As estate litigators, we see far too often what happens when reason gets thrown out the window and disputes – big and small – tear families apart. Here are some practical tips that can be used to make an estate plan as well as tips for personal representatives to follow to try to avoid uncomfortable family dinners in the future.
- Don’t be a Superhero! This tip applies equally to those making their Wills and the personal representatives charged with following it. When drawing up your Will, be reasonable in selecting a personal representative (formerly known as an executor) by carefully considering whether that person can do the job. Be reasonable about the expectations that you are placing upon this person in light of family dynamics. If your children have never gotten along during your lifetime, your death is not going to improve the chances of them getting along now. Your children will find new (read expensive) ways to argue and things to argue about. Remember, this is a job, not an honour. For example, don’t assume that your eldest child is suitable for the job. Consider their capabilities in communication and their relationships with the other beneficiaries. If possible, pick a family member who is neutral or diplomatic. If that is not possible, consider someone outside of the family or a professional advisor. The last thing that you want to do is start out of the gate with a war between the personal representative and the beneficiaries, because things can only go downhill from there.
- The last thing that you want to do is start out of the gate with a war between the personal representative and the beneficiaries, because things can only go downhill from there. Be reasonable about the plan for your valued treasures and even those items you never knew people wanted. Who knew grandma’s patchwork quilt was the item that all three of your children were going to desperately want after you die? Plan for these disputes and help your family be reasonable by giving them a system. Put a mechanism in your Will that tells the personal representative how these suddenly desirable items are to be divided among your beneficiaries, with a way to resolve those disputes. Maybe use a hockey style draft pick system. In round 1 children choose an item in birth order and in round 2 they reverse the order and so on. Or, everyone picks the items they want and if there is duplication, pulling a name out of a hat leads to a lucky recipient. These may seem like simple ideas, but it can be very difficult for your personal representative to come up with a way that everyone accepts to resolve these disputes. It is best if the plan comes from you and is set out in your Will.
- One of the most common arguments among children is about what is “fair”. Unfortunately, as parents we realize that this desire for fairness doesn’t wane as our children grow older and, as estate litigators, we see that this desire for perceived fairness rears its head again after death. One of the most important ways that you can prepare for this problem is to identify any sources of potential “unfairness” and address them in your Will. For example, perhaps you lent one of your children some money during your lifetime for the purchase of their own home, or to get them out of trouble. Make it very clear in your Will whether you expect the personal representative to collect this debt on your death, or whether it is to be forgiven. Otherwise, this can be a very difficult decision for personal representatives to make and they will have one side or the other upset with their decision. To avoid this, make it clear in your Will whether the loan is to be forgiven and make sure that you keep accurate records of any payments you receive towards that loan during your lifetime.
- When you are making your Will, you should ensure that you have discussed the need for an Enduring Power of Attorney and a Personal Directive with your lawyer, as those are equally important estate planning documents. Don’t be a Superhero! This tip applies equally to those making their Wills and the personal representatives charged with following it. Work with your lawyers and financial advisors to draft your Will and create an estate plan. Their help can ensure that your plan is clear, appropriate and reasonable. Personal representatives often think they should shoulder responsibility to save the estate money. They shouldn’t try to be superheroes – attempting to do tax returns without the advice of an accountant can lead to missed deductions or incurring penalties. Similarly, trying to prepare the probate application without the assistance of a lawyer can lead to a very frustrating experience and delays. Be reasonable and use the assistance of accountants, lawyers, and financial advisors. This professional help can keep the personal representative on track and can save time and money overall.
- Reasonable communication is key. For personal representatives, early, often and clear communication with beneficiaries is the number one thing that they can do to reduce the risk of conflict. As estate litigators, the majority of calls we get from beneficiaries are due to suspicions raised when the personal representative won’t respond in a timely manner to requests for information. Avoid the suspicion. Personal representatives should provide reports, answer questions, and be clear about what steps they are taking and the expected time line. This can reduce conflict dramatically.
- Choosing mediation allows the parties to be reasonable and creative. They can reach a solution that is acceptable to everybody and that will hopefully preserve their ongoing relationships. As a personal representative, remember your role. You are not there to right the wrongs of the past, to make things more fair or to distribute the property as you think should be done. You are there to follow the terms of the Will. If you are unclear about what they are, seek professional assistance.
- What about fees for personal representatives? There is nothing wrong with personal representatives expecting a fee for all the work that they do. Personal representatives should be compensated for their time. However, personal representatives can’t set their own fees, so first look to the Will to see whether the deceased has set out the basis for calculating the fee. If not, seek the assistance of your lawyer to determine what would be reasonable in the circumstances. A simple estate usually pays a lower fee, but a more complex estate with litigation and other matters to deal with may necessitate a higher fee. The range is usually between 1-5% of the value of the estate. Remember that personal representatives cannot pay fees to themselves without the agreement of the beneficiaries or an order from the court. When it comes time to assess what is reasonable for the work done, a personal representative must rely on notes and records. How many hours were spent? What are the out-of-pocket expenses? Keeping track of these items consistently will help the personal representative deal more reasonably with the beneficiaries later.
- The funeral is another area where fights begin. Memorial plans can cause huge problems for families, perhaps because emotions are so raw. The personal representative’s first step shouldn’t be an ugly one! He or she has the right to make these decisions, but should be reasonable in considering the opinions of all those who want to say goodbye and accept suggestions for how to celebrate the deceased’s life, so that everyone can be accommodated, if possible. Using a reasonable manner will help ensure that there won’t be long lasting hostilities and grudges about how to say a final farewell to mom. In our estate practice, we very often see that disputes surrounding the funeral can set the tone for the rest of the estate administration.
- What about fees for personal representatives? There is nothing wrong with a Personal Representative expecting a fee for all the work that he or she does. Personal Representatives should be compensated for their time. Be realistic. Disputes are not uncommon. First, look to the Will. Does it tell you how to resolve a dispute? If not, consider estate mediation. Mediation is a wonderful way to solve a dispute. In court there must be winners and losers. The judge has to apply the law and applying the law usually means picking one side or the other. Someone is going to be unhappy. However, in mediation any solution is possible and parties are only limited by their imagination. Choosing mediation allows the parties to be reasonable and creative. They can reach a solution that is acceptable to everybody and that will hopefully preserve their ongoing relationships.
- Above all – have a plan! There is nothing more helpful in keeping families together than making sure that you have your estate planning documents done properly. A good lawyer will assist in ensuring that the Will matches your family’s needs. When you are making your Will, you should ensure that you have discussed the need for an Enduring Power of Attorney and a Personal Directive with your lawyer, as those are equally important estate planning documents.
In estates, each step that you take sets the tone for the next. If you start out with a reasonably prepared plan, you set yourself on the right path. If you are the personal representative, take your first steps in a reasonable way, communicate early and often with beneficiaries, and include them in funeral planning. If you make sure that everyone feels that they have a voice and that they have your ear, then you are the best equipped for a reasonably confrontation-free estate. Disputes will arise, but it is how you approach them that will rule the day.
Erin Lafuente and Doris Bonora are partners with Dentons Canada LLP in Edmonton, AB and practice exclusively in the area of wills, estates, estate planning and litigation. They would be pleased to answer questions arising from this article. Please send an email to :. email@example.com or firstname.lastname@example.org.