,

The Danger of Doing it Yourself: Penny Wise and Crown Foolish

Last week’s column dealt with the legacy Alfred Nobel left in creating the Nobel Prizes in his last will and testament. He drafted that will himself, without the assistance of a lawyer. It was handwritten and short. By drafting his will himself he left a second legacy: a five-year battle that wrangled its way through the courts, the salons, and the political offices of Europe.

When Nobel’s will was read, his nephews and extended family were displeased to say the least. His fortune was immense by the standards of the day, and they were left very little of it. If the will were invalid, they would be fantastically wealthy.

The Swedish Academy of Science and other organizations charged with giving out the prizes were unhappy as well. The will gave them little or no guidance onhow the prizes were to be given out. One of them, the Norwegian Storting, being the equivalent of their parliament at the time, was particularly unhappy. It was given the task of giving out the peace prize, which was thought to be a political hot potato.

The executors were unhappy. One was a chemist and business owner who was too busy with his work todevote time to unraveling the mess. The other, Rangor Sohlman, was only 25 years old. Neither had any legaltraining or experience in the area. The burden of the job fell to Rangor.

It took years to hammer everything out.

The will was dragged through the French courts. King Oscar II of Sweden intervened, trying to influence the process, and had to be rebuffed.

The young executor, Rangor, had to smuggle valuable securities and other documents out of France at one point, simultaneously evading French taxation authorities and the Nobel family. He achieved the feat by fleeing Paris to a seaport in a horse-drawn carriage with a loaded pistol resting on the seat at his side.

The Attorney General of Sweden had to be asked to intercede, and issued a ruling that the will, while not drafted properly, ought to be enforced by the Swedish Government.

The Swedish Academy, the Storting, and other organizations had to be convinced to take on the job of awarding prizes, and the rules had to be formulated and agreed to.

Finally, the Nobel family had to be bought off in a hefty out-of-court settlement.

It took five years before the will could be given effect, and another year before the first prizes could be awarded — six years of uncertainty, and acrimony, and lawyers, and courts.

A lawyer might have helped. The will, because it was improperly drafted, was easy prey to court challenges. It was deficient under the laws of every court that looked at it. It was no small feat on the part of Rangor tohave muscled the will into operation.

This is a classic example of the old adage “penny wise but pound foolish,” or, here, “penny wise and crown foolish.” Nobel had the money to hire a team of lawyers, and to carefully put proper arrangements in place in advance. His failure to do that jeopardized his vision, saw a chunk of wealth go astray to buy off disgruntled family members, and filled the coffers of the lawyers involved.

All of a person’s wealth passes through their estate plan. It is one of the most important legal structures a person ever puts in place. Yet many people search for the cheapest, off the rack, estate plan they can find. Or, like Alfred Nobel, they do it themselves. Businesspeople, who would think nothing of a $30,000 legal fee toacquire a significant capital asset, will sometimes balk at having to spend $5,000 or $10,000 to structure the conduit that is destined to pass the whole of their fortune to their children. They shop until they find a lawyer who is willing to do it for next to nothing. Then they proudly bring home a used and dented estate plan from the legal bargain-bin.

No one profits by that, except the lawyers when the wrangling begins.

Next week’s column: An estate plan gone to the dogs.

John Poyser practices as a wills and estate lawyer with The Wealth and Estate Law Group (Alberta). A former chair of the Wills, Estates and Trusts Section of the Canadian Bar Association, he co-authors a textbook for lawyers and accountants on trust and estate taxation. Contact him at (403) 613-2128 or jpoyser@welglawyers. ca , or visit www.welglawyers.ca

© John E. S. Poyser 2009.

This article was current when it was written. No effort has been made to update it. It is not a replacement for legal advice.

/by
,

A Lasting Gift

Alfred Nobel was born in Sweden in 1833 to a family that went from rags to riches, went bankrupt, and then went from rags to riches again. He became one of the richest men in Europe in his time. How? He invented dynamite.

His work focused on the use of explosives in the construction and mining industries, but he knew firsthand the human slaughter his invention could cause. Aviolent explosion in 1864 leveled one of his plants inGermany. Another explosion in 1866 destroyed one of his laboratories and, worse, killed his brother.

Nobel also saw his invention used for military purposes. The advances he made in explosives gave rise to themodern munitions industry and created a frightening new potential for wide-scale carnage on the battlefield. Although he became a wealthy industrialist, Nobel wasa lifelong bachelor and had no children. He saw the opportunity to make amends, perhaps, for the destructive force of his invention when it came time to draft his last will and testament. The Nobel Prizes were established in a single, handwritten paragraph embedded in thatwill. He composed it himself. It directed his executors to hold his estate in perpetuity, and to divide the interest generated from the estate into five annual prizes, for physics, chemistry, medicine, literature and peace. The paragraph contained fewer words than the first few paragraphs in this article.

How powerful was that single, handwritten paragraph? The world is a different place because of it. His corporate empire came and went, but the Nobel Prizes became Nobel’s lasting testament.

People in this world, like Nobel, want to make a mark, a legacy to say “I was here” after they have died. Charitable giving can be a highly effective way to make that mark. Citizens with more modest fortunes set up scholarships or bursaries, or establish endowment funds for the arts, or find other ways to memorialize themselves in their community.

Charitable giving also provides tax relief. Capital Gains are triggered at death. Amounts previously sheltered in RRSP’s and RRIF’s are included in income. The income taxes triggered at death can be substantial. Charitable giving allows citizens to reduce those taxes in a variety of ways.

First, the normal caps and limits on the charitable tax relief available to living persons are not applicable at death. Second, special capital gains rules involving the gifting of publicly traded Canadian securities and other qualified investments have become permanent fixtures as part of our tax laws and have the effect of A Lasting Gift magnifying the available tax relief by eliminating capital gains on the donated assets. Third, new and varied charitable gifting vehicles have been put in place involving insurance policies, and annuities. Finally, Canadians who want to secure those tax savings now, while they are alive to enjoy them, can consider vehicles like charitable remainder trusts.

You may be in a position to have real impact in your community through charitable giving. Like Alfred Nobel, you simply have to write your paragraph. Get some good professional assistance if you want to do it right.

The lesson to be drawn from this story goes beyond charitable giving. Think of your death as a golden opportunity. When you die, all of your wealth, including life insurance, temporarily pools and becomes available to change the world you leave behind. Depending on your circumstances, your death is the opportunity to make large charitable bequests. It is the opportunity to put special structures in place to save your heirs annual income taxes. It is an opportunity to help a disadvantaged niece or nephew. It is an opportunity to ensure your grandchildren or great-grandchildren will have the resources and encouragement to attain their educational dreams.

You may not be able to afford those things while you are living – you are using your money. To the extent that money is power, the most powerful moment in your life is, quite arguably, the moment you draw your last breath.

Next month’s column: Another estate planning lesson from Alfred Nobel.

John Poyser practices as a wills and estate lawyer with The Wealth and Estate Law Group (Alberta). A former chair of the Wills, Estates and Trusts Section of the Canadian Bar Association, he co-authors a textbook for lawyers and accountants on trust and estate taxation. Contact him at (403) 613-2128 or jpoyser@welglawyers. ca , or visit www.welglawyers.ca

© John E. S. Poyser 2009. This article was current when it was written. No effort has been made to update it. It is not a replacement for legal advice.

/by
,

Arranging for the Disposal of Your Remains

Download PDF

In the late 1870’s, an Englishman named Henry Crookenden left a last will and testament directing his executor to give his corpse to a friend, Eliza, to be disposed of in accordance with a letter of direction he had provided to her.
The reaction of Henry’s wife to this arrangement is not known, nor is the precise relationship between Henry and Eliza, but Henry’s wife and the executor arranged to have Henry’s body buried without Eliza’s involvement.
The wishes set out in the letter of direction, known only to Eliza, were ignored. Eliza, not to be thwarted, forged papers to exhume the body two years after his death. Henry’s wife caught wind of that plan and tried to stop Eliza, but was six days too late. Eliza had already removed the body from the grave and spirited it away with her aboard a ship to Italy. Without modern refrigeration, or today’s more effective embalming techniques, the trip could not have been a pleasant one. In Italy, Eliza followed the wishes that Henry had expressed in the letter of direction. She had the body burned in a wood fire – cremation was not widely practiced in England and this, by itself, would have created a small stir. She then collected the bones and other fragments that had not been consumed by the fire and placed them in a Wedgwood, earthenware vase provided to her by Henry for that purpose. She completed Henry’s wishes by burying the vase in consecrated ground.

On her return to England, Eliza asked the executor of Henry’s estate to reimburse her expenses. They amounted to £321 — a huge sum of money in those days. The executor said “no.” Eliza sued the estate, and the 1882 decision Williams vs. Williams is still quoted by judges in England and Canada as an integral part of the law governing the disposal of human remains.
You cannot make a binding arrangement to deal with your remains. You can dispose of all of your worldly goods under your will, but cannot dispose of your body. Why not? The corpse does not form part of the estate. No one owns it.
The executor has the exclusive legal authority to dispose of the deceased’s body, not the family, not the deceased. While the executor doesn’t own the body, he or she is legally entitled to control arrangements for its disposal. To ensure that your wishes are followed, make them known to your executor. You can do that verbally or, better still, in writing. Your wishes can also be expressed in the will, but warn your executor to look at the will before making arrangements.
Most executors follow the deceased’s known wishes. Sometimes those wishes are disregarded. The chief reason is pressure from the family. It is a good idea, therefore, to pre-clear wishes with your immediate family.

An executor may also be legally forced to disregard a deceased’s wishes if they are too expensive. There is a limit on what an executor can spend. If the deceased dies rich, the executor can spend big. John Fuller died in 1834 and was buried in a pyramid shaped mausoleum sitting in a chair with a glass of claret in his lifeless hand. If a deceased dies with more modest financial means, the executor is forced to make correspondingly modest arrangements for the disposal of the remains. An executor who overspends can be forced by the beneficiaries of the estate to foot the bill personally.
If your wishes are going to be expensive, or you are simply worried about family pressure, consider making prepaid arrangements in advance. This puts the shoe on the other foot: an executor who disregards the prepaid arrangements and pays for something different can find themselves personally on the hook for the cost of the alternate arrangements. That is strong motivation to stick with the arrangements made by the deceased.

An executor may also be forced to disregard a deceased’s wishes if they are illegal or outrageously out of the ordinary. Consider the reputed tale of a fellow in England who, within the last century, left directions to have a steel stake driven through his heart after his death (believing, apparently, in vampires). His executor disregarded those wishes.
What became of Eliza? Because the executor, not Henry, governed Henry’s body, the judge ruled that Eliza was not entitled to reimbursement for her trip to Italy to carry out his wishes.
Next week’s column: planning a surprise for the kids.
John Poyser practices as a wills and estate lawyer with The Wealth and Estate Law Group (Alberta). A former chair of the Wills, Estates and Trusts Section of the Canadian Bar Association, he co-authors a textbook for lawyers and accountants on trust and estate taxation. Contact him at (403) 613-2128 or jpoyser@welglawyers.ca , or visit www.welglawyers.ca © John E. S. Poyser 2009.
This article was current when it was written. No effort has been made to update it. It is not a replacement for legal advice.

/by