The Most Critical Resolution

Going into the New Year, we all get into the “Resolutions” mindset. I’m going to exercise more or drink less or be nicer to my cat. Whatever, we see the new year as a hinge of history, a signpost to a new and better self.

Almost anything on our critical to-do list has a tomorrow option, that is, you can safely put it off for another day. But there’s one thing that doesn’t have a tomorrow option. And that’s planning for the day when there is no tomorrow. As an estates and succession lawyer it was far too often my sad duty to help minimize the disaster left behind when someone died without having made proper plans for property and loved ones.

Clients used to give me all kinds of weak excuses to put off preparing wills and estate plans, but underlying all the alibis was the unwillingness we all share to admit that a day will come when everyone else is still here and we aren’t. We all know that’s a silly notion, but we all still refuse to think or say, “Someday, I won’t be here, but my stuff and my loved ones will.”

During my career I made some pretty good money helping clear up the most gosh-awful messes left when a successful entrepreneur died without good estate and succession planning. Suddenly out-of-control adult kids, spouses, former spouses, creditors, suppliers, tax authorities, and all the local alley cats became a hissing ball of flying fur and vituperation, the totality of their competing claims far exceeding what’s available to share. And that’s before legal expenses. Completely at odds with the shrewd instincts which built the empire in the first place.

One should never forget that upon your death, the Canada Revenue Agency is given a once-only last opportunity to squeeze the orange, and they will do so with a vengeance. They do this by “deeming” (that is, pretending) that you disposed of all of your stuff at fair market value, and then they calculate what your deemed capital gain would be. This is something you can’t do anything about after the fact.

In order to dodge or limit the tax damage, far too many otherwise smart people turn to the internet for “tips and tricks” and come up with home brew schemes. Schemes that blow up post mortem. And the problem with post mortem, of course, is that it’s post mortem. When you’re dead, you can’t come back and fix your oh-so-clever ruse. And believe me, Canada Revenue Agency has already thought of all these clever schemes, denied them, and built in sufficient penalties that your estate will soundly hate your scheming. Some legacy.

But the CRA is not necessarily the biggest problem. Often, tricky family dynamics will be the leading source of grief. By failing to grapple with these in advance you can pretty well guarantee that most of your estate will go to places and people you may not want to benefit, including lawyers, valuation experts, expert witnesses, forensic specialists, and family members other than those you intended. We professionals don’t mind earning the money, but that’s probably not what you intended to do with your hard-earned wealth.

And, of course, there are those who believe that if they don’t have a written will, the family will just sit down and work it out. Right. And the Easter Bunny will preside. No matter how tight and reasonable your family may be today, after your passing and amid the raw emotions, there will at a minimum be hurt feelings and ruptured relationships. “Dad always loved you the most!” Is that your idea of a great legacy?

But what about just letting the law determine the division of your estate. Surely there must be some laws that say what happens if you die without a will?!?!?! During my days of practice, I would put it to clients this way, “So, you’re going to put bureaucrats in charge of your estate?” That usually got their attention.

And then I would go on to point out that in almost every case, the cost of an intestacy far exceeds the costs of preparing a thorough, carefully planned “lawyer drawn” will.

For all but the most modest of estates, a consultation with a knowledgeable estates lawyer and a well-drafted estate plan will not only limit exposure to family rifts, but will reduce potential tax liability and speed up the distribution of your assets to beneficiaries.

One of my last questions to clients when we had done estate planning and will signing was, “How do you feel now?”, and the answer, without exception, was “Relieved.” Many would thank me for having been bossy and pushing them. I had no regrets.

Most readers have already wisely taken care of this business and can go into 2024 knowing that if they are eaten by a crocodile during the year, their estate will roll out in an orderly and tax-efficient fashion. And my hope, for all the others, is that New Year’s Resolution #1 is to make an early appointment with a solid, knowledgeable, and well-reputed estates lawyer.

And with that, I wish everyone a wonderful 2024, that you make sure your estate plan is buttoned down and finalized, and that many decades will pass before anyone needs to look at it.