All About Estates

The Procrastinating Client and the Impact on Estates

Procrastinator – a person who habitually puts off doing things.  Intestate – dying before making a will. These two words in an estate context can make the administration of an estate a nightmare.

No one likes to think about death and planning for their death.  However, death is inevitable and, despite incredible advances in science, no one has a crystal ball that tells them when it’s their time.  For a procrastinator, I imagine putting off attending to their estate planning may not feel like a big deal and the “I’ve got plenty of time, there’s no rush” or “yes, I know it’s on my list of things to do” are common answers given when asked whether they have considered their testamentary wishes.  However, not having a will and dying intestate can be a very a big deal.

When you die intestate, the distribution of your estate will be in accordance with s.47 of the Succession Law Reform Act[1](“SLRA”).  The distribution under the SLRA between your surviving spouse and children is not in keeping with what most people want when they take the time to consider what they want. And if you don’t have a surviving spouse, children or grandchildren, the legislated distribution, to surviving parents, or siblings, or nieces and nephew, if any, or to your “next of kin” is almost certainly not what most people want when they take the time to think about this. What can you do if the distribution according to the SLRA is not what you intended? Well, nothing if you’ve died without a Will.  This is one of many reasons why it is important to educate our clients about the importance of having a Will.

Let’s Talk About “Bob”

Let’s look at a situation involving Bob.  Bob has had drafts of his will prepared for some time.  His lawyer follows up with him and reminds him that his Will has not yet been signed and that he should do so before anything were to happen.  Bob tells his lawyer that he is still considering the drafts and would get back to them when he makes a decision but, at this time, he’s far too busy.  Bob does not have a spouse, does not have children or grandchildren and has a few siblings with whom he does not have a good relationship with.  As part of his estate plan, Bob would prefer to give some money to family members with the rest going to charitable causes that he supports.

Bob unfortunately dies before having his wishes finalized and executing his will.  His assets at the time of death include a house, a car, several bank accounts, investment accounts, a business which he is the sole shareholder and sole director of, and other personal assets. The business is an operating business with employees and has obligations to be dealt with.  His estate is worth in excess of $30M.

Aside from many of the common issues incurred on an intestacy, for example that no one will have authority to deal with paying the expenses relating to the deceased’s house, accessing the bank accounts and other assets belonging to the deceased, if proper planning with respect to Bob’s business has not been put in place prior to his death, such as signing authorities on bank accounts, it could pose significant financial harm to the business.

Having died intestate and as the sole director of his company, there is no one with immediate authority to provide instructions on the ongoing management of Bob’s business, and no one with authority to appoint new directors.  How are Bob’s employees going to be paid (including those he had a long-term trusting and valued relationship with)? Are they going to suffer financial hardship and bring a claim against the business for unpaid wages and other damages?

It may be necessary to attend before the court to seek an urgent appointment to enable the administrator to take control over the business to prevent significant financial hardship. This can be costly.

As Bob’s parents are deceased, we know based upon the SLRA, that Bob’s siblings will share in the distribution of Bob’s Estate. As well, they will each also have an equal right to be appointed the administrator of the estate pursuant to s.29 of the Estates Act[2] (the “ESA”).

What if Bob’s siblings are non-residents of Ontario? Pursuant to s.5 of the ESA, it will mean that they will not be permitted to have the Certificate of Appointment of Estate Trustee without a Will granted to them.  An Ontario resident or trust company will need to be appointed as the administrator of the Estate on the beneficiaries’ consent.  What happens if one of the siblings is a resident of Ontario, but the siblings don’t get along and they won’t consent to the Ontario resident sibling becoming the administrator?  This is likely to cause significant delays in the appointment of an administrator, causing further financial hardship to Bob’s Estate, including his business.

Bob is sadly not alone in this. A similar situation is playing out in the estate of the late actress, Anne Heche. Her eldest son has applied to be the administrator of her estate, but her ex-husband and father to her youngest son has come forward claiming that the eldest son is not suitable to be the administrator and was estranged from Anne at the time of her death.  Anne’s ex-husband has also claimed that Anne wanted him to be her executor, but never got around to drawing up a Will confirming her wishes.  You can see how estate matters can drag on for years, particularly when families do not have good relationships.

The application to have an administrator appointed will also require a bond to be posted or a request to the court to dispense with the requirement for a bond.  This can, of course, cause unnecessary delays and expense to the Estate should a judge require a bond be posted.

Following up with Clients

November, which is fast approaching, is considered “Make a Will” month by the Ontario Bar Association. Now is a good time to touch base with some of those clients who have draft wills/estate plans outstanding and remind them that their wills need to be executed.

As estate planners and other advisors to our clients, it is prudent to ensure that we are reminding clients of the risks associated with dying intestate and not having proper instructions in place.  Keeping detailed notes with respect to communication with clients about their wishes and the attempts made to have the client execute their wills is important from a risk management perspective.  Setting up reminder systems to ensure proper follow up to clients with outstanding will drafts will assist estate planners in ensuring they are meeting the needs of their clients.

 

 

[1]      Succession Law Reform Act, R.S.O. 1990, c. S.26

[2]      Estates Act, R.S.O. 1990, c. E.21

About Jennifer Campbell
Jennifer Campbell is a Law Clerk in the firm’s Toronto Private Client Services Group and Trusts, Wills, Estates and Charities Group. Jennifer has extensive experience assisting executors and trustees in managing complex, high-value estates and trusts. Jennifer specializes in the administration of estates and trusts. Assisting in all aspects of estates work, Jennifer’s primary responsibilities include providing support to the lawyers in the practice group, the day-to-day administration and management of estates and trusts, including gathering in assets, winding up of estates and trusts and distributing assets to beneficiaries. Jennifer is responsible for the preparation of all probate related documentation, preparation of estate and trust accounts, the preparation of court documentation in connection with passing of accounts and has experience in assisting individuals establish bare trust arrangements in connection with their estate planning solutions. Jennifer has received a Certificate in Estates and Trust Administration from STEP Canada.

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