When it comes to wills and estates, it is common for people to leave their assets to a spouse, followed by their children. This traditional structure of passing wealth to children can become complicated in a blended family. While the process of writing and administering a will are similar regardless of family structure, more complex family structures can lead to additional challenges. In these cases, clear consideration and communication are important for seamless estate administration in Ontario.
Understanding estate litigation related to undue influence
When an individual plans for the future of his or her estate, the intention is for the person to be able to make independent and well-informed decisions. Unfortunately, it is possible for people to be conned or manipulated into changing their will to the benefit of someone with ill intentions. In fact, undue influence is at the heart of many estate litigation cases in Ontario.
It is not uncommon to hear about a senior who is pressured or deceived into changing his or her will; perhaps adding a beneficiary who is not a family member, making strange-seeming valuable gifts, or cutting someone out of the will last-minute. Elderly people, especially those with many assets, can be vulnerable to these types of cons. While sometimes these seemingly strange wills do in fact align with the final wishes of the deceased, other times they are the result of something more deceptive.
Be careful when selecting executors, news story demonstrates
When it comes time to pick an individual to oversee the distribution of a will or trust, many people consider a third-party professional instead of a family member or friend. While it may seem natural to name those with a financial background to this role, it is important to take a closer look at one's title and designation before selecting executors or trustees. An Ontario mutual fund dealer recently landed himself in hot water when he improperly took on two clients' estates as co-executor and trustee.
The Toronto-based mutual fund dealer has been permanently banned from the industry after it was found that he became the executor of two clients' estates after both passed in 2011. This is against the rules of the Mutual Fund Dealers Association of Canada (MFDA). It was also contrary to the agreement between the dealer and his employer.
Estate planning tips for business owners
Planning for the future can be challenging for anyone, but business owners have particular considerations when preparing wills. Ontario business owners should be careful to include detailed information about the future of their business in estate plans if they hope for their business to survive the owner or owners. Plans should not only designate future management and ownership of the business, but also answer any questions that may arise about the transition and assets within the business. Here are some considerations for business owners looking to plan for their futures.
First, it is important to remember that businesses can change over time. So, a succession plan that made sense five years ago may not be the best option following such changes. Additionally, laws governing estate taxes and businesses can alter over time. To build a tax-efficient and sustainable estate plan, regular review is imperative.
What happens if a beneficiary dies during estate administration?
When a person passes away, his or her assets are distributed amongst beneficiaries, often based on a will. Unexpected occurrences, such as the death of an heir, can make estate administration more complicated than it may seem on the surface. Here is how to approach the administration of an Ontario estate if a beneficiary dies prior to distribution.
Fortunately for executors, many lawyers do plan for this scenario when they help someone draft a will. The first step when this unexpectedly happens is therefore to check the document for a suvivorship clause. A suvivorship clause requires beneficiaries to live a certain amount of time after a testator passes. These clauses are typically about 60 or 90 days. The clause will then lay out who should get the assets should someone not survive this length of time.
Thorough planning can ease estate administration for the affluent
Almost every family has some difficult issues to consider when preparing estate plans, but those who are particularly wealthy may have additional considerations. Many wealthy Ontario families hand over estate planning decisions to financial advisors, but it may be beneficial to take a closer look at their recommendations before finalizing a strategy. This attention will not only help families identify their best options, but also ease the estate administration process later on.
One common tactic used by wealthier individuals is to divide assets before passing away by using an estate freeze. Other tax minimization tactics can also be considered. For those with many assets, taxes should be top of mind when planning estate administration.
Future planning should not wait until capacity wanes
Many people consider estate planning to exclusively involve the management of their assets after passing away, but there is more to it than just this. It also involves planning for who can make decisions on an individual's behalf if they no longer have the capacity to do so. It is important that Ontario adults and their loved ones have serious conversations about what may happen in a variety of situations, not only in the event of a death.
In Ontario, a power of attorney can be named to make decisions for an individual who no longer has the capacity to do so. Powers of attorney can be named to manage health decisions as well as financial matters. There are many options available to grantors: they may grant more than one person power of attorney, they may limit or expant the scope of their decision-making power, or even restrict the duration of time during which their power of attorney decision is valid.
Prioritize the process, not the will itself, with estate planning
For most Canadians, financial planning is far from a well-defined process. While many have an idea of what they have and where they may want it to go after they pass away, these plans are often not articulated to those who need to be aware. Ontario families may find that the best way to avoid financial challenges, up to and including estate litigation, is to consider an estate as part of a longer-term process of financial planning overall.
Estate planning and its inevitable aftermath are among the lesser understood financial issues in Ontario and throughout Canada. Investments and insurance are much more widely discussed and understood, while retirement and estate plans are less considered in many cases. Considering how the two interact, and how many stakeholders may be involved in the outcome of these decisions, this can be a mistake.
Managing gifts to grandchildren in estate administration
As the economy changes and housing costs rise, an increasing number of grandparents are offering financial assistance to their grandchildren. This shift in priorities can impact estate planning and estate administration, especially if grandparents would like to leave money to help their grandchildren only with particular purchases like a home or education. Here are some ways Ontario grandparents can approach the delicate subject of grandchildren in estate planning.
One of the first things grandparents should clarify is the reason for the financial assistance. Some may simply have excess money in their estate and wish to give it to younger family members with more financial need. Others have less resources or very specific intentions, so they need to be strategic about how they offer assistance.
Plan ahead to avoid estate administration issues with the cottage
A family home is often at the center of estate planning efforts. But there are other large-scale assets that can often cause serious disputes and estate administration challenges in Ontario families. Cottages are one common asset that can cause discord among families. Here are some steps cottage owners can take to prevent conflict around this often beloved family asset.
The first consideration when estate planning with a cottage is to consider who will use the property. While equal co-ownership of an Ontario vacation property between children might seem to be the simplest solution, it can become complicated when one child uses the cottage significantly more than others. A child's location, vacation preferences and future plans should all be considered when planning for a cottage's succession.
