All About Estates

Stock options held at death

Written on August 1, 2014 – 7:00 am | by Derek de Gannes

A recent Canada Revenue Agency technical interpretation sheds light on the treatment of the deceased’s unexercised stock options and tax relief in the event the value of the stock has declined since the date of death.

Our tax rules provide that where an employee has died and the employee owned unexercised stock options prior to their death, the deceased is considered to have received an employment benefit in the year of death. The employment benefit is equal to the value of the stock options immediately after death less any amount paid by the deceased employee to acquire the options. Where the terms of the owned unexercised stock option provide that the stock options are automatically cancelled in the event of the employee’s death, the value of the options immediately after death, and the employment benefit, will be nil. If the employee stock options are not vested prior to the employee’s death, the employee would not own unexercised stock options prior to their death and the benefit rule would not apply.

Tax relief is provided where a stock option is exercised, expires, or is otherwise disposed of within the first taxation year of the deceased taxpayer’s estate and the value of the stock option has declined since the employee’s death, such that the benefit realized by the deceased’s estate is less than the employment benefit deemed to have been received by the deceased taxpayer. If the legal representative of the deceased elects in prescribed manner, an amount is deemed to be a loss from employment of the deceased taxpayer for the year of death resulting in a reduction of the terminal tax liability.

Keep an eye out for those unexercised or expired stock options as they may be worth something to the estate.

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Tags: Canada Revenue Agency, CW Group, Estate Administration, Executors

Posted in Estate Planning, Executors

Set the time to ’10 past 11′

Written on July 31, 2014 – 6:00 am | by Ken Shulman

Clock-drawing has become one of the standard cognitive screening tools used around the world. How did this particular test achieve such popularity and why is it so useful?

Originally, the clock-drawing test was cited in a leading Neurology textbook as a means of specifically assessing parietal lobe function in the brain because that is the location of visuospatial ability. However, in the 1980s our group at Sunnybrook (among others) began using the clock test and assessing its value as a broader cognitive screening tool comparable to the Mini Mental State Examination (MMSE). Its acceptability and shorter time and ease of administration has made it very popular. We use a pre-drawn circle with the instruction, “Put in the numbers so that this looks like a clock and then set the time to ’10 past 11′ ”. Drawing a clock requires multiple cognitive functions (not just visuospatial ability). It requires: visual memory of a clock; planning ability and concentration in order to place the numbers evenly around the clock circle; and abstract ability to set the time using the symbol of hands which point to the number ‘2’ to represent 10 minutes past the hour. The latter task is very sensitive to cognitive impairment as affected individuals often ‘pull’ the minute hand to point to the number ‘10’ rather than ‘2’. See figure below.

It turns out that clock-drawing correlates very well with the MMSE. It takes less time to administer and is generally very well accepted. It is as sensitive to cognitive impairment as the MMSE and picks up changes in cognition over time. Moreover, it tests frontal-executive higher-level brain functioning (abstract ability) in a way that the MMSE does not. Also, the visual impact of abnormal clocks is often an eye opener for families who may not have been aware of the full extent of cognitive dysfunction. The clock test is frequently used in combination with the MMSE as a screening battery.

Clock-drawing is of course subject to the same limitations as all screening tests including the MMSE. It is affected by level of education and should not be used alone for diagnostic purposes or for assessing the severity of cognitive impairment. However, like all good screening tests it does tap into multiple cognitive functions and can provide a ‘signal’ that calls for further inquiry or more investigations. Importantly, it also establishes a baseline for future monitoring to determine if cognitive impairment is worsening and thus increasing the likelihood of an underlying dementia.

Finally, the often asked question: “What will happen to the generation of kids who have grown up with digital clocks?” Well, for them, this test may indeed become obsolete. However, we still have many more years of the current cohort of middle-aged and elderly people for whom this test will still be useful. Warning: If you are dementing, practice does not help. So don’t bother.

Next time: A home-grown cognitive screening test from La Belle Province.

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Posted in Capacity Law, Elder Care, Estate Litigation, Power of Attorney, Wills

Having The Last Word

Written on July 30, 2014 – 6:14 am | by Audrey Miller

The Globe and Mail’s ‘Public Editor’, Ms. Sylvia Stead, wrote a piece in the July 26, 2014 Saturday paper called ‘When capturing a life in a few hundred words, try to avoid mistakes’. Good advice.

I have been reading obits for the last few decades and I would say they have changed over the years. There seem to be more pictures than previously, sometimes showing a younger person and at times, also including a more recent older photo. Our longevity with date of birth and of death has also changed, with many having reached their 90’s. The lives summarized reflect amazing, accomplished, and involved and loving profiles typically written by others. The SOB you may recall is not to be remembered that way and instead, leadership qualities that you may never have known existed, are highlighted. There was one obit written by the deceased himself and it is this particular obit that gave me pause for reflection. While it announces a death, the obit also summarizes a life.

Ms. Stead suggests ensuring that important dates and events are written down (in advance) and I would also like to suggest that more of us may want to consider writing our own obit. I have written extensively on the importance of planning ahead, having the talk (with family members) and knowing where important papers are kept. The facts of your life and perhaps your own obit should be included with these important papers. It certainly is one way to ‘have the last word’.
-Audrey Miller

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