The phrase, “you can pay me now or pay me later” was a clever advertising slogan for an automotive oil filter back in the 80’s. The message was that you can pay a small amount for a good oil filter now, or, if you don’t, you’ll pay much more later when your car breaks down.
The same principle applies to paying legal fees: paying a small amount to get good legal advice up-front can save a lot of headaches and wasted money down the road.
This was starkly demonstrated in the court’s recent decision in one of our cases following a trial earlier this year. Because of the court’s ruling, a man’s estate will have to pay tens of thousands of dollars in legal costs that could easily have been avoided: all it would have taken was a few hundred dollars spent before he died to make a will.
Here’s what happened: the man (call him Senior) owned 15 acres of vacant land that he bought as an investment. Senior was a builder and one of his two sons (call him Junior) worked for him. They built a house on the property and Senior let Junior live in it as long as he paid all the taxes and mortgage expenses.
Junior moved into the house and finished the construction back in 1989. He has lived there and paid the expenses ever since. However, when Senior died, he died without a will and he still owned the whole property, including the house.
Junior claimed that, when Senior let him move into the house, he agreed to give him the whole property as a gift. He argued that, even though Senior didn’t actually transfer legal ownership to him, the fact that he let him live in the house and pay the expenses for so long meant that Junior was the real owner of the whole property, not Senior.
The Administrator of Senior’s estate disagreed. He argued that the fact that Senior never transferred legal ownership to Junior meant that it was Senior’s intention that the property would form part of his estate and be shared by his whole family when he died, namely by Senior’s wife and both of his sons.
Nevertheless, Junior insisted that it was all his. The case eventually went to trial in the Ontario Superior Court last December and continued in January. The judge released her decision in May.
In the end, Junior didn’t get the whole property as he had claimed. But Senior’s estate didn’t get all of it either. The Judge ruled that Senior’s estate is entitled to 25% of the property and Junior is entitled to 75%.
I wonder what Senior would think of that? Maybe he wanted Junior to have it all. Maybe he wanted his family to share it. We will never know. But one thing is sure: Senior would certainly be unhappy that a big part of his estate is now going to cover all the legal costs that were needed to sort this out.
Senior and his family would have been a lot better off if Senior had just paid the small amount that a local wills and estates lawyer would have charged to draft a will years ago, instead of paying much, much more for the legal costs of an expensive trial years later.
“Pay me now or pay me later” isn’t the only lesson to be learned here: “Get it in writing” is another important piece of advice. If Junior had received a proper transfer of the property in writing (or if it had been left to him in a written will), he would not have needed to go through an expensive trial just to learn that he only owned part of it.
When it comes to planning your estate, it pays to get expert advice up-front. A small cost now can save your family a lot of trouble (and money) after you are gone.
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