Law Times

Page 14 October 21, 2013 Law Times • FOCUS Public knows little about estates matters, survey finds BY MICHAEL McKIERNAN For Law Times T he general public's view of estates includes a lot of misinformation and ignorance, according to an online survey by LawPRO. The professional indemnity insurer questioned 1,500 Canadians about the treatment of their debts and assets after death and found just one-third of respondents understood what would happen to them. The remaining 67 per cent either had no idea at all or they had the wrong perception altogether. The survey is the latest in a series as part of a public awareness campaign highlighting the value of lawyers in estate planning. Last year, a similar survey commissioned by LawPRO revealed more than half of Canadian adults don't have a will and almost three-quarters were living without a signed power of attorney. Suzana Popovic-Montag, managing partner at Hull & Hull LLP, says the results were a shock to her. "I'm disappointed and worried by the lack of awareness outside the profession. On the inside, we always see how badly things can go. I wish people were more attuned to it and not just to generate revenue for lawyers. They need to be cognizant of the fact that if you don't make a will, there are consequences, that the government will make the choices for you if you don't make them yourself." Raymond Leclair, LawPRO's vice president of public affairs, says he understands why people don't tend to pay much attention to their wills. "Nobody really wants to think about their own demise. I know when I was in practice dealing with wills, people were almost reticent to come in and talk about it," he says. Cost is also a frequently cited reason for avoiding wills, according to Popovic-Montag. But she says proper estate planning can save more money than it costs by cutting the risk of a challenge down the line, especially if the testator has built an estate plan based on misconceptions about the law. For example, she says it's quite common for clients to plan to leave one child out of the division of liquid assets and attempt to make up the difference by bequeathing them the family home or some other kind of property. "You might think they're of a similar value, but it can actually turn out quite unequal when you consider the tax consequences that they're saddled with," says Popovic-Montag. "We try to provide clients with the kind of advice that means when they make the final decision, it's from a place of knowledge. . . . I always think it's amazing that we spend a lifetime building our estates, but at the end when the time comes to decide how it's going to be distributed, that's the point people say, 'It's too expensive; I'll do it myself.'" Leclair says he's particularly concerned about people acting on the advice of non-lawyers to put assets in joint ownership before death. He says his own mother gets calls about adding a child on the title in order to save on her tax bill. "It just angers me the kind of misinformation that is out there. They said nothing about the risks of the scheme. If the child gets into trouble . . . mom's house is now part of the assets creditors are looking at. At the end of the day, you might be able to go to court and show that the son didn't really have an interest in the property, but that's going to cost you a lot of money and time." Scot Dalton says it's not just testators who have gaps in their knowledge about the estates process. The chief executive officer of executor insurer ERAssure says average executors are "flabbergasted" when they discover the scope of their responsibilities. "Depending on the value of the assets and who the beneficiaries are, there could be 50 or 60 individual tasks to be performed. The average person probably thinks they just have to pay some income tax and send some cheques out, but there can be considerably more to it than that," he says. Dalton says he'd like to see lawyers explain the executor's role to testators at the time they sign the will. "Most people look for someone they trust who will be responsible and sensitive to the needs of the family. They know it's going to be an emotional role but they usually have no idea that if things go badly in the administration and litigation arises that the executor could be personally exposed," says Dalton. By making a provision for the purchase of executor insurance in the will itself, Dalton says testators can ease the burden on executors, particularly when they're members of the family. "It takes out the question of whether it's an appropriate expense of the estate," he says. "Then if a claim arises during the administration and an insurer gets involved, that can depersonalize things. I think that might lift the burden on the executor and ease the tension in the family environment because the institution can be the good guy or the bad guy." LT LawPRO survey at a glance • 67 per cent of respondents either didn't know or had misinformation about what would happen to their debt after death. • 15 per cent of respondents had given no thought at all to the legacy they wanted to leave. • Homeowners were more likely to know about debt treatment after death than renters. • 37 per cent of men understood the process compared with 30 per cent of women. • 65 per cent of respondents didn't appreciate the risks of having assets in joint ownership with children or others before their death. "When you've had cancer, every day is a gift."-Chris Taylor " Thanks to the groundbreaking research, the care of Dr. Messner and the compassion of the whole team at The Princess Margaret, I'm here today." A gift left in your Will can save lives. If cancer is your cause, support one of the top 5 cancer research centres in the world. To learn more about planning your gift, call 416-946-2295 or email legacy@thepmcf.ca See Chris Taylor's story at www.thepmcf.ca Untitled-4 1 www.lawtimesnews.com 13-10-16 1:17 PM

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