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.

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.

Why Determining Who Died First Can Be Important

By now, most people have heard about the tragedy of Chris Benoit.  The wrestler, who grew up in the Edmonton area, is believed to have killed his wife and young son before strangling himself this past June.   Unfortunately, despite having an estate worth several million dollars, neither Benoit or his wife had a will and now a dispute has emerged over who should properly inherit all of this property.

Nancy Benoit's mother, Maureen Toffoloni, has asked the court to determine the order of death.  This is because under Georgia succession laws, if the boy was killed before his mother, then her beneficiaries (i.e. Mrs. Toffoloni) would inherit the Benoit estate.  However, if Nancy was killed first, then the beneficiaries will be Benoit's two children from a previous  marriage, who live near Edmonton with their mother.

We recently had a case where death order was an issue.   A parent and child had been killed in the same accident and the parent did not have a will.  The Alberta Survivorship Act is set up to deal with situations where death order is uncertain.  Section 1 of that act says that where death order is uncertain, the older person is presumed to have died first.   Seems simple enough, doesn't it?

However, s. 2 goes on to refer to statutes that contain a "provision...for the disposition of property operative if a person designated in the statute... (a) dies before another person,.." It goes on to state that when the "designated person dies...in circumstances rendering it uncertain [whether the designated person survived another person], then, for the purpose of that disposition, the case for which the statute provides is deemed to have occurred."

The Alberta Court of Appeal considered the interplay between these provisions of the Survivorship Act and the Intestate Succession Act in Re Mandin Estate.  The Mandin Estate case was similar to the Benoit situation in that multiple murders had occurred, the order of death was uncertain, and competing family members were the potential beneficiaries.  Unlike the Benoits, the Mandins had a will, but there was a partial intestacy as all of the family members (except the murderer) had died and there was no provision for what was to happen to the Estate in that circumstance.   

In Mandin Estate, the Alberta Court of Appeal ruled that the Intestate Succession Act, as it provided for the distribution of property, was one of the statutes referred to in s. 2 of the Survivorship Act.  Applied to our fact situation, instead of the presumption that the child had survived the parent (a la s. 1), since the Intestate Succession Act provides for a case of what happens on the parent's death if the child does not survive her, it is deemed that the child did not survive.   Our application for a grant of administration was prepared based on this reasoning and the court agreed, as we received our grant just this week.

Of course, the easiest way to avoid these situations at all is to have a will with a proper beneficiary survivorship clause (i.e. Any beneficiary must survive me for at least 30 days or else he or she will have been deemed to have predeceased me).    That way it doesn't matter who died first, so long as it was within the 30 day period. 

RCMP Burial Dispute

Tomorrow, Constable Leo Johnston, one of the four RCMP Mounties murdered at Mayerthorpe, Alberta on March 3, 2005, is scheduled to be disinterred from his original burial site at Lac La Biche, AB and moved to the cemetary at the RCMP depot in Regina, Saskatchewan.  This request was made by his widow, Kelly Johnston.

Constable Johnston's mother, Grace Johnston, is very distraught over the impeding move, which she only found out about this past Friday.  Since then, she has contacted her MLA , the Solicitor-General, and even the director of Service Alberta to help her stop the disinterment.   She has also hired a lawyer to get an injunction against moving the body.

Unfortunately, if Kelly Johnston is the administrator or executor of her late husband's estate, there is probably little that Grace Johnston can do to stop her son's body from going to Regina.  As I have stated in previous columns, the executor is the one who makes the final call on funeral and burial arrangements.  Kelly may, however, be personally responsible for the costs of moving the body, rather than Constable Johnston's estate. 

The public policy reasons for this are sound.  Someone needs to be designated as responsible for making the final decision on funeral arrangements, otherwise families could dispute the arrangements for months, or even years! 

An update will follow once this issue has been decided.

Let the Games Begin

Back in December, I wrote about Billy & Ruth Graham and how things were shaping up to get ugly when either of them died due to a dispute about where each wanted to be buried and where their son, Franklin, wanted them to be buried. 

Ruth Graham died today , so it won't be long now before this drama plays itself out.  Let's hope for everyone's sake that she is laid to rest in peace.

Nothing Certain But Death & Taxes

The following article by David Koski, a partner at The Estate House, originally appeared in the Edmonton Examiner

“In this world, nothing is certain but death and taxes.” – Benjamin Franklin

I've often wondered if Benjamin Franklin had estate lawyers in mind when he made his famous quote about the certainty of death and taxes.  Estate lawyers, for better or worse, are positioned at the intersection of these two certainties.  While we can’t do much about the certainty of death, we might be able to do something about the certainty of taxes—or at least the taxes that arise on death.

One of the first things I learned about tax planning way back in my law school courses on income tax was that if you have an opportunity to defer taxes, you should take it.  Many Canadians defer taxes through RRSPs.  No income tax is paid on monies contributed to an RRSP until those monies are withdrawn.  Ideally, RRSP monies are drawn out over a period of years during a person’s retirement when their marginal tax rates tend to be lower.  Death presents a problem for the RRSP holder in the sense that at death, the entire amount of the RRSP is drawn into income in the person’s terminal income tax return.  If the RRSP amount is large enough, the resulting spike in income can drive the taxpayer well into the highest tax bracket.  For Albertans, each dollar of income (including any RRSP amounts drawn into income at death) above $120,887 will be taxed at 39%.

Taxes that would otherwise be due on RRSPs can be deferred further by naming the deceased’s spouse or common law partner as the designated beneficiary of the RRSP.  (For income tax purposes, common law partner means a person who cohabits with the taxpayer in a conjugal relationship for a continuous period of at least one year, and includes common law partners in a same-sex relationship.)  The spouse or common law partner so-named can receive the RRSP proceeds free of tax, provided they are then kept in the spouse’s or common law partner’s own RRSP.  The usual rules of taxation of RRSP amounts on eventual withdrawal remain in effect for the surviving spouse or partner.

In circumstances where transfer of RRSP amounts to a spouse or common law partner is not an option, it may be possible to transfer RRSP amounts tax-free to a financially dependent child or grandchild.  Generally speaking, taxation authorities dislike tax-free intergenerational transfers of wealth, so the definition of “financially dependent” is quite restrictive and, if available, the deferral lasts only until the financially dependent child or grandchild turns eighteen.  Not as good as the deferral available to a spouse or common law partner, but a deferral nonetheless. 

Another means of reducing taxes on death is through gifts to charity.  Gifts made in a will to a registered charity give rise to non-refundable tax credits that can be used to reduce taxes that would otherwise payable in the year of death.  If charitable giving is something in which a person believes, charitable giving at death through a will may offer a means of reducing that person’s taxes at death.

RRSP rollovers and charitable giving are just two of the many ways that effective estate planning can reduce the impact of taxes at death.  In the months that follow, I will endeavour to highlight other ways of dealing with the intersection of death and taxes.

How long does probate take?

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To probate a will means to have the court say definitively that this document was the deceased's last will and to confirm someone to act as the deceased's personal representative, or executor.  An application for probate also involves setting out the deceased's assets (as discussed in the previous post), so that the court and various financial institutions and the Land Titles Office can have some security in transferring those assets to another party for the benefit of the beneficiaries.   

This is usually not a difficult process, particularly if you have good legal counsel to help you, but it doesn't happen overnight. 

The law requires that you must wait at least seven days after a person's death to submit a will to probate.    It is not unreasonable to have the application for probate prepared and ready to submit within this time frame, but usually a family is too busy dealing with other aspects of the passing of their loved one to worry too much about probate right away.   The timing for when an application for probate is submitted will depend upon who the executor is, how extensive or complicated the estate is, and how easily information about the value of the estate and the beneficiaries is obtained. 

Once the application is submitted, it usually takes 4 - 6 weeks for the grant of probate to be issued by a Justice of the Court of Queen's Bench.  After the executor has received the grant of probate, he or she can take the grant to the institutions involved and begin collecting in assets.  If land is involved, the timeline is extended, as documents will need to be submitted to the Land Titles Office to transfer the property to the executor in trust for the estate.  It will then be up to the executor to either sell the property and include the proceeds as part of the residue of the estate, or to transfer the property to any individual or group who was left that specific property in the will.

If the assets have all be liquidated, then it is time to distribute the estate to the beneficiaries.  However, it is advisable that executors wait until they have received a Clearance Certificate from the Canada Revenue Agency prior to distributing any money so that there is enough to pay any taxes that might be owing by the estate.   That can take anywhere from 6 to 18 months, although interim distributions of partial inheritances can be arranged if deemed to be appropriate in the circumstances.

All told, executors have one year to try and wrap up an estate, although it can be shorter or longer, depending on the estate.

In other words, if you're a beneficiary under a will, don't count on your inheritance to be available to pay next month's rent. 

Just what am I "probating"?

Many people have heard of "probate" even if not all of them really know what it means.  The nuts and bolts of the process were set out in an earlier post, but beyond the actual process, there are a few things executors should be aware of.

First, it is the executors responsibility to account for all of the deceased's assets so that they can be set out in the application for probate.  This can be as simple as asking the bank(s) for a list of accounts, or can be as complicated as determining the value of an ownership stake in any number of business holdings.   As an executor, you need to satisfy yourself that you have searched all reasonable places for evidence of anything of value, even if it means combing through years of collected statements.   Be prepared to be challenged by beneficiaries who will accuse you of hiding assets, particularly if you were also the deceased's attorney under a power of attorney just before his or her death.

As I mentioned earlier, the best way to protect yourself against these kinds of allegations is to be as open and transparent as possible.  That means sharing as much information with the beneficiaries as possible, and being prepared to answer to those people who expected to be beneficiaries (or expected to get more than the will sets out), only to find out that the testator had other plans.  Sometimes children believe that their parents are wealthier than they really are. 

If you find yourself in a situation where you are a beneficiary and you are not satisfied with how the executor is handling things, there are two main ways about addressing the situation (assuming that you are not receiving adequate information from the executor).  The first is to find out if a lawyer is handling the application for probate.  If so, then it is more cost-effective (i.e. cheaper) to contact that lawyer first to see if he or she can advise you as to what's going on.  I say cost-effective because those costs will, in all likelihood, be paid for by the estate prior to distribution to the beneficiaries.  If you go the second route and hire a lawyer to represent your interests, there is no guarantee that the estate will cover your legal costs.  It might, but there is no guarantee.

So, once there is an accurate understanding of the estate's assets, we then go to the second most common complaint from beneficiaries when it comes to probating a will...

Does it count if it's not read out loud?

I was reading this morning about Nina Wang, the Chinese multi-billionaire who died last week.  Nina inherited much of her wealth from her husband after he was kidnapped in 1990.   His body was never found and he was declared dead by a Hong Kong court a few years later.  Nina had her husband's power of attorney, which enabled her to manage his business affairs (he owned a large corporation called Chinachem), but after he was declared dead all of that was put on hold until they had a "reading of the will."   After that all heck broke loose, but that's for another post.

If you've seen a movie or television show where a character has died, you'll be familiar with the concept of having a "reading" of the will.  Usually the family gathers in a study or library of some sort with dark panelling on the walls, and the family lawyer stands behind a desk and reads out the will.  I think that the movies and tv is the only time that this ever actually happens, but I might be wrong. 

Contrary to public belief, there is no requirement that the deceased's will be read out loud to members of the deceased's family, at least not here in Alberta.   In fact, the only people who are entitled to even see a copy of the will are the individuals who are mentioned in it and anyone who might have a dependent's relief claim (spouses or adult interdependent partners, dependent children, and adult children who are unable, by reason of physical or mental disability, to earn a livelihood).  That's it. 

Now usually it's a good idea for the executor/trustee to keep everyone in the loop.  That's the easiest way for them to avoid any accusations of impropriety and to keep things as transparent as possible.    But that doesn't mean that they are obligated to provide anyone and everyone a copy of the will.  Even those individuals who inherit under the will usually receive their copy of the will when they receive the application for probate submitted by the executor/trustee.  So if you're wondering what's Mom or Dad's will, find out who the executor is and ask. 

But, you say, it's not always that simple.  I know, and that's what I'll discuss in my post...

When Someone Dies

Having someone close to you die is traumatic.  The emotion that is inherent in these situations is often what makes the prospect of administering that person's estate seem daunting for whomever has been appointed as the executor.  Potential beneficiaries want to know when they are going to get their due. Very few people involved are aware of exactly what is required to ensure that the estate is administered properly.  Over the next few blog posts, I'm going to explore various scenarios related to the administration of an estate.

The first aspect is ensuring that the deceased's remains are properly disposed of.  As I've discussed in previous posts, the executor bears this responsibility, and it may or may not be carried out in accordance with any written wishes previously expressed by the deceased.  People often want to know if they should include their funeral wishes in their wills; our advice is that is usually best to discuss your wishes with your executor, as by the time anyone gets around to looking at the will, any decisions about your funeral may have already been made.   You can have them written down, but make sure that your family knows what you want. 

Next post...when will the "reading" of the will be held?