some of this, what I will call some of the other action items that you can take the steps on with the probate document, are things like dealing with personal affects. And for our next podcast, I want to start to…we’ll talk a little bit about not just personal affects but automobiles, talk about other assets that we can now start to administer with the document in hand, that being probate, and with authority that we’ve been waiting for.

 

So thanks so much Suzana. Good to have you back and we look forward to our next podcast.

 

Suzana Popovic-Montag: Thanks to you, too, Ian. And just a reminder to our listeners, that we’ve got our comment line set up at 206-457-1985.

 

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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The orderly administration of a parent's estate will often revolve around the family home.  All too often, the children of the deceased  parent will not see eye to eye on the best way to liquidate the home or whether the home should be liquidated at all.  The situation is often compounded when one of the children resided with the parent and may have developed an enhanced emotional attachment to the home. If the home is sold, it may become a challenge to empty out the contents in a timely fashion.

Such difficulties have led some commentators to espouse the viewpoint that a family member ought not to be an executor of an estate in which the family home is the most significant estate asset.  To my mind, such recommendation is a bit extreme:  each family is different and while there is no certainty as to how the children will interact with one another on the death of the surviving parent, it is worth noting that the vast majority of estate administrations are not referred to litigation counsel.

As noted in a recent article in the New York Times, the difficulties that may arise in the sale of the family home are often best resolved through the advice of a good listing agent and effective communication between the executor and his or her siblings. Such issues that may arise include: the appropriate list price, how to show the home to attract the most optimum sale price, and what upgrades (if any) to engage in and whether to use estate assets for this purpose.

David M. Smith

 

 

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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 5^th, 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 5^th, 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.

 

Suzana Popovic-Montag: And what I think of in these situations when we’re dealing with a piece of property is the real estate taxes that are either outstanding up until the date of death or will have to be paid on a go forward basis.

 

Ian Hull: And then, as you say, the contents of the house and the valuables and so on, you’ll want to make sure they’re well insured. But you also need to take control and custody over them in some way, shape or form. And so what I often tell my clients is that…go through the house and bring a video camera and video everything in the house - every room, every piece of furniture - so that at the other end of the day if someone says, “Geez, you know I used to have a beautiful chest of drawers in that room and it’s gone,” you have an answer to say, “No it isn’t, it never was there because here’s the video that I took the day after I got the job of being an  executor.” It’s a trick that you can get trapped and you can get caught into and a nice answer to it is if you have the evidence in response to it.

 

Suzana Popovic-Montag: And that’s so much easier than the suggestion to go and make a handwritten list, for instance, and helps with the identification too, so I think that’s a fantastic suggestion.

 

Ian Hull: One of the things that you really struggle with, I think, in the whole management of the real estate is when they’re in a commercial or semi-commercial, and I call that semi-commercial as a residential landlord situation. Or commercial landlord situation. What early action steps need to be taken?

 

Suzana Popovic-Montag: Well, in those situations, Ian, I think it’s always recommendable to look for the lease, to review its terms and to see about contacting the tenants so that in terms of going forward and collecting rent and making any re-direction of payments that are necessary, that you can do that by having this documentation firstly in hand and secondly understand what it provides for.

 

Ian Hull: And as with any piece of real estate, you want to know what encumbrances are on the property.  For example, a mortgage, sometimes the mortgage is mortgage insured. But if it’s not mortgage insured, you want to look at the terms because some financial institutions might be prepared to re-negotiate the mortgage because the person’s passed away. You might be able to get more favorable terms and so forth. Now that’s all good news, but it’s also probably expected of you as an executor to look into that level of business expertise.

 

Suzana Popovic-Montag: And when we started this series of podcasts, Ian, we talked about, you know, executors doing their homework.  But this is another illustration of those kinds of things that we’re hoping that people will do during their lifetime in terms of, you know, getting insurance documentation together, getting information about real estate together and here now rental property or leases or mortgages, that kind of stuff. If it’s all together, it certainly will help your executor at the end of the day.

 

Ian Hull: So Suzana, what happens if the deceased was renting a property, say renting a condominium or an apartment building unit?

 

Suzana Popovic-Montag: Well, one of the first things that you’d want to do is to contact the landlord and advise them of the fact that the tenant has now passed away and see how you would go about either cancelling the lease and providing vacant premises or otherwise dealing with the interim period until decisions are made as to how to go on.

 

Ian Hull: And I guess in the right circumstance, you might even want to look at subletting if you can’t get out of the lease arrangements that they were in.

 

Suzana Popovic-Montag: That’s probably a really good suggestion.

 

Ian Hull: Okay. This is a bit of a loaded question and we’ll spend more time in future podcasts on this as well, but what do you do if you have an ongoing business?

 

Suzana Popovic-Montag: Well that really is, as you say, a loaded gun because that’s not something that you can just quickly cancel and put aside and deal with on a rainy day. You actually have to arrange for the continuity and I’d say competent management of the business in the meantime until either you distribute it pursuant to the terms of the Will or you continue to manage it in accordance with the terms of the Will

 

Ian Hull: And without getting into too much detail in this podcast, you’re right, I mean it’s such a loaded question.  But, you know, in the course of the continuity and creating a competent management team, you probably want to meet with them and create some sort of short term plan of action as to how you’re going to operate the business.

 

Suzana Popovic-Montag: That’s for sure. And you may also want to review if there’s any buy/sell agreements that are in place, shareholder’s agreements or those kinds of corporate documentation that may provide for how to deal with the situation in the meantime.

 

Ian Hull: Okay. We are now inching toward that fateful moment of getting probate and we’re not quite there.  But one of the first steps that we want to make sure we’ve got under control is opening an estate bank account. Coincidentally I’m on my way after this podcast to go close a bank account which is full circle on an estate administration. But in this case, we want to be mindful of what’s going to be necessary and:

 

1. Is opening a bank account necessary? and
2. What are some of the steps we’re going to have to take in that regard?

 

Now what I often will do is I will send a letter to the bank just advising them, because I don’t have probate. They’ll want probate before they’ll actually open the bank account typically, but I don’t have probate in hand.  But I’ll write them and say, “Look, I’m the executor, here’s a notarial copy of the Will. I look forward to seeing you, my face is now on this file, not the deceased’s.” And it softens the bank up and it gets it ready to sort of deal with an account that is not normal anymore. or is not being dealt with by someone who’s alive. And I send that same to the financial institutions as well, sort of priming everybody to know that I’m coming down the pipe. I don’t have probate.  I’m applying for probate, or if I’m not, in the right circumstances. But typically you’re going to be applying for probate if you’re going to need to get money out of financial institutions. So I’ll just make it clear that I’m applying for probate and you can expect to hear from me shortly. This letter actually does take the account out of the mainstream of the bank operations and flags it in some meaningful way so that they’re going to be ready for you when you get your probate application. It doesn’t take much time and it’s a helpful step

 

Suzana Popovic-Montag: I think it also helps, Ian, in the event that the account is somehow held jointly with another to put the bank on notice of the fact that one of the joint account owners is no longer alive and there may be consequences that arise from that, if it’s not clearly a, you know, right of survivorship kind of situation.

 

Ian Hull: Okay. So finally, just because again I’m coincidentally on my way to go do this as well, is the locating and cleaning out the safety deposit box. An important step and again one that you want to document very carefully. I will often just take notes of what I have taken out of the box or make an inventory as soon as I’ve emptied the box, back at the office, of everything that I’ve taken out. Sometimes I’ll even video that moment in time.  That’s not always the case. But you want to make sure that you keep the custody of the documents and whatever is in the safety deposit box under tight reign and control.

 

Suzana Popovic-Montag: Well I think that brings us to the end of this week’s discussion. Thanks very much to all of our listeners for joining us and thank you for joining me today, Ian.

 

Ian Hull: Thanks very much Suzana. And again, don’t forget to come to our webpage at hullandhull.com and you can link into our daily blog.

 

Suzana Popovic-Montag: And we hope to have a little bit of interaction with the comments from the people who are listening and any comments, questions they might have we’d look forward to receiving them.

 

Ian Hull: So for that number again 206-457-1985. 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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Listen to Estate Assets

This week on Hull on Estates, Natalia Angelini and Sean Graham discuss issues that surround estate assets.  The value of some assets are not always determined by their financial value and the value of other assets may change dramatically over time.

Estate Assets - Hull on Estates Podcast #90

Posted on December 18^th, 2007 by Hull & Hull LLP

 

Natalia Angelini:  Welcome to Hull on Estates.  You’re listening to Sean Graham and Natalia Angelini on Tuesday, December 18^th, 2007 and you’re listening to podcast Episode #90.

 

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.

 

Sean Graham:  Hi Natalia, how are you?

 

Natalia Angelini:  I’m great, Sean.  How are you?

 

Sean Graham:  Oh, pretty good thanks.

 

Natalia Angelini:  That’s good.  I thought we would talk today about assets in the estate planning context.  And so one of the questions that come to my mind is, what kind of considerations does a testator have to take into account when dealing with their assets?

 

Sean Graham:  Well, and it’s kind of a fundamental question which sounds, at first blush, fairly simple.  What do you own?  But I think there’s a bunch of background issues that go into it.  And once we start to talk about some of these issues, at least I was thinking about them when I was doing my blogs this week, it came to my attention that really it can mushroom into a whole bunch of different considerations.  And as we both know, one of the indicia of testamentary capacity is that the testator must know the extent of his or her assets.  So that’s sort of the first step.  You need to know it to do a valid Will, but also knowing the nature and extent of your assets is not always as simple as it may seem, at least in the estate planning context.

 

Natalia Angelini:  So what different assets are there that testators should know about?

 

Sean Graham:  Well, and to some extent, that’s going to depend on what the testator holds dear.  Economic value is not necessarily the only measure of value that goes into a Will.  There may be a painting or a family memoir of some kind that really has no economic value but in some cases, may be the most important asset.  So assets, I think, needs to be considered not only in an economic framework, but also in a sentimental framework.

 

Natalia Angelini:  That’s a good point.  I think in last week’s podcast, David and Allan were talking about probate.  And, of course, one of the things you need to do is value your assets when you’re seeking probate.

 

Sean Graham:  Yeah, and some of those sentimental assets that I just talked about, aren’t going to show up on that application.  But again, in some cases, with some testators, that can actually be more important than the economically valuable assets.  So that’s something I like to look for in any given situation.

 

Now moving on to the economic assets which, in the litigation framework, tends to dominate, although certainly there can be disputes over sentimental things.  Again, this is a possible…this topic really can mushroom.  It’s easy to say sort of off the top of your head what you think is in your bank account and so forth.  But let’s just maybe break it down.  Because each asset, depending on its characteristics and its form of ownership, can really lead to tax issues, litigation issues in terms of who owns something.  It may have an economic and a sentimental value to the testator and also to potential beneficiaries.  So there may be a reason to give an asset to one of the beneficiaries instead of the others.  And really, that’s just the start of it.  So…

 

Natalia Angelini:  Now the obvious largest asset that most people have is their house.  But there’s a whole bunch of others that might not come to mind unless you give some further thought to it.  Why don’t you let us know what some of those are, Sean?

 

Sean Graham:  Well, sure, and the house leads me into sort of real estate, of course.  Not just residences, but people can have multiple residences.  It’s often the case that someone may have bought a residence decades ago.  The price of real estate may have been a relative fraction of what it is today and the testator may have a general idea that real estate values have gone up in the last 50 years.  But they may not know that that house they bought, you know, for, I don’t know, $5,000 in the Forest Hill area and the 5 acres of land on which it sits, are now worth a good deal more than $5,000.  So that’s a situation, obviously that’s an extreme example.  But, you know, there can be very large disparities in values in terms of what a testator who never really wanted to sell the house, never really bothered to check on the market and all of a sudden is talking about giving this house in a Will plan.  It would be helpful certainly to know what the value of that property is.  And, of course, that leads into the issue of well, what happens after the Will is drafted and the value keeps changing?  And that’s why a lot of planners, I think, sort of advise someone to go back to their plan and look at it every few years, because the value of assets change.

 

Natalia Angelini:  That’s right.  I think it’s something always to keep in mind and when you’ve got assets that are local to where you’re residing, it might be more straightforward.  But a lot of people have real estate outside of the country as well.

 

Sean Graham:  And cottages.  I mean, depending on the area, the value of cottages, I understand anyway, can really have changed a great deal.  You know, up in Muskoka, my layperson’s understanding from what I read is that some of the land values have really gone up.  And they might go back down, who knows?  And again, then you’ve got the foreign assets.  Condominium prices for vacation properties in the areas hit by the hurricanes down south a few years ago, you know, who knows what happened to those?  But a testator, you know, it’s a good idea, I think anyway, for a testator to certainly find out.  And it doesn’t hurt to check every once in a while, just to keep yourself updated, whether you’re planning a Will or not, I suppose, just general financial planning.

 

Natalia Angelini:  That’s right.  And once you’re actually administering an estate, that’s going to be relevant at that point again.

 

Sean Graham:  Yeah, and again, the values can change between the time of the Will and the administration of the estate.  I mean, you’re stuck with the Will I suppose.  But you may find that the intentions of the testator sort of may get skewed a bit by changes in values.

 

The other thing I find interesting is those sort of up-in-the-attic personal property, or hanging on the wall, if it’s a painting say, where the family has a basic idea, a family or testator is pretty sure that the painting is valuable.  Say it was done by an artist who rose to prominence after the painting was purchased.  And so the family has a pretty good idea that the painting is worth something but really it’s never been appraised, they’ve never tried to sell it. Those assets can be, it seems to me, very helpful to value, really get a sense of what it’s actually worth.  There could be tax consequences of any assets, and particularly, you know, a valuable painting which was bought for nothing.  And similar to corporate shares, which are bought for nothing and then they skyrocket, but not identical.  You know, there’s different considerations I suspect.  And knowing the value, it seems to me, is the first very important step.

 

Natalia Angelini:  It’s particularly important when you’ve got litigation that’s brewing, because you’re going to want to keep, if you’re the estate trustee, you’re going to want to keep all the beneficiaries and purported beneficiaries aware of what the status of the administration is.  And one of the first things they’re going to want to know is, what all the assets are and what their value is, so they know what they’re fighting over essentially.

 

Sean Graham:  For sure.  And if…let’s just take a hypothetical situation, I’ll pull some names out of mid air.  There’s 3 children:  John, Jenny and Stewart.  There’s a testator who wants to divide up the assets and the testator thinks that John really likes the house and wants the house and Jenny, I think I said, wants the painting, and Stewart gets the rest.  And this is similar to the hypothetical situation I mentioned in my blog.  Again, if you don’t know the values of these different assets, you could be giving John the $2,000,000 house, Jenny the $50,000 painting and Stewart the residue, which is worth $100,000.  But who knows?  Maybe someone is suing the testator so, you know, one of these assets gets eaten up completely.  Without knowing the value and knowing, not just the value, the market value, but also whether there’s claims against an asset, whether it has depreciated or been damaged somehow.  All those things are helpful, in my view, in coming up with a plan.

 

Natalia Angelini:  And the sooner you know this, the better, because if you’re trying to resolve litigation, you’re not going to be able to do it in a meaningful way without knowing what your net dollar value is.

 

Sean Graham:  For sure.  So then you have, of course, the investment assets. And we’re not talking about every kind of asset in this podcast that someone could have.  But investments, portfolios, mutual funds, that sort of thing.  Again, a lot of people I think tend to know the value of these assets because they get statements.  But you don’t get regular statements about your car and you don’t get regular statements about a painting or a house, and so on.  So in many cases at least, I think the investment side of things may be a little easier to figure out.  But you still have background information that’s helpful.  You mainly want to get some tax advice in terms of whether these investments have grown or whether they’re invested in the best, you know, tax manner.  And that can all go into the planning stage as well.

 

Natalia Angelini:  And I think it depends on how sophisticated the testator is and how complex their estate assets are.  But it’s certainly something that, in that kind of scenario, is a good idea, or it’s something I would do in any event.

 

Sean Graham:  And the last thing I’d just sort of want to maybe close on is that you want to come up with a total, I suppose, or some sense of a total value of all these assets once you take into account claims and tax consequences and so forth.  And the total value may affect the amount of beneficiaries.  If an estate is worth $50,000, you may not want…a testator may not want to get too generous to too many people because once all the administration is done, of course, you know, the initial amount may not lend itself to having too much left to give to too many people.  If you’re looking at a $10,000,000 estate and the testator just, for example, might want to take care of the kids “first” and then decide about what other beneficiaries there may be, then who knows.  There may be specific bequests to charities, you know, that would not necessarily be desirable in a smaller estate.

 

Natalia Angelini:  Good point, Sean.

 

Sean Graham:  Well I think…I hope that’s sort of helpful.  Again, we’re just sort of sketching out issues here and the one thing when I think about this topic is a relatively simple question: what do you own? - can lead to an extremely complicated set of follow-up questions and inquiries and so on.  And you may need to go to other people other than the testator, a tax expert, there could be foreign assets, you need to get an opinion from a foreign expert, just to come to that initial question of value.  So I hope that’s helpful to people.

 

Thanks very much, Natalia.

 

Natalia Angelini:  Thanks, Sean.

 

Sean Graham:  So that’s the end of our podcast, and hopefully it’s been some help to people and thanks very much to everyone for listening.

 

Natalia Angelini:  Thanks for listening.  Bye.

 

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.

 

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