The LEGAL/JUSTICE POST

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How much detail should be in an executor's accounts?

Post by Webscout » Tue Feb 13, 2018 9:06 am

Monday, February 12, 2018
How much detail should be in an executor's accounts?
Lynne Butler-Lawyer East Coast Canada

I often hear from clients and blog readers who want to talk about an accounting received from an executor on the wind-up of an estate. Sometimes there are complaints but most of the time it's really an open-ended question: how much detail should there be? The following question recently received from a reader is a good example:

"The executors accounts are vague, for example saying cheque as a disbursement but not saying what for. Accountant fees but no billable hours or reasoning. Also it was said that there was more in the estate than the accounts are showing. No balances to bank accounts or receipts are provided."

Disbursements with no explanation whatsoever are not acceptable. The point of the accounting is to provide information. If the executor knows what the disbursement is for, the explanation must be included. If the executor doesn't know what it was for, then there are bigger problems. The executor needs to own up to the fact that the money is missing.

Typically when the beneficiaries of an estate receive an accounting from an executor, it is a summary of the records kept on the estate. At that point, there would not be copies of bank statements, receipts, or the accountant's bill attached. The use of summary documents is standard procedure and usually it is sufficient.

However, if you are a residuary beneficiary and this is not sufficient, you are entitled to make reasonable inquiries to obtain more detailed information. The key here is "reasonable". Whether a question is reasonable will always depend on the circumstances. Let's look at the accountant's fees as an example. If you know the accountant prepared a tax return for the estate and the amount shown as payment to the accountant seems about right, is there any need to know the billable hour applied? The answer to that might be depend on whether this is the only questionable item on the accounting or whether the accounting is full of mistakes and gaps. Also, if the amount paid to the accountant seems much too high for the services you believe were rendered, then it makes sense to find out more about what the accountant did for the estate.

An executor is obligated to respond to reasonable questions and requests for details. After all, the money in the estate belongs to the beneficiaries and they have every right to know how the executor dealt with their money.

An executor is not obligated to continue to answer questions if he or she has already provided the information that was requested and if the executor simply has nothing else to add. While certainly there are executors who provide weak or even false accounts, there are also unreasonable beneficiaries who make the executors' lives miserable for no good reason by harassing them with continual accusations and questions.

Reasonableness cuts both ways.

Be careful about relying on second-hand information. You mentioned in your question that "it was said there was more in the account". You didn't mention who said that or how this person would be privy to the deceased's financial information. If you feel that it was a reliable source, you are within your rights to ask to see a bank statement for the day the deceased passed away. Perhaps you could ask the person with the knowledge of a bigger bank balance to prove it. Just be careful of making unfounded accusations against the executor because once you do that, the job of getting along with each other becomes a thousand times harder.

If the executor and the beneficiaries are not happy with the accounting and they reach an impasse, the usual recourse is for one side or the other to apply to pass the executor's accounts through the courts. It's unfortunate when it gets that far because most of the time the parties really should have been able to resolve it between them without needing a judge to referee. Instead, the parties, who are usually family members, end up facing off across a courtroom, slinging mud, spending their money, and ruining their family relationship.
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Re: The LEGAL/JUSTICE POST

Post by Webscout » Mon Feb 26, 2018 8:29 am

Sunday, February 25, 2018
Adult Guardianship & Trusteeship Act - unjust legislation? I don't think so
Lynne Butler-Lawyer-East Coast Canada

I recently read an article from Elder Advocates of Alberta Society entitled "Adult Guardianship & Trusteeship Act, Unjust legislation". Click here

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http://elderadvocates.ca/adult-guardianship-trusteeship-act-unjust-legislation-2/
to read it. I read this with great interest, as my regular readers know that I continually advocate for respecting the rights of seniors.

However, I have to conclude that the article amounts to fear-mongering. It declares the entire piece of legislation as being abusive and unjust, and I don't agree that it is. Some of the problems identified by the author of the article are: "In one case, a senior’s property was sold without consent, in other cases seniors haven’t been able to speak for themselves in court. In one instance, a senior was placed under guardianship without being informed." I'm sure these things actually did happen, but keep in mind that it's possible to find anecdotal evidence of pretty much everything if you look hard enough.

Yes, property may be sold without consent and that may seem harsh at first. But I have seen dozens - perhaps hundreds - of older individuals over the last 30 years who do not understand or do not accept that they can no longer live in their homes. They get lost when they leave home, they fall, they catch things on fire while cooking, they don't dress properly for weather conditions,  and they are vulnerable to dishonest people. These are, unfortunately, common effects of dementia that interfere with independence. Yes, I'd be upset too if someone sold my property without my consent, but what if I were one of those people in physical and financial danger because I didn't understand my own limitations?

Sometimes adult children are quick to place Mom or Dad in a long-term care facility, but most of the time it's a difficult, emotional decision that is based solely on what they believe will work the best for Mom or Dad. That doesn't mean that the parent, in danger or not, goes along without a fight. They may be frightened by what's happening and usually feel vulnerable and disoriented. Sometimes that comes out as anger. Sometimes the anger is a result of dementia, too.

A few weeks ago I visited a client in a secure (i.e. locked) dementia ward at a local long-term care facility. I went because she had told a family member she wanted to speak with a lawyer. When I got there, she had no idea who I was or why anyone would think she needed a lawyer. When nudged in the direction of complaining about being in care, she ranted for a good five minutes about how she hated being there and how unfair it was that her house was being sold and how she didn't *&($* well have dementia. Then she forgot all about it and started telling me how nice the place was, how she had a good social life, and how she liked it there. So I guess your perspective on how she feels about her house being sold depends on which five minutes you heard.

I don't believe in taking away rights and dignity from a person based solely on his or her age. I do, however, believe that when someone loses his or her ability to live independently, the family should step in and help. Sometimes that isn't comfortable. Sometimes the parent doesn't understand or accept what is happening. That doesn't make the entire law unjust.
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Re: The LEGAL/JUSTICE POST

Post by Dude » Mon Feb 26, 2018 10:08 am

That is a tough one and every case is different, I am sure most people are trying to do the right thing,
but a lot of the time it's not clear what is the right thing to do.
And what works for one person may be abuse to another.
I think it's a waste of time trying to pass laws to force someone to do what is best for another person,
it won't work and just creates a bunch of useless laws.
There are only 10 kinds of people in this world,
those that understand binary and those that don't. 

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Re: The LEGAL/JUSTICE POST

Post by Webscout » Wed Feb 28, 2018 9:07 am

Tuesday, February 27, 2018
Is it okay to keep the house in the name of the deceased to help out a beneficiary?
Lynne Butler-Lawyer East Coast Canada

It's not always easy to carry out the instructions in a will. It would be so much simpler if reality didn't have a way of putting up obstacles. Recently a reader asked me about keeping a major asset in the name of the deceased in order to help out a beneficiary. Is it a good idea? Here are my thoughts on it.

"There is a beneficiary of a house that is having a difficult time qualifying to assume the mortgage of a house he inherited. However, he is able to make the payments on the existing mortgage. As executor, I would like to do him a favour and keep the mortgage in the name of the deceased, as he is able to make the payments.The beneficiary lives in the house and does not want to lose it or sell it. The house was not the deceased primary residence. My question is: What are the tax and other implications that could arise from this?"

I assume there are no other beneficiaries or you wouldn't even be considering this move. And I don't just mean beneficiaries of the house, but of the whole estate.

You said that the house was not the deceased's principal residence, which means there may be a capital gains tax liability arising when it transfers from the deceased to the estate. The longer you keep the house in the name of the deceased, the greater the chance there will be tax owing (assuming that property values increase, as most do). This tax must be paid by the estate and if there is not enough there, the house should be sold to cover the tax. This is why I said there probably aren't any other beneficiaries; taxes have to be paid before beneficiaries are paid and I can't see them waiting years to find out if they are going to inherit anything after taxes.

If you keep the house in the name of the deceased, you are assuming a great deal of personal liability that you would not assume if you transferred or sold the house. While the house is in the name of the deceased or the estate, you are responsible for it. If the house is not insured and burns down, you will have to pay to replace it. As the executor, you are personally responsible for any loss to the estate. Don't kid yourself that keeping it in the name of the deceased rather than the name of the estate will protect you.

In addition to the potential liability on the loss of the asset, there is also the problem of maintaining it. The cost of running that house is on you as the executor, even if the beneficiary lives there. You will have to pay for property tax, repairs, insurance, etc. because the house is in the name of the deceased and therefore in your care. Certainly you can make an agreement with the future beneficiary to take care of all of those things, but what if he doesn't? What if he loses his job or something else happens and he fails to keep up payments on these things? What if he just moves out? You said that he is the beneficiary of a house. You didn't say that he is the beneficiary of any funds. So there will be nothing in the estate for you to fall back on if he drops the ball.

Also consider the possibility that something could occur on that property that places liability on the estate, such as a pedestrian being injured on an icy sidewalk or a visitor being injured in a fire. If such an event occurs, the estate will be sued and by extension, so will you personally because you didn't transfer the house.

My final point is that sooner or later the mortgage is going to come up for renewal. How is that going to work when the bank finds out the mortgage holder is actually deceased?

You can keep the house in the name of the deceased if you want to. Something I say often to people is that whether you can do something is not the same question as whether  you should do something. It seems to me that the favour you want to do for this beneficiary is pretty darn huge considering the risk you will be taking.

I know you're trying to make this work for the beneficiary, and it's great that you are. But keep looking for other options.
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Re: The LEGAL/JUSTICE POST

Post by Webscout » Fri Mar 02, 2018 8:32 am

Thursday, March 1, 2018
  :'( Left out of the will? Here are your options :'(

Lynne Butler-Lawyer East Coast Canada

I am one of three lawyers who were interviewed for a story in the Globe and Mail by Augusta Dwyer. The article is all about launching a lawsuit against a will and in my view it's an excellent discussion of how and why people challenge wills. Click here

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https://www.theglobeandmail.com/globe-investor/globe-wealth/left-out-of-the-will-here-are-your-options/article38110891/
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Re: The LEGAL/JUSTICE POST

Post by Webscout » Sun Mar 04, 2018 8:41 am

A 3,800 year old will

Lynne Butler-Lawyer East Coast Canada
Most of us know that wills have been around for hundreds of years. The other day I saw a photo of a will that was made about 3,800 years ago! A client dropped by to give me a photo of an ancient will from Egypt and its translation. Click here

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https://www.facebook.com/1630296423926519/photos/pcb.2135941013362055/2135939966695493/
  to see the post about it on my Facebook page. I thought it was so funny that two of the three witnesses were janitors from the tomb, reminding me of all the times I've dragged in witnesses who just happened to be passing by a hospital room at the time. I guess some things never change.
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CDN-What happens if the estate is not paid out within the "Executor's Year"?

Post by Webscout » Wed Mar 14, 2018 9:01 am

ME-Another very interesting Estate case.
Another co-executorship. This example is of 3. I wonder if the father was made aware of potential co-executorship problems by his lawyer. Unlike Butler I have not read the

Rivard v. Morris appeal doc nor do I have the lawyer skills to interpret it. The outcome seems unjust.

Tuesday, March 13, 2018
What happens if the estate is not paid out within the "Executor's Year"?
Lynne Butler-Lawyer East Coast Canada

I have blogged before about the so-called "Executor's Year", a common-law concept that says an executor should have wound up an estate within a year. Most of the time, beneficiaries of estates are content with using that concept as a guideline and are not too upset if there are small delays caused by events that the executor could not control.

But what happens when a year is exceeded by quite a bit and the beneficiaries have not been paid? Not all beneficiaries are okay with waiting for their inheritance.

This is where another legal concept, this one called "The Rule of Convenience" comes in. This rule says that if specific gifts (as opposed to residuary gifts) are not paid within a year, the beneficiary will earn interest on that specific gift. The interest starts running once the year is up and continues until the gift is paid.

I have recently read a very good blog post from www.allaboutestates.com that discusses a recent case from Ontario in which both of these concepts were discussed. Click here to read the blog post. I highly recommend it for executors who have been slow getting the estate finished. Here are the facts as set out in the blog post:

"The deceased died in October 2013.  In his last will, the deceased appointed his three children (a son and two daughters) as the co-estate trustees of his estate.  He left each of his two daughters specific legacies of $530,000.  The deceased left the residue of his estate to his son.

After their father’s death, the sisters challenged his last will.  The will challenge settled in August 2016, finding that the father’s last will was valid.  The sisters were paid their respective $530,000 legacies in October 2016 (2 years after the first anniversary of their father’s death).  The sisters resigned as estate trustees.  They also claimed that they were owed interest at 5% per year on their respective legacies commencing on the first anniversary of their father’s death."

Anybody else find it overwhelmingly greedy of these sisters to claim that the estate took too long when (a) they were the executors and (b) they were the ones challenging the will and therefore causing the delay? The greed of some people just continues to astonish me. In any event, the judge denied their application for interest. Of course, the sisters appealed that decision.

The Ontario Court of Appeal allowed them to get the 5% interest per year on their inheritance. The court said that the sisters were entitled to their will challenge and that neither the sisters nor the brother should be rewarded or penalized by the passage of time. I'm having a bit of a hard time with that one, given that the interest amounting to more than $100,000 is coming right out of the residue that the brother would otherwise inherit.

In any event, what we can take away from this case is that the courts are prepared to stick to the Rule of Convenience.

If anyone wishes to read the case in full, it is called Rivard v. Morris and can be read here.

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https://www.canlii.org/en/on/onca/doc/2018/2018onca181/2018onca181.html
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The LEGAL/JUSTICE POST March 31/18

Post by Webscout » Sat Mar 31, 2018 9:28 am

Friday, March 30, 2018
Amid 15-year legal dispute, new executor named for artist C.C. Wang's estate
Lynne Butler

Links below..

What a nightmare! Fifteen years into the dispute and things are really just getting going. The stress and unhappiness for the family of C.C. Wang must be immeasurable.

C.C. Wang was a Chinese-American artist and collector whose name is on New York's Metropolitan Museum of Art, Asian art wing. He died in 2003. His grandson was named as the executor of the estate, estimated to be valued at $60 million.

Since that time, Wang's daughter (who was disinherited by the will) has tried to have the grandson removed as the executor for a number of reasons. Mostly the problem is that the grandson appears to be seriously mishandling the estate. There are allegations that he stole works from the deceased's collection, re-sold items at many times their value while keeping the money, and that almost 50 pieces of art are unaccounted for. There are also allegations that Wang, who was 90 when he died, was suffering from dementia and was influenced by his grandson into making the will in his favour.

In this, the daughter's second attempt through the courts, she was successful in having the grandson removed and herself named to replace him. She is now in a position to investigate many of the transactions and allegations that she could not get access to before. This means it's not over yet. Click here to read a more detailed article about this estate at w*w.artnews.com.

While the dollar values in this case are high and the deceased is famous in art circles, the issues are just the same as the ones that cross my desk on a regular basis. Any estate litigator will tell you that the trials and tribulations of the estates of rich and famous people are just like those of the rest of us, except for the public attention.

You'll notice that the trouble in this case appears to have started when someone took advantage of Mr. Wang's impaired state of mind and influenced him into preparing documents in their favour. Unfortunately, we all are vulnerable if we are in that position. However, one of the best and smartest things you can do for yourself is to make documents naming representatives while you are mentally healthy. Make a Health Care Directive and an Enduring Power of Attorney while you are at full strength and while you have the time and ability to put some real thought into who you want in charge and what you want them to do.

Anybody with Mr. Wang's wealth should have been working with a financial advisor, as should everyone who has amassed even a reasonable amount of wealth. An advisor will talk to you about trusts that will take assets out of your estate and help you structure your money in ways that will benefit those you care about.

An executor who is determined to find a way to steal from an estate might well be able to do so. I've certainly seen it happen. But there is a lot we can do while we're alive to prevent these long, drawn-out, expensive lawsuits from happening in our estates.

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http://www.artnews.com/
http://www.artnews.com/2018/02/27/amid-15-year-legal-dispute-new-executor-named-artist-collector-c-c-wangs-estate/

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Re: The LEGAL/JUSTICE POST

Post by Webscout » Tue Apr 03, 2018 9:23 am

CDN-Left out of the will? Here are your options. G&M April 3, 2018 (paper)
UPDATED FEBRUARY 28, 2018. Online.

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https://www.theglobeandmail.com/globe-investor/globe-wealth/left-out-of-the-will-here-are-your-options/article38110891/
CDN-About Lynne Butler- came across while lurking...

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https://ca.linkedin.com/in/lynne-butler-91ba2412

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CDN-Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence & Diminished Capacity

Post by Webscout » Thu Apr 05, 2018 9:07 am

Wednesday, April 4, 2018
Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence & Diminished Capacity
Lynne Butler-Lawyer

:oo: Link below

I'm glad to see that various sectors of our society are aware of the fact that our aging population is leading to an increase in elder financial abuse and are taking steps to combat it. I was recently provided with the report called "Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence, and Diminished Capacity", which was published in 2017. Click below to read the report. It was prepared specifically for people in the investment industry who deal with aging individuals who may be vulnerable due to illness or incapacity, or due to elder abuse. It talks about everything from predatory marriages to joint property, and backs it all up with statistics. It's interesting reading for anyone who deals with seniors and their money.

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https://faircanada.ca/submissions/report-vulnerable-investors-elder-abuse-financial-exploitation-undue-influence-diminished-mental-capacity/

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CDN-Estate planning and asset protection with an estate lawyer

Post by Webscout » Thu Apr 12, 2018 8:39 am

Wednesday, April 11, 2018
New podcast on financialpodcast.ca: Estate planning and asset protection with an estate lawyer
Lynne Butler-Lawyer East Coast Canada

Recently I recorded a series of podcasts with the folks at Financialpodcast.ca. The first one to be posted online is about joint property and how it causes problems in estates. If you'd like to listen to it (free, of course) click here. While you're there, check out their list of podcasts in other areas such as investments and retirement.

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https://financialpodcast.ca/podcast/estate-planning-and-asset-protection-with-an-estate-lawyer/

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California high school ....

Post by Webscout » Thu Apr 12, 2018 9:33 am

The cover of a California high school student magazine features a physical "bullet hole" that pierces every page.
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Re: The LEGAL/JUSTICE POST

Post by Dude » Thu Apr 12, 2018 12:01 pm

it was probably an accident, not everyone can afford a gun safety class.

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Re: The LEGAL/JUSTICE POST

Post by Webscout » Thu Apr 12, 2018 12:17 pm

Dude wrote:
Thu Apr 12, 2018 12:01 pm
it was probably an accident, not everyone can afford a gun safety class.

Good point. Therefore, before you can own a gun you must have the means to pay for and take a gun safety class. ....pre·req·ui·site Pay for it when you buy your gun.

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CDN:Can you get child support from an estate? +

Post by Webscout » Wed Apr 18, 2018 7:54 am

Can you get child support from an estate? And can an estate sue you for child support?
Lynne Butler-Lawyer East Coast Canada

If you are paying or receiving child support, do you ever wonder what would happen to that obligation if you passed away? If you are the one paying, would your estate have to keep paying? A recent case in the Alberta Court of Queen's Bench has provided some confirmation of what will happen.

Whenever a case is decided by a court in Canada that touches on issues like this, we lawyers look at it to see whether it confirms what we're already doing, changes what we're doing, or clarifies some issue or outstanding question. Most of the time we hope for clarification of the facts or circumstances that will lead to a particular outcome. This is important so that we keep up with the current law but also so that we can give our clients some certainty as to the outcome of their own cases.

The bottom line with child support obligations is that it all comes down to the wording of the order or agreement that directs you to pay. If the agreement says that the support obligation continues on after you pass away, then it does. If the agreement does not say that it survives you, then the obligation to pay support dies with you.

The case mentioned above is that of Stalzer v. Stalzer. When Frank Stalzer died, he and his wife had been separated for about 10 years but had not divorced. The three children were living with Frank. His brother was named as the executor of Frank's will.

The executor brought an application to court asking for retroactive child support for all of the years that the children had lived with Frank. At the same time, Frank's wife brought an application against the estate for retroactive child support for the time the children lived with her. It's amazing how an argument can keep going even after one person has passed away, isn't it?

The judge denied both applications. He said that unless the order or agreement says otherwise, an obligation to pay child support is a personal obligation that ends when the person dies.

Also important is the fact that our Divorce Act (which applies right across the country) limits who may apply for child support. The applicant must be a spouse, not the estate of a spouse.

If you'd like to read the entire case, click here.

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https://www.canlii.org/en/ab/abqb/doc/2018/2018abqb191/2018abqb191.html?autocompleteStr=stalz&autocompletePos=1

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