Estate Planning

I recently had a meeting with a client who retained us to draft a Shareholder’s Agreement for her and the co-owner of her business. This type of an agreement lets the shareholder of a company control what happens in the event of certain things such as change in ownership, death of a shareholder or the divorce of a shareholder.

Some of the items she easily had an opinion on, however, some items she said “let’s leave those out and we’ll deal with them later.” I encouraged her not to do that, rather than to tackle the hard issues head on and while that advice was with respect to her particular situation, the advice that follows applies to all business issues, not just legal ones.

It is better to plan for something than to respond to it happening.

From a legal point of view, it costs far less to draft a legal agreement that sets out what will happen if an event takes place as opposed to litigating the issue when it happens and there is no agreement in place. This applies to employment agreements, contracts with customers and suppliers. Litigation dollars are easily ten times the amount of dollars spent on drafting documents: use your legal fees wisely, plan ahead.

From a general business point of view, facing the possibility of an unpleasant event head on, let’s you plan how to deal with it before you are in “crisis mode” and struggling to deal with shock as well as coming up with a plan.

Plan your response before you need it. We can help with that.

Inga B. Andriessen JD
iandriessen@andriessen.ca

Remember years ago when Martha Stewart had an “Apprentice” TV Show and she told one of the female contestants, there are no tears in Business? That was likely some of the best advice she gave during the show.

Tears are borne from emotion and the emotion in a Business should come after hours, not during.

As a Business Lawyer one of the most challenging types of business I deal with it “the family business”. Businesses which involve multi-generational family relationships can be the most difficult businesses to find solutions to what would otherwise be simple problems.

The best advice anyone can offer a family Business is to use lawyers to negotiate difficult issues. Cool heads, steeped in legal knowledge are the right people to resolve conflicts.

Lately, litigation involving Constructive Trusts in Family Businesses has seen an increase in acceptance by Canadian Judges. Older generations who live off the work of their children and grand-children cannot cut those children out of the business without compensation.

Litigation is the last place a family Business should end up in, however, at times, that is the only way to ensure everyone is dealt with fairly.

If you need help navigating these waters, without tears, please reach out to me.

Inga B. Andriessen JD
iandriessen@andriessen.ca

As business lawyers, helping business owners with Estate Planning is part of what we do.

I’m not going to write a long and detailed (yawn) blog post about all of the “interesting” technical issues that come up in drafting wills.

Today, I’m going to write a direct and pointed Blog about one issue that can lead to huge legal bills, elimination of any estate left to divide between beneficiaries and a lot of hurt feelings: leaving one of your adult children out of your will.

In the context of business law, this can often happen when one child is running the business and another is not. The person writing the will may choose to leave the business to the child who is running it and instead give the other child a different inheritance.

In a more dysfunctional situation, one child may have had a permanent falling out with a parent and had no contact for years, while another child may have the parent living in their house and caring for them in their senior years.

Regardless of the reason, if you are going to treat one child differently than another in your Will, include a hand written letter to the child(ren) explaining why they are being treated differently.

The purpose of the letter is to try to avoid a law suit over your estate and all the nastiness that flows from that. If the law suit cannot be avoided by the letter, it can be used in the law suit to show the parent had the mental capacity to make the Will and also be used as evidence against a claim of undue influence.

When you are drafting a letter to your excluded child, if possible, do not be cruel: nastiness will only fuel a law suit that will hurt the child you have not excluded. An explanation of your reasons and a sentiment of wishing that child the best, is one of the best gifts you can leave a child and will benefit all involved.

The best advice we give our clients on Estate Planning is “organize your affairs so your family can grieve you, not hate you”. I hope this Blog helps you follow our advice.

Inga B. Andriessen JD
iandriessen@andriessen.ca

I snagged the title to this Blog from a Huffington Post Blog by Krizia. The original blog described the evolution of a small business called Lotus Premium Denim. This Blog is not about Denim.

The title of the Blog grabbed my attention because it refers to two things many lawyers fail to do, but two things I know that we do at our firm.

The title of the Blog grabbed my attention because it refers to two things many lawyers fail to do, but two things I know that we do at our firm.

Delivering on our promise is critical in maintaining the client relationships we have established over the past 20 years. I’m proud to say that many of the clients we have today are clients we have had for the entire 20 years the firm has been around.

The keys to “promising” as a lawyer in my opinion are:

1. Communicating clearly to the client what you will be charging them.
As lawyers all we have to sell is our time, but how we sell it (by the hour or by the task) is an important difference and clients must be told about this up front.

2. Honestly evaluating any litigation and being clear, even if you have a strong case, there is always a possibility of a Judge finding against you.
Clients have to be told Judges are human and let’s face it, there is a reason we have Courts of Appeal.

3. Before starting any litigation, assess the likelihood of collecting on a Judgment and advising the client if the only result will be a “pretty piece of paper stamped Judgment”.
No one just wants a pretty piece of paper and why should the law firm be the only party that benefits from litigation?

If you are our client, we understand you and we promise to continue delivering excellent legal services to you.

Inga B. Andriessen JD
iandriessen@andriessen.ca

There have been several recent stories in the papers relating to legal restrictions on the right to choose the timing of one’s death or that of a family member.

One story related to Nagui Morcos, a man with late stage Huntington’s. He chose to end his life rather than continue forward knowing the fate that awaited him, having witnessed his father’s deterioration and eventual death at the hand of this illness. His doctor had no ability to actively assist him in carrying out his choice, given potential College of Physician discipline and criminal sanctions. Those who did assist him could face potential charges for doing so.

The other story is that of Robert Latimer, the Saskatchewan farmer who chose to end the life of his disabled daughter who had cerebral palsy. He was initially sentenced to life in prison in 1994 for second-degree murder. His case went through various appeal stages, including a new trial in which he again was once again found guilty of second-degree murder in 1997. He was granted parole in 2010. He continues to serve his life sentence in the community, but as he is on parole his movements are restricted. He was recently granted permission to travel to the UK to sit on a panel debating both sides of the right to die issue.

These stories raise the very difficult legal and moral issues of the right to take your own life or that of a family member under your care – ending life earlier than would otherwise occur to avoid pain and progressive physical/mental impairment. The decision to end one’s own life is made while capacity still exists, yet is a decision made in anticipation of the capacity fading and becoming non-existent as the illness progresses. In deciding to end the life of a family member, it is a debate that involves quality of life and ending the suffering endured by that loved one.

My personal views on the correctness of the current laws or any need for change are irrelevant. But these two stories are very good examples of how laws are challenged, forcing lawmakers (the government and the courts) to consider modifications over time to meet the evolving standards of society. Some laws are easily changed. Others, such as the issue of the right to die, require significant debate and hand-wringing.

Powers of Attorney for Personal Care, which we regularly draft as part of a comprehensive estate planprepared by our office, are essentially all that need be done to ensure that your wishes are carried out should you become incapacitated. They do not allow your Attorney to decide to end your life, but they can provide the power to decide when no further treatment is to be given to you – a decision you would no longer be able to make on your own. Until such time that the laws on the right to die change, if ever, this is the most protection that you can afford yourself should you lose the capacity to make decisions on your own regarding treatment of your own illness.

Paul H. Voorn
pvoorn@andriessen.ca

Recently we’ve had a lot of questions about trustees – both in the context of the estate (formerly called the executor/executrix) and in inter vivos trust situations.

Generally speaking, the trustee is the person tasked with administering the trust according to the wishes of the person who donates the trust proceeds, or the testator, as the case may be. They have a legal duty to account for their actions as trustee and have legal obligations to the beneficiaries of the trust.

In the testamentary trust situation, the trustee is also going to be the person who organizes the affairs of the deceased. They need to know what the testator had, where they kept it, and what they want done with it. In addition to the trusts and gifts established by the Will, this may include insurance policies, RRSPS, pensions and other proceeds that might not flow through a Will.

Ultimately the choice of trustee should be a person who, as the title indicates, is trusted. But beyond that, there are some skills requirements you want to look for. Selecting a trustee who isn’t good with money or who is easily overwhelmed when dealing with paperwork and bureaucracies might not be a good idea.

In some situations we have recommended that our clients designate a professional trustee. The benefit with this option is in having experienced trust administrators who have the skills and resources to make sure the trust is administered properly – the downside is obviously the expense.

If you have any questions about this or any other issue, please feel free to contact us.

Scott R. Young

Amidst all the Facebook IPO hype this week, there was the release of an e-mail from Mark Zuckerberg to his corporate lawyer, instructing them to dilute Facebook co-founder Eduardo Saverin’s share in the burgeoning company.

Aside from the obvious professional responsibility issue that this presents for the lawyer (assuming the lawyer was acting for the corporation, they had an immediate duty to declare a conflict of interest and cease all representation of the company), the story highlights the need to get good independent legal advice before entering into any legal agreement. I had a great example of the right way to do things last week – we were retained to give ILA to a shareholder on a Shareholder’s Agreement that they had largely formulated. Despite the fact that this shareholder had been the principal instructor to the corporation’s lawyer, and was intimately familiar with most of the terms of the agreement, the corporation’s lawyer still thought it would benefit all of the shareholders to get ILA – not just to waive it as is sometimes (unfortunately) done.

The shareholder was convinced that ILA would add value even if only to have a fresh set of eyes review the agreement. In our review, we offered more than that; considering various critical events from the shareholder’s individual perspective was very different than the perspective of corporate representative they had while preparing the agreement.

The details of the Facebook dilution are not entirely clear (the ensuing litigation was settled and not much is on the public record) but presumably the restructuring that diluted Savarin down to 10% was ultimately effected, and presumably without Savarin retaining counsel to explain this to him. And when he did realize the dilution, litigation was the only option available.

Getting independent legal advice is not cheap, but the value in what you are getting is often immeasurable. If you are entering into an agreement of any significance (including potential future liabilities), you absolutely must have legal counsel review the agreement and confirm that your interests are protected (or that your unprotected interests are known to you). It’s that simple.

Scott R. Young

I am reading more and more lately about the idea of putting together a Will for your social media accounts. Some are advising that you elect a trustee who will delete or otherwise take care of your twitterbookspaces after you shuffle off of this mortal coil, and others are suggesting that you write instructions directly into your Will. Some US states are even considering legislation that will deal with the issue directly. And of course, with an aging population, the social media companies themselves are spending more time dealing with the issue of what do to with dead members.

To be clear, from a legal standpoint, in Ontario, at this time, any directive about what do to with a social media account after your death has no legal force on its own. It’s the same as organ donation (and I know this always shocks some people) – all the good intentions in the world, coupled with the best drafted and executed documents, can be completely undone by those you leave behind. And there’s no added validity to putting something in your Will about what to do with all those ones and zeroes floating in the cloud after you pass on.

That said, thinking about what you would like done with your digital life after you’re gone is a great idea and I highly recommend it. I also highly recommend talking about the issue with your legal counsel so you can get the clarity needed to find out the legal effect of all of your estate planning wishes. A good lawyer will be able to tell you what belongs in a Will, what doesn’t, what to look for in an Estate Trustee, and how to go about effecting all of your wishes.

We’ve had significant experience in putting together comprehensive estate plans for some incredibly tech-savvy business people – there are a lot of creative solutions out there – escrow service agreements that hold data in a secure environment and subject to very strict (and heavily insured) contractual obligations are one solution; joint licensing agreements that give ownership of social media property to multiple parties is another. There are options – but they’re not as simple as putting an instruction in your Will.

In short, social media continues to proliferate and is becoming an increasingly important personal and business commodity. Like anything else, there are things we want to happen to those things when we die. Think about it. Put together a plan and talk to a legal expert to make sure it’ll all happen the way you’d like.

If you have any questions, send us a twitterpoke or something #beforeyoudie.

Scott R. Young

Tomorrow is New Year’s Eve – time to promise to workout more, eat less & be kinder to everyone (except the Kardashians, well, maybe even them).

As many people find personal resolutions hard to keep, I’m happy to propose a few business resolutions which should be easier to keep and therefore give you smug satisfaction next year at this time when you look back on the year.

So, without the snappy banter of Dick Clark’s Rockin’ New Years Eve, here are some suggested resolutions:

1. Have your lawyer prepare your annual business minutes and esnure your minute book is up to date.

2. Prepare both a personal and business will.

3. Register a Trademark if it has value to you.

4. If you are in Construction, lien projects within 45 days of last service or supply.

5. Follow 30-60-90 Sue to ensure your receivables do not cripple your cash flow.

Wishing you a Happy & Profitable 2012 !

Inga B. Andriessen J.D.
iandriessen@andriessen.ca

One of the many positives to being a small law firm is the close interaction between the litigation and non-litigation sides of the firm. We meet together on a regular basis to discuss files from both perspectives (how to avoid litigation and what strategy to pursue when litigation becomes inevitable). We also talk about avoiding disputes from the very beginning of a commercial relationship – this usually means getting the documentation right.

When we draft documentation for a client, we try to find out as much as we can about the way they do business; or more exactly, we find out about the way they want to do business and then we try to make sure that its completely compliant with the statutory framework under which the client operates, and any applicable case law. When possible, we try to approach the process holistically, and address as much of the business relationship as possible. We consider client solicitation, customer intake, the review of documents, imbalances in bargaining power, the need to retain specialized counsel on both sides of a transaction, the execution of the documents, the clarity of the documents, the term and termination of the agreement and what rights the parties have after the life of the document has ended.

When we talk about the clarity of legal documents, we’re talking about more than plain language and the clarity of our words – although we are talking about that too. We’re talking about everything from the readability of documents to font size, white space, kerning, the appropriate placement of margins in the event that a document will be faxed repeatedly, organization, numeration, and everything else we can think of. And then the litigators look at the document from the perspective of a judge, squinting to read and understand what exactly the parties have bargained for. And we fine tune.

At the end of the day, our goal is to provide a legal document that envisions the intention of the parties in a clear manner, contemplates current and incoming legislation, is adaptable for changes in case law and will add value to the underlying interaction between the parties. Our multi-disciplined and flexible approach produces excellent documentation. And that documentation improves the systems of our clients.

That’s the Andriessen Document Advantage.

Scott R. Young