Learn how to put the ‘pro’ in probate
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When I mentioned my topic for this week’s column, my husband told me not to touch it with a three-metre Christmas tree.
But because this topic is something we should all understand, I felt I had to drive the hatchet in. And a quick survey of the offspring illustrated the need for education on this issue.
“Does anyone know what probate is?” I asked.
“Is it something a fisherman has to do in a competition?” asked
“Sounds like probation,” said
And interestingly, No. 3, the final child surveyed, came up with something relevant. “It sounds like delay,” he said.
Then, when I reviewed email feedback on The Kids are All right, my choice of column topic was clinched.
Trish writes: “I really enjoyed your article about having a will in The Evening (sic) Telegram. I was wondering if you could take it one step further in writing an article about what happens with the will after death — the legal process, the role of the executor, the role of a lawyer, what the family can expect, the costs of the lawyer and the executor fee.
“My mother passed away in May and here we are almost December and nothing is settled yet for our family. A lawyer told us we need to have him probate the will and now he seems to have taken over ‘guiding’ the executor. How do we know when we are doing what we should be doing as per the lawyer or when the lawyer is taking advantage of us? Is there someone we can turn to for advice?”
Then a second email, this one from Don G. Ross, an investigative paralegal: “It was (with) great interest and public interest that I read your paper article dated Nov/22/2011 … concerning wills and how to do them up. I would like to ask why you did not include our paralegal profession and only mentioned the services of lawyers or the option of do-it-yourself to complete a will when indeed paralegals can equally do these up if one wishes?
“Our profession, sadly to say, has been left out with the thinking that only lawyers … can do certain legal issues.
“Please refer to the Yellow Pages and see my ad regarding the legal services that a paralegal can complete. Many do not know that we can handle summary matters, etc., fill the void when a lawyer is too expensive, or take clients who do not receive approval for Legal Aid, etc.
“Too bad we were not included in the options you outlined. I receive many clients from certain lawyers who know that we can help a client when they determine that their service cost exceeds that of the budget of some.”
So, because of the continued interest in wills and probate, I found myself in my lawyer’s office this morning updating my own will and setting up power of attorney and health directives for my husband and me.
But first thing’s first. What the heck is probate?
Probate is the court process you go through to settle someone’s estate after they die. Probate deals with the distribution of the dead person’s property as well as guardianship of dependents.
Fact No. 1: Once a will passes through probate, it becomes a public document and anyone and their fishmonger can look up the details of how you only gave your firstborn a large stuffed otter.
Fact No. 2: The probate process can take a long time. Even with an uncontested will and a small estate, probate can take up to a year.
Fact No. 3: Probate can cost a lot of money. Probate fees differ from province to province. In Newfoundland and Labrador, the fees are about five per cent. Then, of course, you have the lawyer’s or paralegal’s fees on top of that. I am blessed with a competent lawyer I trust. I recommend that if you have second thoughts about your legal professional, find someone else. That said, probate on a straightforward will will probably still run into the thousands of dollars.
Fact No. 4: Probate can be a royal pain in the gluteus maximus for the loved ones who have to deal with it. Executors may become overwhelmed with the responsibility they took on 50 years previous and hadn’t thought about since. You can give your executor a set amount like $5,000 or $10,000, depending on how dicey you expect things to get. Or you can offer a percentage of the estate.
But you don’t want to force your children to live in the street because your house has to be sold in order to pay the executor. Best stick to a percentage of liquid assets. In any case, navigating through the probate process can be like taking on a part-time job on top of a regular day job. It can be stressful.
But take heart; there are several things you can do while you’re alive to avoid torturing those you love once you’re dead.
Let me back up a bit for those who missed the column on the importance of making a will. The first thing you need to do is keep all your will info up to date. Before a visit to your lawyer or paralegal, a $20 will kit will provide all the forms you should fill out before a visit to his/her office.
As Christmas is fast approaching, I know those of you who read the will column will have already completed an overview of your estate, filled out forms and made an appointment with some professional as your Christmas gift to yourself.
So, moving right along, the next step in your journey to becoming efficient in the afterlife is educating yourself on what happens after you die.
One thing to keep in mind is that probate and income tax are two different things. The good people at the Canada Revenue Agency anxiously await dead people’s tax statements. You can settle the affairs of the estate through probate before the final income tax statement is in by setting aside some estate money to deal with any what-ifs.
You can, of course, avoid probate altogether by setting up a living trust. This, in itself, is a big commitment. You will have to pay a legal professional to set up a trust that becomes the owner of your home and other assets. Then the assets can pass directly from the trustee of the account to the beneficiaries you name.
You should consult a tax expert to deal with questions like: is your house still considered your principal residence if it’s moved to a trust? What are the tax implications?
If it’s the money you’re worried about spending on probate once you’re sitting in a Mason jar on the mantel, you may as well let your fragile mind rest. You’re going to have to dole out the cash be it while you’re on this side of the dirt or when you’re six feet under.
If you are older or if you own a fair chunk of cash, real estate or other property, it’s probably worth your while to establish a family trust. Once you name the trustees, it will be they who decide how to distribute assets to the beneficiaries. It’s a good idea to name at least one trustee from outside the family in case things get tangly and end up in court.
Next, of course, you have to name beneficiaries — you can choose anyone you like out of your 253 family members. Just let them know they’ve been named and make sure you tell them they’ll have no say in how the assets get distributed. That is the job of the appointed trustees.
Then, a paralegal or lawyer must get involved with the nitty-gritty of the trust deed which itemizes who does what among the trustees. They’ll set up voting rules, etc., much like for an annual general meeting. If you sell assets to the trust, then you can lease them for your own use.
Sounds complicated. No wonder you need professional help.
You can also give lifetime gifts. About three years ago, my father-in-law gifted his cottage to his three children. Granddad lowered the value of his estate by giving a large chunk of it away while he is still alive.
The next step is relatively easy: next time you make an appointment with the bank to review an account or renegotiate a mortgage, take the time to specify a beneficiary for a pay on death (POD) account. Then when you die, the money remaining in those accounts passes directly to the beneficiary without going through probate. Same thing with your mortgage and life insurance documents; specify a beneficiary to avoid probate.
As I’m sure these tasks will to entertain you for the next few holiday weekends, I won’t get into things like level of care and power of attorney until the new year.
But over the holiday, think about your online footprint. Your Facebook page isn’t going anywhere after you die unless you have made arrangements with someone.
Fun Yuletide topics, one and all. Merry Probate and a Happy Will Year.
Susan Flanagan is a writer whose lawyer assures her all wills and documents in the safe on Duckworth Street survived the fire. Susan can be reached at firstname.lastname@example.org.
Bee writes: “Just a little email to say that even as a 20-year-old I still thoroughly enjoyed your Pokemon article in this week’s Telegram, it is the first time I have ever been caught staring at the front of the paper until I HAD to read it!”
And from Liam, a student at Macdonald Drive Junior High: “Your Pokemon article was the best ever!”