Tag Archives: estate planning

Choosing a Trustee / Executor

Its been decided – you need to establish a Trust. Perhaps you have a blended family and want to reduce the risks of your Will being challenged following your death. Perhaps you have a disabled or spendthrift beneficiary who needs assistance to maintain financial stability. Perhaps you have minor children who could not manage funds personally in the event of your untimely death. There are countless reasons a Trust may be advised.

Now, though, the difficult question of choosing a Trustee must be addressed.

There are traditionally three categories of people chosen to act as trustees:

  1. Family Members and Friends.
  2. Professionals (Lawyers, Accountants, Financial Planners).
  3. Trust Companies.

Family and Friends

People who know you offer the advantage of understanding your values and the personal goals behind your decision to establish the trust. Of course anyone chosen should be financially responsible, trustworthy, organized and capable of working with legal and tax matters. But what other considerations should be taken into account?

Age – Our most trusted personal advisors are often our age, meaning they are more likely to be incapable of acting or even deceased at the time of our own death; young appointees may lack the requisite skills and experience necessary to administer your trust.

Nature of Assets – if your trust or estate contains only liquid assets to be managed and distributed in a specified manner, your selection of potential trustees may be much broader than if your assets include a going concern business that must be operated within a trust for a period of time. Land, foreign holdings, corporate shares, animals and other assets each raise different considerations.

Residency – the Estate Administration Act permits individuals residing outside British Columbia to act as your executor and trustee, but it does not assist in resolving practical challenges created by a distance from the physical assets to be managed. There is also provision in the Act for the Court to grant a special administration to another party, if absence is delaying administration of your estate. Tax legislation in other countries can impact the feasibility of your choice as well – US citizens and Green Card holders are often advised by tax professionals not to act as trustees outside the United States.

Professionals

Professionals offer expertise in the specific tasks trustees must take on and, depending upon their profession, may also be bound by professional licensing standards that increase their clients’ peace of mind when entrusting assets to their care. Professionals often agree to take on the role of trustee or executor for clients they have had prior dealings and built significant rapport with, increasing their understanding of the personal objectives giving rise to the trust.

Trust Companies

Trust companies offer the knowledge and expertise of professionals in an even more heavily regulated environment. While the employees of the trust company may never have met you personally, there is a heightened degree of continuity and objectivity in selecting a company rather than an individual, as complex family relationships will not have any impact upon the company’s method of administration.

Co-Trustees

Due to the benefits and limitations of each of these three categories, you may consider opting for a personal advisor and a professional or corporate advisor to act jointly. In this case, it is common for the professional or trust company to be allocated tasks associated with legal and tax matters, records keeping and providing/obtaining necessary opinions, while your personal advisor will guide specific allocations and distributions to your beneficiaries.

General

Establishing a trust, either during our lifetimes or in our estates, is quite common and the need for them or their benefits are not restricted to the wealthy. Successful implementation of a trust is often a reflection of the care taken in selecting trustees. If you have questions about whether a trust is suitable for you, or about selecting an appropriate trustee, please contact our offices to obtain advice on these matters.

 

Intestacy and Predatory Marriages

Predatory Marriages – what are they, how can we protect elderly loved ones from them and how can they can impact estate inheritances?

As our population ages in the coming years, it is anticipated that personal wealth in the astonishing range of several trillion dollars, will be transferred from one generation to the next. Much of this wealth will transfer simply from husbands to wives or from parents to children.  Other wealth, however, will transfer from a widowed parent to a new life partner against the testator’s previously stated wishes, either due to legal requirements or due to the influence of the new spouse.

The case of Banton v Banton in Ontario is a perfect example of how a predatory marriage can impact an otherwise standard family distribution.  The testator in this case married a member of the food services staff in his long-term care facility, then revised his will to provide for his new wife; notably, his estate was large enough to have provided for both his wife and his children, but his new will distributed his assets to his second wife.

Following Mr. Banton’s death, his children challenged the validity of the will and the following facts were considered:

  • The marriage occurred very close to the end of Mr. Banton’s life, following a period of reliance upon the new wife as a paid caregiver;
  • Mr. Banton was deemed to have been mentally incompetent at the time he wrote his new will (and likely also at the time he entered into the marriage);

In Ontario, much like in British Columbia under current statutory law, marriage nullifies previously existing wills.  The will Mr. Banton executed before his second marriage was no longer valid under the terms of the statutory law.

Mr. Banton was deemed to be mentally unsound at the time of drafting his new will after the questionable marriage.  This will is therefore not viable for probate purposes, rendering Mr. Banton intestate (having no valid will), and his estate became subject to distribution in accordance with the government’s statutory provisions for individuals without wills.

Currently, in British Columbia, if this situation were to arise, Mr. Banton’s second wife would receive the first $65,000 of his estate assets, as well as 1/3 of the remainder of his assets. His children would split the other 2/3 of the remainder of his assets equally between him. These distributions would, of course, occur after his debts and those of his estate had been repaid in full.

As our population ages, we need to turn our minds to the ongoing right of our elders to direct their lives, engage in rewarding interpersonal relationships and explore new experiences.  We will also begin to see increased cases providing guidance on how to ensure mental competence at the time of a late-stage marriage.

At McQuarrie Hunter LLP, we work with clients to ensure protection of family assets, responsible support of loved ones who are engaged in legitimate relationships and the eventual distribution of our clients’ assets in accordance with their stated wishes.