The Importance of a Will

You might be surprised to learn how many people do not have a will. In March, 2012 a poll conducted by Harris/Decima revealed that 31 per cent of Canadians between the ages of 45 and 64 don’t have a will. Many people would be concerned with that statistic, but others would say, ‘Who cares, I’m not going to be here anyway’. Well, here’s a few things you might want to consider.

Having a will gives you control. Control over who gets what. Control over who becomes the guardian of your kids. Control over who manages your estate. Control over whether family heirlooms get sold or handed down to younger generations. In short, you get to make all of the decisions.

I know many people who hate government involvement of any kind. Well, guess who controls your estate if you have no will (ie. die intestate)? That’s right, provincial legislation controls how your estate will be divided, and the government gets to decide who will raise your kids.

I know someone who is widowed, has 2 estranged kids, no will, is worth $1M, and hates giving money to the government. Since he hasn’t spoken with his kids in ages and likely doesn’t know where they are (and vice versa), if he dies his kids will likely never even be informed. Since he has no other family, if his kids are not located, his wealth will eventually go the government… exactly what he would not want. And that’s after the Public Trustee gets paid to settle his estate, since there may be no one else to step in as Administrator. Even if you have no family to leave your estate to, you could still leave your wealth to one or more charities… if you have a will. No will, no control.

Many wills that I read are quite simple: the estate is split amongst a handful of beneficiaries, family members most often. Perfectly fine. Other wills are more detailed, leaving items of sentimental value to certain friends and family. Again, perfectly fine. At least there’s a will… control.

People often assume that it’s more difficult to settle an estate when there’s no will and, for the most part, that’s an accurate assumption. Due to privacy laws, third parties, like banks, will provide no information, sometimes refusing to even acknowledge if a bank account exists, let alone tell you the balance. This makes it hard to generate a list of assets & liabilities when applying for Letters of Administration, and the person applying may even need to post a bond. But, there’s a bright side (no, I’m not being facetious). When there’s no will everything gets sold, and there’s no question about who gets what… everything is clearly spelled out in the Estate Administration Act. It really is that clear cut. But, getting back to the guy with $1M and 2 estranged kids, since the Administrator will have no access to the deceased’s bank account, I wonder how much of his own money he’ll have to spend trying to find the kids.

Gregg Medwid is the owner and president of Executor Support, a firm based in Coquitlam, British Columbia, with expertise assisting executors and administrators in settling estates. The project management expertise and customer service focus Medwid brings to Executor Support ensures questions are answered and help is given when it is most needed.

This article is in no way intended to substitute for competent legal advice.

(Source for statistics: CNW Canada Newswire, May 9, 2012, “CIBC Poll: Nearly one third of Baby Boomers don’t have a will”)

Gregg Medwid, Owner
Executor Support
gregg@executorsupport.ca
604-999-2106
http://www.ExecutorSupport.ca

Generating a List of Assets for the Estate

When someone dies they are deemed to have sold all of their assets at fair market value immediately before death. So, the big question is, what did they own, and what are the values? Answering this question is one of the first big tasks in settling an estate… generating a list of assets and liabilities, as of the date of death (ie. Balance Sheet). The contents of the balance sheet will be used by the person preparing the probate forms, either the executor or their lawyer.

Generating a list of assets can be very easy in many estates, but very complex and frustrating in other estates. Firstly, is there a will? If there is, then the bank will likely share information with you, such as account numbers and balances. But if there’s no will then most companies will refuse to provide any information due to privacy concerns. Write letters to any banks, financial institutions, insurance companies, service providers, pension offices… everyone who the deceased did business with. Ask them for account numbers, values and any other details you can think of, with respect to the assets (possibly) owned and debts owing.

Most people are helpful, but sometimes you’ll hit a dead end, in which case you’ll have to dig deeper. Search through the deceased’s home. Look in filing cabinets, desks, closets, boxes, drawers. Speak with their lawyer, accountant, financial planner, relatives, friends. Contact any and all companies whose documents you find. And if you ask yourself, “Should I bother contacting this company?”, my answer would be, “For the price of a stamp, why wouldn’t you”.

Seek whatever help you may need to establish market values, such as professional appraisals for jewellery, antiques, real estate and companies. Calculate interest earned up to the date of death on financial investments such as bonds and GIC’s. Research those stock certificates you found in the safety deposit box. The company may have changed its name or been sold.

The CPP Death Benefit as well as the final pension cheques need to be shown as assets, even if they haven’t arrived yet. And then there’s the assets that can easily get overlooked, such as the damage deposit from the apartment rental, or the trust/comfort account at the care home. The condo or timeshare in Florida needs to be shown. Insurance policies where there is no named beneficiary must also be included, because the estate will be the beneficiary.

You do not need to include joint bank accounts where there’s a right of survivorship, or real estate owned in joint tenancy, because the surviving owner simply continues to own them.

Now that you have your list of assets & liabilities, what’s next? In most cases, filing for probate.

Gregg Medwid is the owner and president of Executor Support, a firm based in Coquitlam, British Columbia, with expertise assisting executors and administrators in settling estates. The project management expertise and customer service focus Medwid brings to Executor Support ensures questions are answered and help is given when it is most needed.

This article is in no way intended to substitute for competent legal advice.

Gregg Medwid, Owner
Executor Support
gregg@executorsupport.ca
604-999-2106
http://www.ExecutorSupport.ca

Settling an Estate by an Objective Unemotional 3rd Party

In many families settling an estate can be quite difficult and take a long time because the family members don’t get along with one another, don’t speak with each other or just don’t trust each other. This can make an executor’s job that much harder. How would you react as an executor if one of the beneficiaries accused you of hiding something? Are you able to remain objective when there are long-standing issues between you and your siblings? Will you continue to move the estate forward if someone threatens to challenge the terms of the will in court? Is someone bitter because they weren’t selected as the executor? Are the beneficiaries second-guessing your actions and decisions?

The list of possible issues can go on and on… every family is different… so the executor needs to remain objective and unemotional. Either that or the executor can hire someone to assist who will communicate with everyone else. How can these difficult situations be diffused? Better yet, how can we prevent them from arising in the first place? Really, it isn’t that difficult, but it can feel impossible if you’re caught up in the emotion.

The top 3 solutions are these: communication, communication, communication. Beneficiaries deserve to receive frequent status updates, including what has recently been accomplished, what is still left to do, and where any pitfalls may lie. All reports provided should be clear, complete and easy to understand. In a word, transparent.

Next, the financials. Eventually, the beneficiaries will be provided with the financial reports and asked to pass the accounts, so another idea is to provide interim financial reports. You will likely prepare a list of assets & liabilities for probate, so you could start by providing that report. Next, all bank transactions should be recorded, so you could also provide that list. Then there’s the list of revenue & expenses… this report could also be provided, which should clearly show all of the expenses incurred by the estate since the date of death.

What else? Do not procrastinate. It’s so easy to do, with all of the other obligations we have in our lives. If you believe you’ll have to justify your every action, sometimes it’s easier to just put it aside and do something else, but then that task stays on your mind, preventing you from relaxing. Don’t procrastinate, just continue to be objective and complete the task now, not later.

People tend to not tell their ‘story’ to anyone acting professionally and objectively. I rarely hear unreasonable statements. People tend to keep their comments/questions brief and factual. It’s this objective person who can maintain an open dialogue with family members. Not only will beneficiaries say more, they’ll also hear more.

Most importantly, let’s remember why we’re doing this work in the first place: we’re respecting and fulfilling the final wishes of the deceased. Yes, settling an estate can be a big job, but it doesn’t have to be a negative one. Remain objective, professional and unemotional, and the estate will be settled before you know it… without conflict.

Gregg Medwid is the owner and president of Executor Support, a firm based in Coquitlam, BC with expertise assisting executors and administrators in settling estates. The project management expertise and customer service focus Medwid brings to Executor Support ensures questions are answered and help is given when it is most needed.

This article is in no way intended to substitute for competent legal advice.

Gregg Medwid, Owner
Executor Support
gregg@executorsupport.ca
604-999-2106
http://www.ExecutorSupport.ca

Owning Shares in a Company When You Die

What happens to your company when you die? Does it die with you? Live on? Who will supervise and pay the staff? Or, perhaps the deceased was a 1-person-show… no staff… does that mean we can just ignore the company? Are there partners? Other shareholders? Was the company incorporated, or was it a sole proprietorship? Or, perhaps the deceased didn’t run his/her own company, but rather played the stock market, meaning there are shares in a few publicly-traded companies. Every scenario is different, so this article will touch on a few of the more common issues.

Sole proprietorship – These companies are usually very small, often times a 1-person-show. Typically, with the death of the owner, the company dies with them. There may well be assets and liabilities which will need to be dealt with, 3^rd parties who need to be contacted, staff, customers, unfilled orders… but likely everything will likely be on a smaller scale. The good news is that there’s no corporate entity to dissolve or sell, and any revenue & expenses of the company are included in the deceased’s final personal tax return.

Small, incorporated company – Small doesn’t necessarily make it easy. First thing, find the Minute Book, which might be in the deceased’s office or the lawyer’s office. This will provide a breakdown of the corporate ownership, information about directors and officers and, hopefully, information about how shares owned by the deceased are to be treated. You will need to determine the value of the company, possibly with professional assistance, so that you can determine the value of the deceased’s shares. After probate has been granted, the shares can be transferred as set out in the Minute Book. For instance, they might get sold back to the company at fair market value or for the original purchase price. Or, they might get transferred to other shareholders. Again, the sale price is important. You will need to determine if the deceased owed money to the company, or vice-versa, as this will impact the list of assets and liabilities. Someone may need to be brought in to run the company, especially if there is staff, customers and unfilled orders.

Publicly-traded shares – You will need to determine the value of the shares as of the date of death, so just look up the closing price for each company on the date of death, multiple by the number of shares, and that’s the value. Those are the easy ones. The tough ones are those ancient certificates you find in the safety deposit box, where the company has been bought and sold numerous times, amalgamated with other companies, and the name has been changed. You will need to do some research to find out the current name of the company, or find out if/when the company was de-listed. Researching old companies can be quite a chore. After probate has been granted the shares will need to be transferred to the executor or someone else, which requires you to find out the name of the transfer agent and then fill out a few forms. Sometimes the transfer fee is more than the shares are worth, so you will have to decide if you even want to bother.

Gregg Medwid is the owner and president of Executor Support, a firm based in Coquitlam, British Columbia, with expertise assisting executors and administrators in settling estates. The project management expertise and customer service focus Medwid brings to Executor Support ensures questions are answered and help is given when it is most needed.

This article is in no way intended to substitute for competent legal advice.

Gregg Medwid, Owner
Executor Support
gregg@executorsupport.ca
604-999-2106
http://www.ExecutorSupport.ca