Inheritance is hard. It’s even harder when it’s unexpected. Wrapping up a person’s entire life always uncovers tangles of loose ends. The more sudden the death, the more unlikely it will be that the deceased had all of their affairs in order. What should you do to financially prepare for an unexpected death?
First, it is important to educate yourself as much as possible. Even the experts, the people you trust to take care of things at the end of life — bankers, lawyers, morticians — don’t have all the answers. A recent viral story by the Canadian Broadcasting Corporation illustrates how unexpected problems can pop even up even with the best of advice. An Ottawa man, acting as executor of a relative’s estate, mailed $500,000 in bank drafts to relatives living in the United States on the advice of his bank. US Customs and Border Protection seized the bank drafts, citing a law against shipping more than $10,000 across the border without first notifying CBP.
US CBP recently released the money after a year of wrangling, so his story has a happy ending, but it still demonstrates how easy it can be to get caught in a bind when settling somebody’s estate, even when you have the best advice. To avoid problems like this, it is best to stay in regular touch with your close family members so that you know their financial plans in the event of a sudden disaster. If they want to sell their stocks and wire it to their nieces in Fiji, it’s best to be prepared for that so that you can anticipate the associated headaches. Talking about has the additional advantage of getting you to plan for the worst, and, let’s be honest, when was the last time you thought about what would happen to your assets if you were to pass away? It’s an unpleasant thought, but one that can save your loved ones from additional pain if the worst comes to pass.
With these money matters in mind, this is a good time to mention that there is no inheritance tax in Canada. Instead, the estate itself has to pay the taxes owed to the government. A legal representative for the estate has to file a deceased tax return. After that is done and the taxes are paid, the Canadian Revenue Agency will issue a clearance certificate, and the representative can distribute the remaining property. Assets like investments, small businesses, and real estate are furthermore taxed at different rates, as the Financial Post explains. You should have a plan for how you are going to operate the financial life of your family’s assets if they aren’t around. The more you know about what their assets and liabilities are, the better prepared you will be to care for it.
Finally, we should mention a topic that is often brought up in the event of a sudden passing: that of wrongful death. Unexpected death is sometimes the result of negligence or wrongdoing, in which case it can lead to the surviving parties initiating wrongful death claims. Wrongful death cases can include car accidents, manufacturing accidents, or the use of defective products. According to Preszler Law in Nova Scotia, one of the Halifax law firms that handling wrongful death cases, “surviving family members have a prescribed time frame from the date of death to file a wrongful death claim.” In most cases, the only people who can file a wrongful death suit are dependents and beneficiaries of the deceased. The process can be long and arduous. According to Brickell Key Court Reporting, a company providing West Palm Beach court reporters, it can include interrogations and depositions under oath, if both of the parties agree to cooperate. Most wrongful death suits are negotiated out of court, rather than going to trial. Like everything else we’ve discussed here, though, it is best to have a plan to take care of the worst before it happens, rather than hoping for a hail-Mary if you don’t have a plan.