Choose the Right Executors to Protect Your Money

Here’s why people never make wills and how you fix it.

Many people do not know who to name as their executor. They cannot envision who would handle their affairs. I ask clients in my law office why they didn’t make a will sooner. Many say, “I could not find the right executor.”

Without any trustworthy family members, many people don’t make a will. They don’t know how to choose the right executor. They are not sure what their executor must do and how to pay them.

Well, if you are in that boat, here’s good news. I can help you with my insider’s tips.

I am launching a series of blog post at MrWills.com – The Home of Happy Executors. I cover steps for you to get the right executor. At the end of the series, you can get this free guide.

Choosing Executors Wisely by Edward Olkovich 2016 (c) Mr Wills Inc. - Guide Cover

How to Choose the Right Executors

Here are the topics I cover in the series to Choose Executors Wisely:

1. Why Choosing Executors is Important

2. What Executors Do

3. The Checklist for Executor Choices

4. How to Find Your Right Executor

5. Tips to Choose Your Executor

What is the Big Deal about Executors?

I’ve seen firsthand how bad executors create disasters. It happens even in the best families. I’ve written about this since I wrote my first Complete Idiot’s Guide® book in 1997.

You name someone as your executor in your will. Executors control when your family receives their inheritance. What happens if you choose the wrong executor?

Executors who are dishonest, incompetent or lazy can ruin your family’s inheritance. My advice is: Don’t put a fox into the hen house.

Court battles with bad executors can add years of waste and delay.

The wrong executor steals your money and ruins families. Once they are in charge, it’s hard to get rid of a bad one. I’ll tell you about one called Tony.

Courts Reluctantly Remove Executors

Tony was his Uncle George’s executor. Tony arranged his uncle’s funeral with an expensive reception. He bought a plot and an expensive headstone. This was despite everyone’s protests. Uncle George’s sister, Alice, said, “My brother wanted to be cremated in a simple service”.

“Too bad,” Tony said to Alice. “He never told me that. I am the executor and I make all the decisions. I don’t like cremation and I don’t have to check anything with you.”

Tony held George’s wake at his golf club. Tony’s golf buddies toasted George at the estate’s expense. The tab for the food and bar was over $6,000. Alice and other relatives did not bother to attend.

Can Judges Remove Executors of a Will?

Only a judge can get rid of a bad executor. Someone must go to court. Can your family afford lawyers? Can they prove that Tony was harming the estate by:

  • committing fraud
  • stealing estate money
  • wasting estate dollars
  • mistreating beneficiaries (whom Tony disliked)
  • being incompetent
  • putting George’s money in danger
  • failing to distribute assets

Such allegations are difficult to prove. A judge may not intervene unless there is serious misconduct.
Tony did not get removed as executor. He also did not tell anyone what he did next.

He took $300,000 from his George’s estate and invested in his company’s new invention – the perfect putter.

Too bad Tony’s company went broke. Tony then told his family (after paying his legal fees) there was nothing left. He never distributed George’s estate.

Tony’s behavior is regrettably common. Some executors abuse their positions.

How can you avoid these problems?

Sometimes it is as simple as naming a new executor.

You don’t need to be a millionaire to have your money wasted.

Legal expenses can eat up your estate. Your hard-earned money gets squandered.

Have You Got Wrong Estate Executor?

Should you always name family as your executor? You may want to re-consider such decisions if, for example, your children:

  • don’t get along
  • are receiving social assistance
  • are stepchildren from a subsequent relationship
  • have been married several times
  • struggle with financial difficulties
  • cannot be trusted
  • live out of the country

The right executor avoids conflicts, comforts your family and controls costs. Make sure you have the right executors. Don’t force loved ones into a court battle to remove bad executors.

What Happens if You Chose the Wrong Executor?

What can happen after you are gone?

Your family can challenge your decision in court. They can show a court reasons why your chosen executor should be disqualified. The trick with someone like Tony may be to try and stop him.

This legal action can keep your estate frozen – bills won’t be paid and investment decisions will be deferred – until your family can agree on appointing a new and neutral executor (i.e. a lawyer, accountant or trust company).

Easy Steps to Choose Executors Wisely

I have spoken to public and professional audiences across Canada. Choosing executors is always confusing. Advice is not always independent or free.

People want to know if they can name their spouse as executor. Is that a conflict of interest? You will get answers to this question and much more in Choosing Executors Wisely.

About Edward Olkovich

Ed Olkovich is a nationally recognized estate expert. He is a Certified Specialist in Ontario estates and trusts law. His law firm’s website is MrWills.com — The Home of Happy Executors. Visit Ed’s blog, MrWills.com, for more free valuable estate information. (c) 2016

Practical Reasons People Do Not Make Their Own Wills

Danny had questions about wills when he called my law office. My practical answer may help you decide how to make your own will.

Danny: I have to make a will and don’t know how. All my friends of my age say it’s easy. I have gone online and found so many websites. They offer will making services and free forms. Is it true I can make a will by myself? Will it be legal?

Ed: I should clear up the common misconception about making your will by yourself. There are more practical factors to consider when making a will.

The simple answer is that there is no legal requirement for you to make a will with a lawyer, Danny. But most people prefer to invest in a lawyer-prepared will.

There are many reasons why you may never get around to doing it yourself. I am not trying to sell you a will. Let me email you more reasons that you can share with your friends.

Here is the gist of the email I sent Danny.

1. Time – you are busy with your job and family. They take all of your time. You do not have extra time to do the research needed to make your own will. If it was a priority, you would have done it by now. That is the issue. It takes time to do things right.

You never know what an online source produces is guaranteed right for you. Who is qualified to prepare a valid will? Sure, they can ask you a standard checklist of basic questions such as:

  • Are you married or single?
  • What province do you live in?
  • Do you own a house?

But more importantly, can you ask anyone questions?

Here are things that are important to you like:

  • How do I make sure my children will have money to go to school?
  • Who should be my executor if I have no one I trust?
  • How can I save taxes?
  • What obligations do I have to my spouse or common law partner?
  • Can I do whatever I want with my money?

You can read my blog post to answer this last question, Honey is it Truly only Your Money?

2. Paperwork – most people make mistakes filling out simple forms. Making a will and having it properly signed is important. Mistakes you or your witnesses make can mean your will may not be legal.

If you make a will mistake, who knows about it? Usually nobody, until you are gone, that is. It is then too late for you to fix it. Your beneficiaries may then need to hire lawyers. Your relatives and their lawyers will need to see a judge. It will cost thousands to try and repair any mistakes. Some will mistakes can’t be repaired.

That would leave you without a will. Wasn’t that what you wanted to avoid in the first place?

Most people do not want to die without a will. You do not want to force your relatives to hire lawyers and go to court. Dying intestate or without a will passes all your estate burdens to them. Without an executor in your will no one has the power to pay your bills.

3. Advice – most people do not understand their legal obligations. When you make a will you deal with complex laws that change daily. These include family law, property, estate and tax laws.

You may think your situation is simple. But I find people want and need help when making important decisions.
Deciding who should be your executor or guardian for minor children is a complex decision. Most people need help understanding all their options. Only a lawyer can provide legal advice.

Using an online form to prepare your will does not help you with your specific questions or circumstances.
There other factors you need to consider as well, Danny.

Investing in a professional prepared will provides protection. Here are benefits to consider:

4. Security – knowing a professional has prepared your will. This gives you added comfort. You don’t have to worry about the what-ifs and if you’ve made a mistake.

5. Making an investment – will lawyers are available almost every price range. A lawyer-prepared will is an investment. Like insurance, it saves you money down the road. Spread the cost of a lawyer-prepared will over the years. The protection and comfort you receive costs pennies a day.

6. Comfort and peace of mind – your loved ones and property will be protected. You will need guidance from a professional if you:

  • own a business
  • share ownership of more than one property
  • are in a second marriage or common law relationship
  • have assets in more than one province
  • have minor children
  • your beneficiaries have special needs
  • charities count on your financial support
  • have a cherished pet to provide for

Make sure you get the right estate planning advice to make a will. Don’t leave it to chance or until you have the time to do it yourself. Get it done right.

Danny, resolve to invest your time in finding the right lawyer to help you. Then invest in a professionally-prepared will.

Edward Olkovich (BA, LLB, TEP, C.S.) is a nationally recognized estate expert. He is a Toronto estate lawyer and Certified Specialist in Estates and Trusts Law. Edward has practiced law since 1978 and has written numerous estate books. Visit his blog, mrwills.com, for more free valuable information. (c) 2016

Brave Old World: Market Cycle Investment Management

The Market Cycle Investment Management (MCIM) methodology is the sum of all the strategies, procedures, controls, and guidelines explained and illustrated in the “The Brainwashing of the American Investor” — the Greatest Investment Story Never Told.

Most investors, and many investment professionals, choose their securities, run their portfolios, and base their decisions on the emotional energy they pick up on the Internet, in media sound bytes, and through the product offerings of Wall Street institutions. They move cyclically from fear to greed and back again, most often gyrating in precisely the wrong direction, at or near precisely the wrong time.

MCIM combines risk minimization, asset allocation, equity trading, investment grade value stock investing, and “base income” generation in an environment which recognizes and embraces the reality of cycles. It attempts to take advantage of both “fear and greed” decision-making by others, using a disciplined, patient, and common sense process.

This methodology thrives on the cyclical nature of markets, interest rates, and economies — and the political, social, and natural events that trigger changes in cyclical direction. Little weight is given to the short-term movement of market indices and averages, or to the idea that the calendar year is the playing field for the investment “game”.

Interestingly, the cycles themselves prove the irrelevance of calendar year analysis, and a little extra volatility throws Modern Portfolio Theory into a tailspin. No market index or average can reflect the content of YOUR unique portfolio of securities.

The MCIM methodology is not a market timing device, but its disciplines will force managers to add equities during corrections and to take profits enthusiastically during rallies. As a natural (and planned) affect, equity bucket “smart cash” levels will increase during upward cycles, and decrease as buying opportunities increase during downward cycles.

MCIM managers make no attempt to pick market bottoms or tops, and strict rules apply to both buying and selling disciplines.

NOTE: All of these rules are covered in detail in “The Brainwashing of the American Investor” .

Managing an MCIM portfolio requires disciplined attention to rules that minimize the risks of investing. Stocks are selected from a universe of Investment Grade Value Stocks… under 400 that are mostly large cap, multi-national, profitable, dividend paying, NYSE companies.

LIVE INTERVIEW – Investment Management expert Steve Selengut Discusses MCIM Strategies – LIVE INTERVIEW

Income securities (at least 30% of portfolios), include actively managed, closed-end funds (CEFs), investing in corporate, federal, and municipal fixed income securities, income paying real estate, energy royalties, tax exempt securities, etc. Multi level, and speculation heavy funds are avoided, and most have long term distribution histories.

No open end Mutual Funds, index derivatives, hedge funds, or futures betting mechanisms are allowed inside any MCIM portfolio.

All securities must generate regular income to qualify, and no security is ever permitted to become too large of a holding. Diversification is a major concern on an industry, or sector, level, but global diversification is a given with IGVSI companies.

Risk Minimization, The Essence of Market Cycle Investment Management

Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income rules— The QDI. (Read that again… often.)

Risk minimization requires the identification of what’s inside a portfolio. Risk control requires daily decision-making. Risk management requires security selection from a universe of securities that meet a known set of qualitative standards.

The Market Cycle Investment Management methodology helps to minimize financial risk:

  • It creates an intellectual “fire wall” that precludes you from investing in excessively speculative products and processes.
  • It focuses your decision making with clear rules for security selection, purchase price criteria, and profit-taking guidelines.
  • Cost based asset allocation keeps you goal focused while constantly increasing your base income.
  • It keeps poor diversification from creeping into your portfolio and eliminates unproductive assets in a rational manner.

Take Jerry Seinfeld’s Estate Planning Advice

I did not interview Jerry Seinfeld for this article. But I can share with you what he taught me.

I was watching Jerry, the all-star comedian, on television.  The program host on an entertainment show asked celebrities about their New Year resolutions. Jerry’s answer was short. It was most appropriate. I am paraphrasing his answer.

“If something needs to be addressed,” Jerry said, “I address it right away. I don’t wait for the New Year to do it.”

This is great advice to apply to your estate planning. Let me tell you why.

Many people never find the time to make a will. They may think it is a chore like cleaning the garage or going to the dentist. However, making a will is the corner stone of your estate plan. Think of it as something you prepare for the people you leave behind.

Let me tell you about Beth. She became a victim because her partner Steven died suddenly at the early age of 54. No one, least of all Steven, expected that to happen. Steven never made a will. He always had it on his “I’ll get to it someday list.”

Almost every week I advise people like Beth. Someone close to them or a family member has died unexpectedly without a will or estate plan.

In Beth’s case, she learned the tragic consequences when Steven died without a will. She now had inherited all of Steven’s family and financial problems.

What is normal?

Normally, a surviving spouse needs time to deal with grief and financial issues. With a will, Beth could wrap up or settle Steven’s estate in six months to a year. In many cases, she would not hire a lawyer. No one needs to go to court.

But that did not happen here to Beth. Steven had no plan and no will for her.

Beth was a common law spouse who struggled with Steven’s adult children. She had trouble paying bills. She ran out of patience and money. The stepchildren wanted to know why Beth did not sell their father’s home. They wanted their inheritance. They saw a sale of the house as the quickest way to get it.

Beth and her bad news

I had to give Beth the bad news.

Since Steven had no will, his estate work will take longer. That means more delays and increased costs. It may take 2-3 years or more to wind up his intestate estate.

I had to ask Beth if she could afford to pay the mortgage, insurance and property taxes on the house. If not, how was she going to continue living there?

“Beth, you may need to go to court for financial assistance to pay bills. Steven’s children do not want you to use their father’s money to live in his house. They want you to move out so they can sell it. They do not trust you to do that.”

Beth wanted to know if she could use Steven’s money to pay bills.

“Steven does not have a will. He has no estate executor to handle his affairs. You need to agree with his children who will handle the estate. Since no one is named as Steven’s executor, the court must appoint one. Until someone is appointed you cannot access Steven’s investment accounts.”

I explained that the children and the ex-wife will each hire lawyers. They will all want a piece of Steven’s estate. Even if everyone agrees this could triple the legal costs. There could be a lawyer for each of the 2 children, the ex-wife and for Beth.

Not everyone may then agree. They could argue about who should be in charge of the estate. The legal costs would then increase tenfold. Instead of $10,000, each lawyer could cost the estate $40,000 in extra legal costs. You could see this number multiplied 10 times if everyone went to court more than once.

Who pays for Steven’s failures?

Everyone suffers differently because of estate delays.

And who pays for the legal trouble?

The court would say Steven created these legal problems. He failed to make a will and name an executor. Steven’s estate will bear the legal costs because he did not have an estate plan.

You do not have to be rich

Estate planning is preparation. Everyone needs to prepare for the inevitable.  You have to prepare a plan for the people you leave behind.

Make sure you get legal advice to make the right choices.

Don’t wait for next year to make a will.

The problems Steven created can take years and cost a fortune to resolve.

If you love your family, take Jerry Seinfeld’s advice.

Don’t wait to make your will. Do it now!

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto-based Certified Specialist in Estates and Trusts Law. Ed’s law firm website is MrWills.com © 2014

Joint Bank Accounts Cause Costly Complications

Lots of people have joint bank accounts. You may not understand the dangers these accounts may bring. You may believe joint bank accounts are trouble-free. They can, after all, avoid probate and headaches for loved ones.

But the reverse can also happen. Joint accounts can bring heartbreaking nightmares.

Married people can benefit from joint accounts. How? The surviving joint owner inherits the account without the need for a will. Joint banks accounts can transfer a person’s money without probate. You can save time and money when you do this with your spouse. However, when the account is held with a person who is not a spouse, the benefits are not so obvious.

Here are some cautions about joint bank accounts. The courts can investigate a gratuitous transfer of money to anyone. The court can question what your intent was when you opened the joint account. Did you intend to make a gift of the money? Or are you expecting the account to be part of your estate? A transfer of a joint account into your spouse’s name does not raise such questions.

Art’s Story about Joint Accounts

Look at Art. He placed his daughter Jennifer on a joint bank account.

Art had revised his estate planning after his wife died. He and his wife had owned their house and bank accounts jointly. When Art’s wife died, he did not have to probate her will. Art inherited all their joint assets.

Art’s daughter, Jennifer, lived close by. Art’s son, Bill, lived in another town. Art decided to put Jennifer’s name on his bank accounts. He checked a box on the bank form. It gave Jennifer rights of survivorship. Jennifer was a joint owner with rights of survivorship. Art figured this would save some probate taxes.

When Art died, his son, Bill, claimed the joint account was set up for convenience only. Art always told Bill he would treat his two children equally. Art mentioned this 50/50 split to his lawyer when he signed his will. The lawyer did not know about the joint bank account.

When Art died, there was $200,000 in the account. Jennifer now claimed the entire joint bank account was a gift to her.

Does Jennifer have to share the account with her brother? Who would you believe – Jennifer or Bill?

Your children can end up in court to fighting to get a judge to agree with them. Courts consider various factors if a gratuitous transfer is made to a non-spouse.

6 Factors Courts Consider with Joint Accounts

1. Evidence of Intent – Art intended to make a gift of the Joint Bank Account when the Joint Bank Account was opened because:

(a) Art understood how joint assets with a right of survivorship would operate on his death based on history with his wife’s estate and legal advice.

(b) Art transferred his bank accounts into the Joint Bank Account with a right of survivorship knowing the consequences. Money in the Joint Bank Account would not be part of his estate on his death. The money in the Joint Bank Account would belong to Jennifer as joint owner.

2. Bank Documents – clearly set out that the Joint Bank Account was subject to a right of survivorship.

3. Control and Use of the Funds – Art was the only person using the Joint Bank Account but his daughter was told she could withdraw funds if she wanted. Art was told his money was subject to creditor risks if his daughter divorced or went bankrupt.

4. Granting of Power of Attorney – Art gave his daughter a Power of Attorney for personal care and for property. This would have allowed Art’s money (including bank accounts) to be managed. Thus, the joint account was not opened to allow Jennifer to manage Art’s financial affairs.

5. Tax Treatments – Art included in his tax returns all the interest from the Joint Bank Accounts.

6. No evidence of any reservation of interest by Art – Art never intended Jennifer to hold money in the Joint Bank Account “in trust” for himself while he lived. He did not intend the account for the benefit of his estate when he died. All evidence proves the opposite. Art intended to “gift” the legal and beneficial interest in the Joint Bank Account.

As far as Art intended, the “gift” was made when the Joint Bank Account was opened.

Arthur had given his entire interest, legal and beneficial, when the Joint Account was opened. There was no expectation by Art that Jennifer would share the account.

The court was satisfied Art intended to gift all legal and beneficial interest to Jennifer.

Joint Accounts in Your Estate Plan

Joint ownership, even with family, can create legal problems. Before you transfer your bank account into joint ownership with survivorship rights, get professional advice. Make sure your will reflects the joint account arrangement.

Owning assets jointly with spouses does reduce probate costs. It is a valuable estate planning technique.

If all your assets are jointly owned, it may be impossible to treat your beneficiaries equally.

Art had not considered how Bill would be shortchanged. The result is he did not divide his estate equally between the two children. They also inherited a legacy of bitterness and unnecessary legal costs.

Always discuss with your lawyer the advantages and disadvantages of having jointly owned assets. Consider the risks carefully. The survivor could still end up in a court fight.

About Ed Olkovich

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto-based Certified Specialist in Estates and Trusts Law. Ed’s law firm website is MrWills.com © 2014

What Must Be True For A Plan To Work?

In developing a plan to attach financial parameters to your life plan, at some point you must begin a success algorithm.  

A process that studies your wishes and resources and then asks a simple question. What must be true for this to play out as I wish?  How long must I live?  How long must I work?  How much must I save?  What yield must I have?

Fair answers to this question will lead to a better process.   Find conflicts,  discover tactics, assess risks, learn about yourself,  learn about your family.   Maybe even find the must “must have.”   Like staying alive and well for x years.

All assumptions are just that.  Assumptions.  Just because they fit does not mean they will occur.  Assessing which of them “must” happen if the plan is to happen, is a crucial step.

Once the must happen parts are organized, insured, eliminated from the list or accepted as risk, move to the next step of dealing with them and the other conditions.

Introduce reality.  Find some tactics that can address the plan.  If there are many choices for a particular step, then choose.  If no tactic appears or the ones there are unavailable to you, then refine and revise that aspect of the plan to eliminate the need to deal with it.

Put the first iteration of the plan into action.  Notice areas that are not smooth or when exposed to reality, behave differently. Modify a little and let it run for long enough to learn from its shortcomings.  This observe – reassess – perfect process, will remain for all time.  Be sure it is built in.

The observe – reassess – perfect process is the “I have seen this happen, what now?” part.  You must pay attention or you may miss it.

As you go along you will find that there are parts of you that heretofore have been obscure.  How much risk is okay for me?  How much margin for error do I need?  How much time can I spend on this?  Does my spouse have the same guidelines?  Do I change as I grow older?  Am I able to adapt easily?

Find the tools that can overcome some of your shortcomings and find some that can productively assist you in reaching your goals.  Personal attributes that make plans work in the long run are objectivity, time, liquidity, support, optimism, options and decisiveness.

Planning is not especially difficult, but it is detailed for a while.  Sometimes people find it works best if they think of it as a giant experiment to learn about themselves, their world and the financial part of it.  The experiment approach works because people in this mode do not get the idea that their work here is done.

No plan, regardless of its beauty and elegance will work and so no plan is ever finished.  Success is evolutionary and follows the questioning of two aspect.  What must work? and after something does not work, What now?

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com

Do You Need a Digital Estate Plan?

Will your estate executor have access to your digital estate? Do you know what is involved in a digital estate plan? It’s more than signing your paper will.

Is it enough to leave your email password on a notepad beside your computer?

Sorry, no. You need to learn more digital dos and don’ts.

Digital assets are various online or electronic files with your personal information. They include financial resources and social networks. Digital assets can include personal data with high emotional value. You could also have digital business property with monetary value. Digital assets can be stored electronically, online, in the cloud or on physical devices.

Passwords Can Control Access

Access to your online information or electronic storage is vital. Who should have access to your passwords?

When you make a will, you can appoint a digital executor. You can authorize your executor to hire experts to handle digital assets. You must, however, share passwords and login information to manage such assets.

Executors face a dilemma; in some cases, you may not have ownership of some digital property. Instead, only a non-transferrable access license may exist. Social media user agreements may only permit network access with a personal password. There is nothing to own or sell.

But executors have a duty to collect estate assets. Will they have to hunt for your passwords and usernames?

What about your material in the cloud, on social media or video sites? You can create a digital estate plan and specify your preferences. How is your executor to handle your digital accounts? Should files be closed, maintained or memorialized?

Secure Devices

Estate trustees must be aware of their duties to secure devices with digital information. This includes cell phones, tablets, laptops and computers.

Documents, photos, videos, text messages can be personal or business materials. Executors may not be able to distinguish between these.

Digital assets may have emotional and personal connections for your survivors. This may not translate to monetary value to calculate probate or income tax. However, the loss or expiry of a business domain name or blog can affect online sales and value.
Customer subscription lists and shopping carts can be stored online for businesses. Trademarks, copyrights and creative work can be considered assets and intellectual property. What about the value of an unpublished manuscript or musical composition?

Your online financial accounts may automatically pay utilities, credit card bills, income taxes or loan payments. Your digital estate property can include:

  • blogs
  • domain names
  • online photos and music
  • memorial websites
  • shopping networks
  • loyalty and reward programs

Credit card agreements may impose deadlines for the transfer of rewards or membership points.

Do Not Store Passwords in Wills

You need to store your digital information somewhere other than your will.
Once probated, your will and any password information become public. This could lead to fraud, cybercrime and identity theft.

Many online services store passwords and access codes. These may promise confidentiality. Their guarantees may be short-lived when such businesses fail. Also, digital laws will likely change and courts can order disclosure of such records.

Executors must be aware that online fees can continue to be charged and go undetected. Credit card payments or debt service accounts may have been set up for automatic payments. Without paper statements, executors may be unable to track them.

Digital worlds often have no paper trail to follow. User agreements may prohibit the transfer of passwords and access to anyone other than the registered user.

Can your executor answer your secret questions?

When asked, “What is your favourite bar beverage?” my answer is, “who’s buying?”

About Ed

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto-based Certified Specialist in Estates and Trusts Law. Ed’s law firm website is MrWills.com © 2014

Are You and Your Business Prepared?

“Did Matthew have a plan to deal with his business?”

Sheila’s life partner, Matthew, died a week ago. He ran a successful bookkeeping business.

Sheila was in my law office to get advice. Here is what she wished she had known before Matthew had died suddenly.

Matthew did not have a will. He and his business were not prepared to protect his loved ones.

Matthew was a sole proprietorship. Without a will, he had no estate trustee or executor to operate the business. The business lost all value overnight and died with Matthew.

Matthew rented a small office for the business. His landlord wanted to know who would pay the back rent. Otherwise, the landlord wanted to trash everything inside the office. The landlord was only interested in getting a new tenant to pay rent.

Sheila asked me what rights she had. She wanted to remove papers from Matthews’s office. His clients were calling her at home looking for their financial papers.

Matthew had no succession plan for his business. He never considered what would happen once he was not around. He did not even have a power of attorney. Sheila had no signing authority at the bank for the business account. Matthew thought this was best to limit Sheila’s liability.

Business Assets v. Liabilities

What kind of estate plan do business owners need?

That depends on how they operate their business. Businesses can be sole proprietorships, partnerships or corporations.

Look at the problems Matthew left behind.

Matthew was the only owner. He was personally responsible for the business debts. Matthew received all the income which he reported on his personal tax return. Matthew’s Bookkeeping Services was the name of his business.

Matthews’s estate will have to satisfy all his business creditors, including his landlord and clients.

Matthew did not have a will. No one was authorized to collect his business receivables. Matthew’s executor would have been able to act immediately if he had a will.

Was Sheila exposed to any business liabilities?

Sheila needed to get advice. She needed to know if Matthews’s estate was not insolvent. In other words, that his assets did not exceed his liabilities. If there was any concern, Sheila should not take any steps to deal with the estate. Matthew’s creditors could always demand an accounting from her.

Matthew was not up-to-date with his own government filings. He had not filed an HST return for a while. Matthews’s credit card and business expenses were not protected with life insurance. Sheila had difficulty determining what Matthew owed for income tax and other bills.

Without a will, Sheila had no access to the Matthew’s Bookkeeping Services business account. She had a business bank statement with a $40,000 balance. Matthew’s estate could be wiped out by creditor’s claims and liabilities. She could not take any steps to sell the business to Matthews’s employee.

The bottom line was that Matthews’s business became less than worthless. Matthew’s business debts reduced the assets he wanted to leave for Sheila.

Estate Plans for Business Owners

Matthew could have made a business plan to:

1. Incorporate his business to protect his personal estate from business creditors. He could have left more for Sheila.

2. Make a will to authorize Sheila to operate the business until it could be sold.

3. Create a buy/sell agreement. Matthew’s employee could buy the business if something happened to Matthew.

4. Buy life insurance to pay his bills or fund a buy/sell.

The moral of Matthew’s story: The biggest risk is death. Protect loved ones with a business estate plan. Don’t short change your family.

About Ed

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto based Certified Specialist in Estates and Trusts. Ed’s law firm website is MrWills.com © 2014

Do Zombies Need Estate Planning?

You might be a zombie…if you mindlessly expect:

  • the government to provide for your family when you die
  • your family will respect and understand your final wishes
  • you don’t know why you need a will and powers of attorney

Don’t walk around like the walking dead. Instead, use this checklist to assess your risk of being a Zombie.

Zombie Risk Checklist

Your loved ones are at risk because you have no estate plan. Use this checklist to find out if your loved ones are protected.
1. My loved ones know where my up-to-date will is stored.
Yes/No

2. I have backup executors or guardians named for minor children in my will.
Yes/No

3. I have legally appointed someone to handle decisions for me if I can’t.
Yes/No

4. I have a strategy in place to save probate and income taxes.
Yes/No

5. I have provided for loved ones with special needs.
Yes/No

6. I have a plan to deal with my business if I die.
Yes/No

7. I regularly review my estate plan to achieve my goals.
Yes/No

8. My RSPs and TFSAs are properly designated to avoid overpaying income taxes.
Yes/No

9. Life insurance has been arranged to pay for my children’s need.
Yes/No

If you have not answered “Yes” to all the questions, you need to take action.

Do Estate Planning for Those You Love

Zombies don’t have feelings. Zombies don’t need an estate plan.

Do you care about the people in your life? Then find the time to make a plan.

Imagine your estate as another word for your loved ones. If so, you’ll realize that taking simple estate planning steps will protect those you love.

Planning can avoid problems like an unnecessary estate sale. This can jeopardize everyone close to you. Let me explain this danger and how you can avoid it.

Estate Sales Are Dangerous

“Estate Sale” – what do you think of when you see these words? Most people expect a bargain. Families must sell assets to pay bills, taxes or to support themselves.

If you plan now, your loved ones can avoid an estate sale. I know you can avoid much pain and expense with a little planning. You can create your own estate plan for those you love. Start by asking yourself these questions:

• Where can I get information?
– local law society or bar association referral services
EstateTherapy.com
MrWills.com

• What decisions must I make?
– Who gets everything? (beneficiaries)
– Who should be in charge? (attorneys and executors)
– Who should act as my backups? (back up beneficiaries, attorneys and executors)

• What action do I need to take?
– Find an estate lawyer
– Book a consultation
– Sign your will and powers of attorney

Read my FREE 7 keys to estate planning success.

Estate to the Heart by Edward Olkovich EstateTherapy dot com - Copyright 2014

 

You can find more answers by downloading a copy of Estate to the Heart. I wrote this easy-to-read guide to plan wills and estates for your loved ones. It is filled with practical checklists to avoid Zombie estate planning.

 

 

 

About Ed

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto based Certified Specialist in Estates and Trusts. Ed’s law firm website is MrWills.com © 2014

Do You Want These Advantages from Estate Planning?

What motivates you to get going?

Sometimes the weather gets us down and sometimes it’s our attitude. Sometimes you need a little help to get started.

My approach looks at advantages. I motivate people to focus on the advantages they want. You may find this works for you as well.

Charles B. needed help. He lost his wife and tennis partner of 39 years. He was, very understandably, sad. He was not motivated to tackle anything, let alone an update to his estate plan.

“It’s too depressing to think about.” Charles said.

“Well Charles,” I said, “Try something different. Let’s look at the advantages. Tell me what you want to do for your family and I’ll help you get started.”

Estate Planning Goals

Which advantages would you (and Charles) want to enjoy?

  • Save money on taxes – less of your money is spent paying too much in taxes.
  • Place the right person in charge – you need to trust someone to carry out your wishes. This ensures the jobs you need done are done right.
  • Protect young people – make sure you set up a trust to help secure the future for young people.
  • Reduce the costs of probate – without an up-to-date will your family may be forced into a court battle.
  • Avoid family disagreements among family members – help minimize the risk of this happening by spelling out your wishes.
  • Support your favourite charitable causes – continue to make a difference after you’re gone. Giving a gift to charity in your will can also help reduce taxes.

“Can I have more than one goal?” Charles asked.

“Certainly. You can choose a couple.” I said. “We can create an estate plan to meet your wishes and goals. A cornerstone to your estate plan is making your will. Without a will to reflect your goals, there’s bound to be disagreement.”

“My family gets along. I don’t think we need to worry about that.” Charles said.

“Perhaps not,” I said. “But you do need a will to specify your wishes. Your executor carries out your wishes. You need to choose your executor.”

I told Charles I have seen too many situations where children say:

  • “My father wanted me to be in charge”;
  • “I’m the oldest so it is my job and duty”; and
  • “Dad told me what he wanted”.

So, why leave things to chance?

If you do not have a will, the government writes one for you. The government is not interested in minimizing your taxes. They have inflexible rules that do not respect your family’s special needs. These rules can add years to the process of probating your estate.

Years of your hard work, investing your assets and saving money can be squandered by that process. Beneficiaries may have to wait years after you’re gone to receive the full benefit of your estate.

An estate plan can reduce taxes, continue your charitable works and even protect your pets.

Your family can struggle after you are gone.

But they do not have to.

Give your family all the advantages you can with a professionally-prepared estate plan.

About Ed

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert (MrWills.com). He is a Toronto based Certified Specialist in Estates and Trusts. Edward has practiced law since 1978 and is the author of Executor Kung Fu: Master Any Estates in Three Easy Steps. © 2014