Wills & Estate Planning

[firebug]

Originally Posted by Derek Sutton

So this topic came up recently as my Uncle in Law was telling us about having recently dealt with his father's (small) estate. His Dad was living off his cash and investments and set up joint accounts with his son (my Uncle). Since all the accounts were set up as joint, everything was quick and easy and avoided probate and "all the paperwork". They went by what was stated in the will and Uncle just transferred what is in the accounts to his siblings accordingly. Could someone explain further on this? I never heard much of this before so I presume it is rather uncommon to set up joint accounts with your adult children? But Uncle said this is the way to go, and he will be doing this in the next few months likely with my wife (his niece) as the joint account holder/ executor as he has no children of his own.

When it works, it works well.

When it doesn't, well, that's a lot of work.

Ensure that this is done as a plan with your accountant and with your lawyer rather than just as a whim based on what you've read online.

Also, no probate tax in alberta so the 'benefits' of this are less than in some other jurisdictions. Additionally, with the new electronic submission option available to lawyers I've had full probates approved within a week so the time savings are not that significant either.

[MoneyGuy]

Originally Posted by Slava

Yeah that's a potential issue, and if you're talking about a significant amount of money, taxation is another one. That's probably not as big an issue if it's a bank account, because the interest rates aren't that high (which begs another question), but if yoh have those funds invested or into something like a GIC, you might end up paying tax on that gain.

If it’s done solely for estate planning I think the risk of a tax problem is minimal. When I had clients who wanted to do that I’d get them to sign a letter indicating that the move was done only for that purpose and the money was owned and the tax obligations were the responsibility of the one whose money it was. There is virtually no chance CRA would go after a few hundred dollars. I’d always include in the file a note that the client agreed that this was initiated by them and I’m not responsible for any taxes, or send a client email confirming that understanding.

[Slava]

Originally Posted by MoneyGuy

If it’s done solely for estate planning I think the risk of a tax problem is minimal. When I had clients who wanted to do that I’d get them to sign a letter indicating that the move was done only for that purpose and the money was owned and the tax obligations were the responsibility of the one whose money it was. There is virtually no chance CRA would go after a few hundred dollars. I’d always include in the file a note that the client agreed that this was initiated by them and I’m not responsible for any taxes, or send a client email confirming that understanding.

I don't know if that stands up though. It's a joint asset, and if someone invests those funds and has a gain it's taxable. You could argue that they're not really yours, but as you know, they legally are. I don't think it's an issue with a minimal amount (and no one would be concerned with that).

[MoneyGuy]

Originally Posted by Slava

I don't know if that stands up though. It's a joint asset, and if someone invests those funds and has a gain it's taxable. You could argue that they're not really yours, but as you know, they legally are. I don't think it's an issue with a minimal amount (and no one would be concerned with that).

I'm not worried about it. My wife did it with her ailing dad and I would have cautioned her if I felt otherwise. Sometimes it's done because (as in my father-in-law's case) it's more convenient to have someone who can pay bills and make financial decisions who is not confined to a bed and wheelchair.

[flamesfever]

nm

[DoubleF]

Originally Posted by Slava

I don't know if that stands up though. It's a joint asset, and if someone invests those funds and has a gain it's taxable. You could argue that they're not really yours, but as you know, they legally are. I don't think it's an issue with a minimal amount (and no one would be concerned with that).

You don't do it with a giant pile of assets though. If it's like $50K or less and mostly cash/GIC for administrative purposes, it's no big deal. CRA only cares that the full value of the interest is taxed in someone's hands. A few hundred dollars in interest isn't much at all for CRA to be worried as long as 100% of the income has been declared by someone (ie: 50:50 or 100%).

I've seen this happen a lot. CRA hasn't made a huge fuss about it unless it was a gigantic amount in a joint name (which people don't generally do anyways).

Tax payer still moves other cash into those accounts to replenish if needed (if they want to keep assets vs distribute to the kids immediately).

Joint names on the house are usually the problem though. It's hard to get away from the idea that the house isn't at least 50:50 if the individual is still living there and it can definitely mess up a principal place of residence exemption. People do this for administrative purposes often without realizing they've done a deemed disposition and they've potentially messed up royally for tax purposes because principal place of residence exemption reasons (I've seen this error a few times already, especially in BC).

Additionally, "avoiding probate" is only a problem if the siblings aren't cool with each other. I've seen some fancy things people have done to avoid probate. So fancy that the siblings had to have had good relationships and trust with each other to execute. They should have just let it go to probate or had the assets distributed/deemed disposed ASAP while parents were alive vs spending more time and effort on things like asset sale and repurchase rotation situations until the parents pass away.

[curves2000]

Hi all,

I hope you all don't mind the bump but I am looking for some assistance with a nightmare I have somewhat gotten myself into.

A friend of my father's recently passed away. 77, cancer, single, no spouse, no children, no will and very little in the way of assets. Strained family situation overseas. He has couple thousand dollars in a bank account and a car worth a few hundred dollars. Sad situation.

Since literally none of his 3-4 friends will actually step up and do anything regarding burial etc, I thought I would lend a helping hand with a religious burial as per our cultural beliefs.

I contacted funeral benefits AB who denied the application based upon assets. ($3000 cash) and the likelihood that a Canada Death benefit is coming, assuming I file taxes for him, nobody else will.

The funeral home wants to be paid but say they can't do a funeral for that amount of money. I can't personally make the call for cremation as I don't like that option and usually not something we normally do in our community. Public trustee doesn't want to help out, nobody stepping up, AB Government providing no guidance on anything and people saying to file paperwork with the courts to be appointed Executor to sell donate a $300. No chance of recouping any costs on my end.

Anybody have any suggestions on where to go from here? Even my MLA who's a friend just says wash your hands of this and be done with it but how can I do that for someone I have known for 20+ years?

Thanks

[Cecil Terwilliger]

If he’s religious, maybe his place of worship would help out. This seems right up their alley. That’s what organized religions are for, to help out the community and the less fortunate. I’m sure his local place of worship or his fellow worshippers would be willing to chip in.

Otherwise your options are probably limited. Pay it yourself or start a gofundme.

[bossy22]

bumping this thread because my mom needs to do a will. I thought she had one done years ago but she's saying she doesn't have one. She's 76. Is a at home will ok? Or should she just pay the $800 to a lawyer to get it done? She doesn't really have any assets other than her car and the money from her house she sold last year.

[DoubleF]

Originally Posted by bossy22

bumping this thread because my mom needs to do a will. I thought she had one done years ago but she's saying she doesn't have one. She's 76. Is a at home will ok? Or should she just pay the $800 to a lawyer to get it done? She doesn't really have any assets other than her car and the money from her house she sold last year.

I'd personally just spend the $800 for a will and POA/personal directive.

Don't focus on what she has, but who will get it and who will deal with her estate. If you are the only beneficiary/trustee and her assets are low, I guess the risk is kinda low. But if there's other beneficiaries and the assets are higher, saving the $800 risks leaving behind issues that could "cost" many times more than $800 to address later on not just in maybe getting a lawyer involved, but also your time and effort to resolve things.

Even if the assets are low, saving $800 now might create an issue worth more than $800 later to legally transfer/enact on her behalf to change name on title/sell or get control of the bank account, vehicle or even proving that you're authorized on stuff like canceling monthly services like utilities, cell plans, internet, credit cards etc.

[puckedoff]

Probably worth it as you can outline your wishes in the event of extreme medical or incapacitated states etc. (not sure the exact legal terms).

[firebug]

Originally Posted by DoubleF

I'd personally just spend the $800 for a will and POA/personal directive.

Don't focus on what she has, but who will get it and who will deal with her estate. If you are the only beneficiary/trustee and her assets are low, I guess the risk is kinda low. But if there's other beneficiaries and the assets are higher, saving the $800 risks leaving behind issues that could "cost" many times more than $800 to address later on not just in maybe getting a lawyer involved, but also your time and effort to resolve things.

Even if the assets are low, saving $800 now might create an issue worth more than $800 later to legally transfer/enact on her behalf to change name on title/sell or get control of the bank account, vehicle or even proving that you're authorized on stuff like canceling monthly services like utilities, cell plans, internet, credit cards etc.

Yes. In the long run, the cheapest will is almost always the one prepared for you by an experienced Estate lawyer.

I'm currently dealing with a home-made will with two home-made codicils and it's going to cost the estate thousands more than what it would've cost for the deceased to pay a lawyer to have done it properly.

Also working on a holographic will (i.e. handwritten) with partial intestacy and estranged children with no fixed address. Another estate with a bunch of extra costs due to 'saving money'.

It's good for me though...

[Fuzzy14]

Yes. In the long run, the cheapest will is almost always the one prepared for you by an experienced Estate lawyer.

I'm currently dealing with a home-made will with two home-made codicils and it's going to cost the estate thousands more than what it would've cost for the deceased to pay a lawyer to have done it properly.

Also working on a holographic will (i.e. handwritten) with partial intestacy and estranged children with no fixed address. Another estate with a bunch of extra costs due to 'saving money'.

It's good for me though...

Bolded for emphasis. I see lots of wills prepared by lawyers that "do wills" as part of their practice. Helps them fill in their billings, etc. Some of these wills are downright bad, result in uncertainty or ambiguity, and end up costing the estate thousands of dollars down the road.

A competent Estate Planning lawyer will do more than just pull a precedent from their files, change the names, and poof you're done for $500.00 or $600.00 bucks. They will look at the client's situation holistically to ensure that the right planning is in place. In my experience, the slightly higher legal fees to get the right expertise pays for itself many times over.

[MoneyGuy]

Originally Posted by firebug

Yes. In the long run, the cheapest will is almost always the one prepared for you by an experienced Estate lawyer.

….

I’ve sent many of my clients to a paralegal who charges $450 for a couple’s wills, PD and POA. She’s been doing it for we’ll over 20 years and has done hundreds.

[firebug]

Originally Posted by MoneyGuy

I’ve sent many of my clients to a paralegal who charges $450 for a couple’s wills, PD and POA. She’s been doing it for we’ll over 20 years and has done hundreds.

Interesting... I've been sending my clients to a financial advisor at Primerica, she's been doing it for 20 years... way cheaper for them than a qualified CFP.

[troutman]

Originally Posted by MoneyGuy

I’ve sent many of my clients to a paralegal who charges $450 for a couple’s wills, PD and POA. She’s been doing it for we’ll over 20 years and has done hundreds.

Paralegals are not insured to give legal advice.

https://www.lawsociety.ab.ca/regulat...actice-of-law/

Paralegals are not accountable for their services, as there is no regulatory body to set or maintain standards of service. Paralegals are not required to follow a code of conduct. It is important to note that, unlike licensed lawyers, paralegals do not have professional liability insurance to cover the cost of any mistakes they may make.

Discussions and correspondence with a paralegal are not protected by confidentiality or privilege.

[MoneyGuy]

Originally Posted by troutman

Paralegals are not insured to give legal advice.

https://www.lawsociety.ab.ca/regulat...actice-of-law/

She doesn’t give legal advice. She does wills, etc. and has done it for approaching 30 years. Wills are not hard if know what you’re doing. We bought packages for our children and have sent family and friends. I trust her.

[Fuzzy14]

She doesn’t give legal advice. She does wills, etc. and has done it for approaching 30 years. Wills are not hard if know what you’re doing. We bought packages for our children and have sent family and friends. I trust her.

This is like saying “my friend that isn’t an electrician isn’t performing electrical work, he’s just helping me wire my basement!”.

Offering will preparation services is giving legal advice. Wills are not some pseudo-legal side project that anyone should be assisting people in preparing. They are complex legal documents, based on hundreds of years of precedent, and risk significant legal consequences if prepared in a negligent manner. That’s the point that Troutman is making. You can have anybody help you prepare a will, and that’s fine. But if they make an error in doing so which results in thousands of dollars of legal fees to resolve (often hundreds of thousands), then the person that is ultimately responsible for that is uninsured.

[GGG]

Originally Posted by Fuzzy14

This is like saying “my friend that isn’t an electrician isn’t performing electrical work, he’s just helping me wire my basement!”.

Offering will preparation services is giving legal advice. Wills are not some pseudo-legal side project that anyone should be assisting people in preparing. They are complex legal documents, based on hundreds of years of precedent, and risk significant legal consequences if prepared in a negligent manner. That’s the point that Troutman is making. You can have anybody help you prepare a will, and that’s fine. But if they make an error in doing so which results in thousands of dollars of legal fees to resolve (often hundreds of thousands), then the person that is ultimately responsible for that is uninsured.

If a will is prepared improperly such that it is not valid who could sue?

The author is dead and wouldn’t the plaintiffs be an heir that got screwed out of money as a result of will? And in order to prove you actually were damaged by the improper will wouldn’t you need to show you were entitled to the money in the absense of the negligence, and to do that you would need to prove the will was valid.

So how would sueing a lawyer for a bad will work?

[opendoor]

Originally Posted by GGG

If a will is prepared improperly such that it is not valid who could sue?

The author is dead and wouldn’t the plaintiffs be an heir that got screwed out of money as a result of will? And in order to prove you actually were damaged by the improper will wouldn’t you need to show you were entitled to the money in the absense of the negligence, and to do that you would need to prove the will was valid.

So how would sueing a lawyer for a bad will work?

A beneficiary could potentially sue. Imagine a single person having a will drafted that leaves 20% of their estate to their brother and 40% to each of their 2 kids. If the lawyer drafting that will made a mistake that made the will invalid, that person would die intestate. That would mean that the estate would be distributed based on the law, normally to the two kids only, leaving the brother with nothing. The brother would then potentially have a claim against the lawyer for his loss due to negligence.