Leav­ing money to a se­cret ben­e­fi­ciary is very tricky

The Hamilton Spectator - - BUSINESS - DAVID HODGES

TORONTO — When it comes to re­quests to have in­her­i­tance money left dis­creetly, Toronto es­tate lawyer Ed Olkovich says it’s typ­i­cally not the racy stuff most peo­ple might ex­pect, such as funds for a se­cret lover or a child out of wed­lock.

Rather, he says, it’s of­ten done to avoid hav­ing some­thing that could ap­pear un­seemly in­cluded in a will — which be­comes a pub­lic doc­u­ment once it’s pro­bated.

“I’ve had a strange case where some­body said to me, ‘Don’t put that per­son’s name in the will be­cause my part­ner will go crazy if I left this per­son money,’” Olkovich says, cit­ing the ex­am­ple of a client want­ing to leave a siz­able gift to a loyal em­ployee with­out rais­ing any sus­pi­cions from his wife.

“The next thing you know, some­body is ac­cus­ing them of hav­ing an af­fair.”

But re­gard­less of why you may want to leave money for a se­cret ben­e­fi­ciary, there are law­ful ways to do it, says Ot­tawa-based es­tate lawyer Nor­man Bow­ley.

One op­tion is to make ar­range­ments with a trust com­pany that ad­min­is­ter the money ei­ther dur­ing your life­time or af­ter your death.

“They’re dis­creet and pro­fes­sional and you would lit­er­ally put in the trust, ‘When I die you are to give this $100,000 to such-and-such-aper­son,’” says Bow­ley. “That is not go­ing to get out in the pub­lic, pro­vided that you take the care to use an in­stru­ment for which you don’t need pro­bate.”

An­other op­tion for leav­ing money con­fi­den­tially is a se­cret trust in which you leave as­sets to a per­son named in your will with pre-ar­ranged in­struc­tions that they pri­vately give the funds to some­one who has not been named in the will.

For in­stance, Bow­ley says, you could leave money to a sib­ling, with the un­der­stand­ing that they would give the funds to your se­cret ben­e­fi­ciary — “a mis­tress, for in­stance.” That means the gift is se­cret even af­ter the will be­comes pub­lic.

How­ever, en­force­abil­ity of a se­cret trust may be a con­cern be­cause there is lit­tle you could do to en­sure your wishes are ac­tu­ally car­ried out. Bow­ley says that “if your brother turns out to be a scalawag af­ter your death, he may just keep the money for him­self.”

An­other op­tion is a per­ma­nent in­sur­ance pol­icy that guar­an­tees a pay­ment, says Lorne Marr of LSM In­sur­ance in Markham, Ont.

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