By Howard S. Simmons
The Good, the Bad and the Ugly
It is common and useful when doing a will to do a power of attorney for property. If you become mentally incapable because of age and illness, the one you trust can handle all your financial and business affairs. Unfortunately, not everything always ends happily.
Let us assume that father has died and mother cannot look after her financial affairs properly. She has a home worth $800,000, which should be sold as she will be moving to an assisted living accommodation, RRIFs of $800,000, and other investments of $700,000. There is a son and a daughter. The son has the power of attorney. The mother lives for nine years more.
The son is involved in a new business. He thinks it would be a good idea for $600,000 of his mother’s money to be invested in the new business. The business fails and all the $600,000 is lost. The son also has a personal guarantee at the bank for $500,000 because of the business. He uses his mother’s money to pay this, as he is sure this is what his mother would have wanted.
When the mother dies, the sister is shocked to learn that very little is left in her mother’s estate.
Here the son sells the house, wisely invests the funds, and pays all the expenses for his mother. His mother still likes to shop so the son takes her once a month to the local shopping centre to buy clothes and presents for her friends who do not have much money.
When the mother dies, the daughter brings a court action requiring the son to account for all the money spent in the last nine years. The son did not keep most of the bills. The daughter is claiming that the son (her brother) must reimburse the mother’s estate for all bills he cannot produce. For many bills he can produce, the sister is claiming they were not for their mother’s benefit. The sister had never helped the mother in the last nine years.
The son does everything as in the Good Bad situation. Here the daughter appreciates everything that he has done. The son also kept all the bills and can account for everything.
Everyone wants the Good Good situation. How do you increases the chances of getting there?