WhereWhere there’s a Will there’s a Will there’s a Waythere’s a Way

Incorporation Estate Planning Incorporation Estate Planning In To Your PracticeIn To Your Practice

ByByKevin O’Brien, CFPKevin O’Brien, CFP

Before We StartBefore We Start

• Young couple on Young couple on the way to the the way to the church to get church to get married are married are involved in a involved in a horrific car horrific car accident. accident.

• Unfortunately Unfortunately neither survived neither survived the accident.the accident.

The Gates Of HeavenThe Gates Of Heaven

• Both meet Saint Both meet Saint Peter at the Peter at the gates of Heaven gates of Heaven and they askand they ask

“ “Is it possible that Is it possible that we can get we can get married in married in Heaven?”Heaven?”

He Did Not Know He Did Not Know

• St Peter did not know the answer so he St Peter did not know the answer so he asks them to wait outside the gates until asks them to wait outside the gates until he can find outhe can find out

The Couple Wait for what The Couple Wait for what seems like an eternity seems like an eternity

• During this time….During this time….• They find out that They find out that

they don’t have the they don’t have the same political views.same political views.

• They don’t agree on They don’t agree on a number of key a number of key issues issues

• They have some They have some serious doubts!!serious doubts!!

Finally Saint Peter ReturnsFinally Saint Peter Returns

• After 4 Months Of After 4 Months Of Searching I Have Searching I Have Found Your AnswerFound Your Answer

““Yes it is possible Yes it is possible you Can Get you Can Get Married In Married In Heaven”!Heaven”!

The Couple Then Ask Saint The Couple Then Ask Saint Peter Peter

• During the 4 During the 4 months that you months that you were gone….were gone….

• We realize we are We realize we are not 100% not 100% compatible compatible

• If Things Don’t Work If Things Don’t Work Out Can We Get A Out Can We Get A Divorce In Heaven?Divorce In Heaven?

Saint Peter’s Reaction Saint Peter’s Reaction

• Visibly AgitatedVisibly Agitated

• Throws His Clip Throws His Clip Board Board

• Starts Pulling His Starts Pulling His Hair Hair

• Muttering Under Muttering Under His Breath. His Breath.

““It Took Me 4 Months Of It Took Me 4 Months Of Searching Heaven To Find A Searching Heaven To Find A

Priest” Priest”

““It Will Take Me Forever To It Will Take Me Forever To Find A Lawyer”! Find A Lawyer”!

Estate Planning & My Personal Estate Planning & My Personal ExperiencesExperiences

• How I Embarked On How I Embarked On My Career As A My Career As A Financial Planner Financial Planner

• 1981 My Father’s 1981 My Father’s Health Started to Health Started to FailFail

When My Father DiedWhen My Father Died

• Even Though My Father Was Sick For 5 Even Though My Father Was Sick For 5 Years We Were Not Prepared. Years We Were Not Prepared.

• No Discussion As To What Financial Assets No Discussion As To What Financial Assets He Had or Where They Were Located. He Had or Where They Were Located.

The BankThe Bank

• Mother –Was Not PreparedMother –Was Not Prepared

• Personal Papers Personal Papers Disorganized Disorganized

• Had No Financial Knowledge Had No Financial Knowledge

• Ownership of Assets- Ownership of Assets-

Only In Fathers NameOnly In Fathers Name

• Safety Deposit Box Not Safety Deposit Box Not DisclosedDisclosed

• Confusion & TerminologyConfusion & Terminology

Estate FrustrationEstate Frustration

• I Spent Months Trying To I Spent Months Trying To Understand The StatementsUnderstand The Statements

• Nothing Had Ever Been Nothing Had Ever Been Thrown Out.Thrown Out.

• I Combed Through Sock I Combed Through Sock Drawers, Files, Cardboard Drawers, Files, Cardboard Boxes and Drawers of Boxes and Drawers of Papers Papers

In RealityIn Reality

• I Was Performing The Duties Of An I Was Performing The Duties Of An Executor Executor

• I organized and Gathered All The I organized and Gathered All The Financial Assets Of the Estate Financial Assets Of the Estate

• I Educated Myself As Much As I Educated Myself As Much As PossiblePossible

Notified Notified

• The BankThe Bank

• LawyerLawyer

• Investment Companies Investment Companies

• Financial AdvisorFinancial Advisor

• Insurance CompanyInsurance Company

• Cancelled/Amended all Cancelled/Amended all Personal Contracts Personal Contracts

Despair & RealizationDespair & Realization

• The Bank-The Bank- Gave Me The Wrong Information On Gave Me The Wrong Information On Probate & OwnershipProbate & Ownership

• The Lawyer Had Died-The Lawyer Had Died- His Successor Was His Successor Was Not An Estate LawyerNot An Estate Lawyer

• Hired A LawyerHired A Lawyer That Specialized in Estates That Specialized in Estates

• The Financial AdvisorThe Financial Advisor :Was At Best A :Was At Best A “Salesperson”“Salesperson”

I was Determined To Help My I was Determined To Help My Mother Mother

• I Organized & FiledI Organized & Filed

• I ResearchedI Researched

• I Determined Course of Action I Determined Course of Action

• I Corrected The Bank- and Stood My I Corrected The Bank- and Stood My GroundGround

• I Directed I Directed

• I Hired an Accountant I Hired an Accountant

And In The EndAnd In The End

• It Took Me 9 MonthsIt Took Me 9 Months • I Succeeded In Finding The Right AnswersI Succeeded In Finding The Right Answers

• Organized My Mothers EstateOrganized My Mothers Estate

• I Hired The Right PeopleI Hired The Right People

• It Cost Thousands of Dollars To FixIt Cost Thousands of Dollars To Fix

The Funny Part Is…The Funny Part Is…

The Bank informed us that my father The Bank informed us that my father had a safety deposit box. had a safety deposit box.

It Held:It Held:

My Fathers Will, PA’s, Life Insurance My Fathers Will, PA’s, Life Insurance and a Substantial Amount of Stock and a Substantial Amount of Stock Certificates Certificates

In My Mother’s Name.In My Mother’s Name.

Where Not To Keep Your Where Not To Keep Your Important PapersImportant Papers

• Not In A Bank Safety Deposit Box Not In A Bank Safety Deposit Box

• No access on weekends No access on weekends

• No access If not held JointlyNo access If not held Jointly

What An Un-necessary Burden We Put What An Un-necessary Burden We Put Upon Our Loved Ones Upon Our Loved Ones

The Shocker The Shocker

• My own estate was set up wrongMy own estate was set up wrong

• My financial paperwork was My financial paperwork was disorganizeddisorganized

• I had the wrong type of life insurance I had the wrong type of life insurance and I was under-insuredand I was under-insured

• I had failed communicate our own I had failed communicate our own situation to my spouse situation to my spouse

• I actually enjoyed the work involvedI actually enjoyed the work involved

I Went Back To SchoolI Went Back To School

• IFIC CourseIFIC Course

• Insurance CourseInsurance Course

• Sponsor Companies Sponsor Companies CoursesCourses

• Sales CoursesSales Courses

• CFP CourseCFP Course

You Would Think I Would Have You Would Think I Would Have Learned Something…..BUTLearned Something…..BUT

• May 1989 I Commenced On My Career As a Financial May 1989 I Commenced On My Career As a Financial PlannerPlanner

Then My Older Brother Called Me Then My Older Brother Called Me Late September At 1.30amLate September At 1.30am

• Sales Job (commission)Sales Job (commission)• No AssetsNo Assets• No Credit (poor)No Credit (poor)• No Mortgage (not Qualified)No Mortgage (not Qualified)• CSV Life Insurance (cashed)CSV Life Insurance (cashed)

My Gut Told Me I was Doing My Gut Told Me I was Doing Something Wrong Something Wrong

• I should have been more I should have been more professionalprofessional

• I should have insisted that we I should have insisted that we meet immediatelymeet immediately

• I should have expressed my I should have expressed my concern that he needed to concern that he needed to have life insurance NOWhave life insurance NOW

• I should have but I I should have but I didn’t…………….didn’t…………….

I Screwed UpI Screwed Up

• My Brother Was Found Dead In A Hotel Room Oct 28My Brother Was Found Dead In A Hotel Room Oct 28 th (they figure th (they figure

he died the 26th)he died the 26th) He Had Died On His Last Sales Trip Of An Aneurism He Had Died On His Last Sales Trip Of An Aneurism

• He Was Only 47He Was Only 47

• He Left a Wife, a Son and a Financial Mess He Left a Wife, a Son and a Financial Mess

Let’s TalkLet’s Talk

You Should Be Initiating The DiscussionYou Should Be Initiating The Discussion

With Your ClientsWith Your Clients

You Will Be Surprised At What You FindYou Will Be Surprised At What You Find

Every Financial Planning Practice has Every Financial Planning Practice has

Estate Horror Stories Estate Horror Stories

The Will That Never WasThe Will That Never Was(Found 16 years later )(Found 16 years later )

• First Holiday Without First Holiday Without Children Children

• First Plane Trip (scared)First Plane Trip (scared)• They Typed A WillThey Typed A Will• Guardian Chosen Had Died Guardian Chosen Had Died

& Spouse had Remarried& Spouse had Remarried (They disliked the new (They disliked the new

spouse)spouse)

They Did Not Have A Valid They Did Not Have A Valid Will Will

GuardianshipGuardianshipConsiderations for Selecting Considerations for Selecting

GuardiansGuardians• Same ValuesSame Values

• The Means To The Means To ProvideProvide

• Live Close ByLive Close By

• Have Your Trust Have Your Trust

• Same Beliefs Same Beliefs

• Close To Your AgeClose To Your Age

• Existing ChildrenExisting Children

• Close FamilyClose Family

Once You Have Chosen Your Once You Have Chosen Your GuardiansGuardians

• Ask Them To Consider!Ask Them To Consider!

• Review Your Criteria With Them!Review Your Criteria With Them!

• Obtain Their Assurance!Obtain Their Assurance!

• Using The Same Criteria Pick Another Using The Same Criteria Pick Another Set Of Guardians As Alternatives!Set Of Guardians As Alternatives!

Last Minute PlanningLast Minute Planning

• Holograph WillHolograph Will• 1948 A Farmer Had An 1948 A Farmer Had An

Accident He Was Accident He Was Impaled On A Shaft In Impaled On A Shaft In His Field.His Field.

• Wrote In His Blood on Wrote In His Blood on Tractor Fender Tractor Fender

• ““in case I die in this in case I die in this mess I leave it all to the mess I leave it all to the wife” Cecil G Harris wife” Cecil G Harris

Choosing An ExecutorChoosing An Executor

• Primarily required to administer and Primarily required to administer and wrap up the estatewrap up the estate

• Gather up All AssetsGather up All Assets

• Make all Disbursements Including CRAMake all Disbursements Including CRA

• Share & distribute remaining assets Share & distribute remaining assets with beneficiaries with beneficiaries

• Be mentally capable to handle the job Be mentally capable to handle the job

Your Executor Should Be Your Executor Should Be

• TrustworthyTrustworthy

• Be responsibleBe responsible

• Be thoroughBe thorough

• Someone that will outlive you Someone that will outlive you

• Be In Agreement with your wishesBe In Agreement with your wishes

• Understand what is requiredUnderstand what is required

• Have the time to focus on the taskHave the time to focus on the task

• Be someone that you can communicate with Be someone that you can communicate with

Inform Your ExecutorInform Your Executor

• The executor may be held liable for The executor may be held liable for mistakes made in settling an estatemistakes made in settling an estate

• Many people become overwhelmed by the Many people become overwhelmed by the responsibility and work required responsibility and work required

• Compensation Is 2.5% of capital receipts Compensation Is 2.5% of capital receipts and disbursementsand disbursements

• 2.5% of revenue receipts 2.5% of revenue receipts • If the estate takes more than a year an If the estate takes more than a year an

additional 1% on the gross for management additional 1% on the gross for management

Always Have BackupAlways Have Backup

• Using the same Using the same criteria pick an criteria pick an alternative alternative executorexecutor

• Never make the Never make the choice emotionallychoice emotionally

Family Monsters That May Family Monsters That May Come Back & Haunt You!Come Back & Haunt You!

• Mother with 4 DaughtersMother with 4 Daughters

• Will was marked up with Will was marked up with changeschanges

• Depending on which Depending on which daughter had gained or daughter had gained or lost favourlost favour

• Will was contested on the Will was contested on the grounds that the mother grounds that the mother was mentally incompetent was mentally incompetent

The Siblings The Siblings

• Mother had died Mother had died

• Left RPP payment via Life Left RPP payment via Life only Annuity Guaranteed for only Annuity Guaranteed for 15 years :$42,000 Per year 15 years :$42,000 Per year X 14 yearsX 14 years

• Left Open Account Left Open Account $ 300,000 $ 300,000

• ½ of Home Worth ½ of Home Worth $ 550,000 $ 550,000

Greed & Not Need!Greed & Not Need!

• The Siblings Wanted To Buy “Bill” The Siblings Wanted To Buy “Bill” Out Of The Home.Out Of The Home.

• They Wanted To Sell The HouseThey Wanted To Sell The House

• Their Reasoning Was They Wanted Their Reasoning Was They Wanted The Full Value Of The Estate The Full Value Of The Estate Now Now

Through Questioning I Through Questioning I UncoveredUncovered• Bill and Mom Had Lived Common-Law For 15 Bill and Mom Had Lived Common-Law For 15

Years Years

• The Will Stated That Bill Had A Life Interest In The Will Stated That Bill Had A Life Interest In Mother’s Half Of The HomeMother’s Half Of The Home

• Bill Was The Beneficiary Of Mothers $400,000 Bill Was The Beneficiary Of Mothers $400,000

Of Registered AccountsOf Registered Accounts

• Bill And The Siblings Didn’t Get Along Very Bill And The Siblings Didn’t Get Along Very WellWell

My Advice – Tread LightlyMy Advice – Tread Lightly

• Life interest in home and Life interest in home and antaginizing Bill could bring antaginizing Bill could bring negative resultnegative result

• The Pension Plan Paperwork The Pension Plan Paperwork did not have spousal did not have spousal consentconsent

• There are potential tax There are potential tax consequences with having a consequences with having a non-spouse as beneficiary to non-spouse as beneficiary to Registered Plans Registered Plans

They Chose Not To ListenThey Chose Not To Listen

• Bill Hired A Lawyer – Specialized in EstatesBill Hired A Lawyer – Specialized in Estates

• They lost their rights to the pension paymentsThey lost their rights to the pension payments

• They now pay for ½ of all home expensesThey now pay for ½ of all home expenses

• Bill intends on living in the home foreverBill intends on living in the home forever

• Bill Cashed in The Registered Accounts Bill Cashed in The Registered Accounts

• The siblings open account paid the taxes The siblings open account paid the taxes

If You Don’t Use A Lawyer That If You Don’t Use A Lawyer That Specializes Specializes

• 98% of Wills are boiler plate 98% of Wills are boiler plate text on a word programtext on a word program

• Look for errorsLook for errors

• Look at spellingLook at spelling • Most Wills could be finalized Most Wills could be finalized

as you wait as you wait

• Have it “Explained” back to Have it “Explained” back to you in Englishyou in English

DemographicsDemographics

• The Same Forces That The Same Forces That Built Your Practice May Built Your Practice May Be Taking it Away From Be Taking it Away From You!You!

• The Leading Edge Of The Leading Edge Of The Boomers Will Reach The Boomers Will Reach 59 Next Year! 59 Next Year!

As The Population Changes As The Population Changes

• We As Financial Planners Need To-We As Financial Planners Need To-

Shift From:Shift From:

Asset Gathering/ AccumulationAsset Gathering/ Accumulation

• Shift To:Shift To:

Retirement Planning and Estate Retirement Planning and Estate PlanningPlanning

Adds Value to Your Practice Adds Value to Your Practice

• Introduce Yourself to Introduce Yourself to the Next Generationthe Next Generation

• Provides Clients With Provides Clients With Value Added Service Value Added Service

• Introduces You to Introduces You to Centres of Influence Centres of Influence

Introducing The Concept Introducing The Concept • Provide A Service That Organizes & Provide A Service That Organizes &

Centralizes Your Clients Important Centralizes Your Clients Important Estate Papers Estate Papers

• Provide A Fire Proof Box For Your Provide A Fire Proof Box For Your ClientsClients

• Develop A Full Net Worth Statement Develop A Full Net Worth Statement

• Ask Questions & KISSAsk Questions & KISS

• Review Wills & PA’s Review Wills & PA’s • Develop The Estate Planning Team Develop The Estate Planning Team

Concept Concept

The LawyerThe Lawyer

• Traditionally The Lawyer Comes FirstTraditionally The Lawyer Comes First

• That’s totally wrong! That’s totally wrong!

• Why should a client pay $300-600/hr Why should a client pay $300-600/hr to have trusts explained?to have trusts explained?

Lawyer is brought in after the initial Lawyer is brought in after the initial plan is formulated. plan is formulated.

The AccountantThe Accountant

• Provide Useful Services Provide Useful Services

• Can be called on a regular basisCan be called on a regular basis

• Asset values and ACB’s revisionsAsset values and ACB’s revisions

• Tax planning Tax planning

The Insurance Agent The Insurance Agent

• Life Insurance Life Insurance

• It’s A Hidden GemIt’s A Hidden Gem

• Important Asset Unique to Estate PlanningImportant Asset Unique to Estate Planning

• May Need Insurance Based Investment May Need Insurance Based Investment Products Products

Other Team Members Other Team Members

• Real Estate EvaluatorReal Estate Evaluator

• Business EvaluatorBusiness Evaluator

• Corporate LawyerCorporate Lawyer

• Family Law Lawyer Family Law Lawyer

• DoctorDoctor

• Special Professionals Special Professionals

Your Role With The Estate Your Role With The Estate Planning TeamPlanning Team

• QuarterbackQuarterback

• Provide Net Worth ReportProvide Net Worth Report

• KISS (Keep it simple silly)KISS (Keep it simple silly)

• DelegateDelegate

• Implement and Follow upImplement and Follow up

• Review annually and update Review annually and update

Sometimes 50-50 isn’t Fair Sometimes 50-50 isn’t Fair

• Family CottagesFamily Cottages

• Family BusinessFamily Business • Special Needs Special Needs

ChildrenChildren

• Baa Baa Black Baa Baa Black Sheep Every family Sheep Every family has one! has one!

Chair Meetings Chair Meetings

• Hold Strategy Hold Strategy Meetings Without Meetings Without ClientsClients

• Determine a course of Determine a course of actionaction

• Provide a Summary To Provide a Summary To The Team Members The Team Members

Remember Remember

• Develop A Complete Net Worth (Starting Point)Develop A Complete Net Worth (Starting Point)

• Organize The Clients Papers (Billable service)Organize The Clients Papers (Billable service)

• Centralize Important Papers (Fire Proof Box) Centralize Important Papers (Fire Proof Box)

• Don’t Be Afraid of The Team Don’t Be Afraid of The Team

• You Know More Than They DoYou Know More Than They Do

• Co-ordinate Their EffortsCo-ordinate Their Efforts

• Keep It SimpleKeep It Simple

Where there’s a Will there’s a Where there’s a Will there’s a WayWay

• A Book that I wroteA Book that I wrote

• That’s easy to read and understandThat’s easy to read and understand

• Organize and Simplify Your Clients Documents Organize and Simplify Your Clients Documents

• Educate Your Clients – SimplicityEducate Your Clients – Simplicity

• Duties Of An ExecutorDuties Of An Executor

• ProbateProbate

• TrustsTrusts

• Charities Charities

Be There For Your Clients Be There For Your Clients

Where there’s a Will there’s a Where there’s a Will there’s a Way Way

• $30 Canadian$30 Canadian• Ideal way to Ideal way to

introduce your introduce your clients to estate clients to estate planning.planning.

• Ideal way to Ideal way to introduce yourself to introduce yourself to the next generationthe next generation

• Adds deep value to Adds deep value to your practice your practice