Poor choices made by financial planners in connecting their clients to wills and estate lawyers can, and often do, result in lengthy and expensive estate litigation.
Solicitor negligence is not something that people like to talk about, but it can be a problem, said Markham-based Andrea Kelly, barrister and solicitor, speaking at the CIFPs’ 9th Annual National Conference, in Ottawa.
“One of the reasons why it’s happening, unfortunately, is because people who have an expertise in other areas of law are actually dabbling in wills and estates,” said Kelly, who specializes in estate planning and administration. “In terms of choosing a lawyer, know what their practice focus is.”
They should be a specialist in wills and estates, not corporate, criminal, or immigration law, she said.
Discussing a client’s particular situation is a key step that some lawyers tend to skip over to the potential detriment of the client’s interest.
“You want to make sure that they do go through a questionnaire,” said Kelly. “I still have clients coming in saying their last lawyer never went through a questionnaire with them; that’s not good.”
Lawyers must dig deeper into their clients’ answers and discover their family dynamics.
“The fact finding process is critical to preparing wills and powers of attorney and other estate planning documents,” said Kelly.
Client testimonials go a long way in establishing a lawyer’s credibility. Planners should ask them for three clients that would be willing to vouch for their process and their experience with them, she added.
More importantly, one size doesn’t fit all. By establishing a relationship with a few lawyers, financial planners are able to give their clients some options.
The hallmark of a good lawyer is the ability to communicate that they will attempt to head off future estate litigation at the planning stage, rather than waiting until the client has passed away.
“And you’re going to get that sense by talking about their process,” Kelly said. “It will be a great value that you add to your client’s experience with you.”
But having a will is not necessarily enough. It’s the process of getting to it that makes all the difference. Professional wills and estate lawyers, she said, are very thorough and will make sure their clients get a good experience in addition to a good product.
Equally important is to have the will updated to suit the current life circumstances. Kelly was particularly critical of catch-all will kits, considered a rather lax approach to very complicated situations.
“I just don’t think it’s possible that a will kit is going to suit everyone’s needs,” she said. “And I don’t know that the person who’s proposing it, or who buys it off the shelf, is able to figure out for themselves necessarily that they have that standard scenario and that they’re going to fit within that.”
Planners and lawyers know that every client is different, and that cases are becoming increasingly complex. “I just don’t believe that simple and standard scenarios, in terms of people’s finances, are as common as they used to be,” said Kelly. “In fact I think that is the exception to the rule.”
Complexity makes litigation more likely. The most common bases for estate litigation include spousal election under the Family Law Act, claims, trustee/executor disputes, interpretation of wills and trusts, dependent support claims, unjust enrichment claims and questionable testamentary intent.
By definition, she said, the Family Law Act‘s spousal election rules mean that the surviving spouse can choose whether they will accept what they were given under the will, or what they are entitled to under statute.
Trustee/executor disputes or fiduciary litigation, can include disputes involving the interpretation of a will, or a trust document, disputes among co-trustees and disharmony between trustees and their beneficiaries.
Then there are also compensation disputes. Executors entitled to compensation for their role sometimes claim more than what heirs might think is reasonable. “There are also disputes as to the removal and replacement and appointment of trustees under wills and trusts, and in case of powers of attorney it would be an attorney for property.”
One of the very important concepts under this category is the passing of accounts. It is a process where a trustee or an executor submits the financial records of what they’ve been doing and administering the trust for approval of a court. They can, however, be challenged by the beneficiaries or other interested parties, such as creditors.
Litigation on the grounds of questionable testamentary intent can take the form of capacity claims, undue influence and suspicious circumstances.
“It’s where it is suspected that something other than the will maker’s free will directed the intention and wishes expressed in the will or other estate planning document,” said Kelly.
In capacity claims, often a key point of contention is that the testator did not understand the nature and the effect of the will being executed and was vulnerable to undue influence or excessive manipulation exerted against them, said Kelly.
“Usually the perpetrators are in a position of authority or power, and they use that position of trust and cause a great expense to their victims because of it,” Kelly explained.
Suspicious circumstances are a little bit harder to spot and require evidentiary and factual research to detect foul play.
“How things are being administrated, who’s coming to the meetings with them, who’s living with who,” are some of the things that are likely to come under close scrutiny, she said.
“There are times when people are actually dependent on somebody else to help them with domestic living, and they misuse that; just the fact that somebody is dependent in that way is enough to rebut the presumption that the will was executed properly.”
And last but not least, don’t ever throw away the old will. “No lawyer should just get rid of the old will, because you never know what might come out of that,” Kelly warned.
Download the PDF: Advisor.ca – June 2011