The Estate House

RCMP Burial Dispute - Final Update

While I was correct in predicting the outcome of the recent application objecting to the disinternment of Cst. Leo Johnston, it turns out that the argument centred on something different.  I guess that is a hazard of relying solely on reported evidence. 

I had suggested that Kelly Basness (also known as Kelly Johnston) would be successful in being allowed to disinter her husband's remains and move them to the RCMP depot in Regina based on her standing as administrator of her husband's estate.  However, according to Johnston v. Alberta (Director of Vital Statistics) 2007 ABQB 597, the court case centred on whether the Director of Vital Statistics applied the appropriate tests and followed the correct procedure when deciding to issue the permit to disinter to Kelly.   It was an application for judicial review of the decision, with Justice Thomas determining that based on the standard of reasonableness, the decision the Director made to issue the permit would stand.

What is interesting to note is that s. 11 of the Cemeteries Act General Regulation, Kelly Basness had priority to Leo Johnston's parents in determining his final resting place because she was his spouse, not because she was administrator of his estate.  In fact, the Regulation only recognizes personal representatives named in a will and does not mention administrators at all.  However, as Justice Thomas referenced in his decision, that section is likely there to deal with cases where there is a dispute as to the initial disposition of remains.  In most circumstances, the decision as to disposition of remains must be made before there can be any proceedings taken to appoint an administrator.

The Trust Fund Whisperer

Last week I blogged about why it's not necessarily a good idea to leave your entire estate to your children.

Today's Globe & Mail has a very good article about professionals hired to assist wealthy families with their succession planning.  There are some very good tips about how these families can try to ensure that their offspring don't blow the wealth their parents (or grandparents) worked so hard to build.  A lot of the tips can also be used by families who aren't super-rich, but are still concerned that their money will be wasted by their kids.   

RCMP Burial Dispute - Update

The Edmonton Journal is reporting this morning that Kelly Johnson has won the right to move her husband's body from Lac la Biche to the RCMP depot in Regina.  The article does not say on what basis the decision was made, but as soon as I am able to locate a copy of the written decision, I will provide more details.

The "Divine Right of the Womb" aka "Why You Shouldn't Leave All Your Money to Your Kids"

Warren Buffett is, by all accounts, one of the most successful and respected men of our current age.  He is revered as much for his humility and modest manner as for his incredible financial savvy.   Through his holding company, Berkshire Hathaway, he has amassed a billion-dollar fortune, billions that he has chosen to donate to charity rather than pass down to his children and grandchildren.

Most of the wills we do at our office involve some variation of the following distribution:  if I die first, all to my spouse; if my spouse predeceases me or if we both die at once, all to our kids and/or grandkids.  If I leave no immediate family, then to some other family members or maybe to charity or a combination of both.  Most common is the scenario where an individual will donate his or her wealth to charity only if there is no immediate family left.  The standard is quite the opposite than that espoused by Mr. Buffett.

Now, to be fair, most of us will never acquire the wealth of Warren Buffett and our children or grandchildren will never have the advantages that are inherent in having such a wealthy family, regardless of whether we choose them to benefit from our estate.   Yet perhaps there is something to be said for Buffett's philosophy that it is not good for society to give that kind of advantage to individuals who have done nothing to earn it.   As he puts it in this interview with MacLean's, "[H]ow can you have equality of opportunity when you hand somebody billions of dollars just because they came out of the right womb?"

Buffett is not the only prominent person who feels this way.  Peter Munk, the chairman of Barrick Gold, has prepared his children for the fact that they will not be receiving very much of his $300-million fortune when dies.  When Bill & Melinda Gates were doing their estate planning, they contacted Buffett for advice.  Their three children will each be receiving approximately $10-million dollars of the Microsoft fortune.  More money than you or I will likely see in our lifetime, but not much when you consider that their parents (or at least Dad) is worth close to $56 billion.

Still, the majority of millionaires and billionaires are planning on leaving their children at least 75% of their fortunes.  As another article (unavailable online) in the same MacLean's magazine asks, should they?

According to MacLean's, a study of 3,250 successful families showed that the transfer of wealth between generations fails an astonishing 70% of the time.   In fact, you can expect that most of your fortune will only last three generations if you leave it all to your kids.

A lot of people try to avoid this fate by tying up the money in trusts for years and years.  This may be a good option, so long as you have a Trustee that's going to stick around for awhile (a corporate trustee, for example). 

What families need to ask themselves is what they hope to accomplish by transferring all of their wealth to their children.    As Paul Schervich, the director of the Centre of Wealth and Philanthropy at Boston College says, "You want your wealth to be productive.  You don't want it wasted in philanthropy, you don't want it wasted by family, and you don't want it wasted by taxes."   

The best option for having that kind of control over your money is to spend it while you're still alive.  Being open with your children about why they may not be receiving all of your estate is another way to try to minimize family conflicts down the road.  Always discuss your expectations with them, if you want the money used to fund your grandchildren's education, for example.   And let's not forget that charitable donations are a great way to minimize the amount of taxes payable by your estate.   

The last thing most of my clients want is for their children or grandchildren to end up as idle youth, with more money than they know how to handle properly.  The key is finding the balance so that you can follow the Oracle of Omaha's wisdom: " I want to leave them enough money to do anything but not enough that they can do nothing." 

What you do with the rest is up to you...    

Where to Keep your Documents

A few years ago, I did up documents (will, power of attorney and personal directive) for someone who advised me that she was going to store the originals of those documents in the safety deposit box belonging to the person she had appointed as her executor and attorney.   She recently became ill and it was discovered that she never delivered the documents to the safety deposit box.  Now her family is having to search her home to find out where they are.

Always always always make sure that people know how they can access your documents.  If you think about it, at the time that they're needed, you probably will not be in any position to remember where they are.   It doesn't make any sense to have documents done if no one is going to be able to find them when they're needed. 

Trusteeship v. Enduring Power of Attorney

Recently, I assisted a client with an application for Guardianship & Trusteeship for his father.  During the course of the application, it came to light that the father had executed an Enduring Power of Attorney in favor of my client's brother several months prior.  My client asked me what the effect of his application would be on the Enduring Power of Attorney.  He did not want to have to work with his brother to look after their father due to ongoing family conflict.

While a court must always be sensitive to the wishes of the donor, if there is strong evidence that the current situation isn't in the donor's best interests, the court can make an order for Trusteeship.  This order effectively nullifies the Enduring Power of Attorney.

If that's the case, then why have an Enduring Power of Attorney?  Well, for one it's a lot cheaper than an application for Trusteeship.  The key is choosing an attorney who will look after your best interests and be accountable to the eventual beneficiaries of your estate.  If your attorney is open and honest with your family and friends, and if your affairs are being looked after properly, the likelihood of a Trusteeship application by an opposing family member is slim. 

The ones that are challenged most often are Enduring Powers of Attorney drawn up for individuals who are elderly or for whom capacity is an issue.  If you are taking an elderly parent to a lawyer to have them draw up a power of attorney, make sure that the lawyer takes good notes.  If you have any doubts at all about your parent's capacity, then you should not proceed.