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“He who touches the ashes of the past,
Will burn himself with still glowing coals.”  --Elizabeth Heyking

Han Sachs invoked this quote in his autobiographical work: "The World’s Greatest Poster Collection: How it came into being and How it Disappeared From the Face of the Earth."  As the title of his book suggests, Sachs (who was, among other things, Einstein's dentist) compiled an invaluable poster collection that was confiscated by the Nazis in November, 1938.  He died without ever recovering his treasured collection.

In a recent essay published in the Timesonline, his great-granddaughter recounts the subsequent efforts made by Sachs' son to recover his late father's collection.  Despite the fact that Germany: (i) committed to return confiscated art found in museums by signing the Washington Conference Principles on Nazi-Confiscated Art in 1999, and (ii) where the Third Reich was implicated, implied that it would not invoke any statute of limitations, a recent Court decision in favour of the estate was nonetheless appealed by the German government and the decision is pending.

The efforts of an executor of an estate to recover lost art poses special challenges that I recounted in this blog reviewing the efforts of the estate trustees of the estate of Max Stern and the advent of the Lost Art Internet Database.   

David M. Smith 

David M. Smith - Click here for more information on David Smith.

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Testators choose their executors.  The choice of executor is commonly assumed to be a very personal choice predicated on trustworthiness.  But in the face of this assumption, can the beneficiaries of an estate ever agree amongst themselves to oust an executor in the absence of any recognized basis for removal?  A pending case in the U.K., as reported in The TimesOnline, addresses this question.

A firm named Will Drafters in the U.K. was named executor in the Will of a deceased.  The beneficiaries named in the Will are not happy with the compensation Will Drafters is entitled to under its contract with the testator.  The beneficiaries have brought this so-called "test case" to see if the Court will order the removal of the named executor based simply on the fact that all beneficiaries seek its removal in favour of another company, Final Duties, which will apparently charge a lesser rate of compensation.  Not surprisingly, Will Drafters takes the position that they contracted with the testator for their services at an agreed rate of compensation and ought not to be removed. Certainly there is no indication that there are any of the factors that give rise to the removal of an executor (in Ontario, this would proceed under s.37 of the Trustee Act)

Quite apart from the legal issue of when the Court ought to remove an executor, the case has sparked a debate respecting whether "will-writing companies" (as they are called in the U.K.) such as Will Drafters and Final Duties, ought to be regulated. As the Times notes: "The only will-writing association to offer accreditation — the Fellowship of Professional Willwriters and Probate Practitioners — says that its research shows that two thirds of people wrongly thought the willwriters they used were all trained solicitors. A recent report on regulation of legal services by Lord Hunt of the Wirral expressed concern about the “fringe legal market” in will-writing, probate and claims handling."

On a final note, to all who read yesterday's blog, please see this link for a revised version of that blog now posted in its place on our website

David M. Smith

David M. Smith - Click here for more information on David Smith.

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What follows is a revised edition of this morning's blog which inadvertently created confusion between the principles of Abatement and Ademption. I apologise for any confusion caused by the initial version.

On Monday, I blogged on the payment of debts of an estate and the steps that an estate trustee ought to take to protect him or herself from any personal liability.  Today's blog is a sequel of sorts (it would have been posted yesterday but a Groundhog Day tie-in was too good to resist).

The issue today is Ademption and Abatement, words that will only be found in a law dictionary.  Ademption occurs when a specific gift of personal or real property in a Will is no longer in existence at the date of death, in which case the gift fails.  If specific legacies of cash can be partially satisfied (as detailed below) from the funds remaining in the estate after payment of debts, then there is an Abatement of such legacies.

For greater clarity, where there are debts to be paid, the residuary beneficiaries take the hit first. If the debts can be paid and still leave something in the residue, than the specific cash legacies can be paid in full.  However, when the residue is exhausted by the payment of debts, and there is a shortfall between the amount remaining and the amount required to fully fund the specific cash legacies, the principle of abatement dictates that these legacies are reduced on a pro rata basis.

The situation gets considerably more complicated if an executor is faced with a cash poor estate and a Will that contains combinations of cash legacies, gifts of real estate, gifts of personal property, and gifts of personal bank accounts (sometimes called general or demonstrative legacies).  In such a case, good legal advice is critical.

David M. Smith

David M. Smith - Click here for more information on David Smith.

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Listen to: Power of Attorney - Hull on Estates #197

This week on Hull on Estates, Natalia Angelini and Nadia Harasymowycz discuss when Power of Attorney should be executed. 

If you have any comments, send us an email at hull.lawyers@gmail.com or leave a comment on our blog.

Natalia R. Angelini - Click here for more information on Natalia Angelini.

Nadia M. Harasymowycz - Click here for more information on Nadia Harasymowycz.

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Listen to: Limited Power of Attorney - Hull on Estates and Succession Planning #193

This week on Hull on Estates and Succession Planning, Ian and Suzana discuss the issues with having a limited Power of Attorney or no Power of Attorney at all.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

Ian M. Hull - Click here for more information on Ian Hull.

Suzana Popovic-Montag - Click here for more information on Suzana Popovic-Montag.

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Every year on Groundhog Day I can't help but reflect on Bill Murray and his contribution to the modern North American psyche.  It must be a massive ego trip to know that, on one day of the year, most everyone reflects on a movie that you have made.  With all due apologies to Punxsutawney Phil and Ontario's own Wiarton Willie, Bill Murray is to Groundhog Day what Cupid is to Valentine's Day (that other February distraction).  And you can't escape him.  Groundhog Day (the movie) is played endlessly in syndication (especially on, well, Groundhog Day) unrivaled in its mind-numbing repetition except by the inescapable "Bridget Jones Diary" and Murray's other masterpiece "What About Bob?" 

But I digress.  Groundhog Day (the day, not the movie) speaks to our deepest yearnings for the coming of Spring in the depths of what is now a very frigid winter. And Groundhog Day (the movie, not the day) observes the mind-numbing monotony of everyday life coupled with the fantasy of excelling at a given endeavour if only given 365 chances to repeat it.  There is a lesson in there somewhere...I am just not sure what it is.

Here's to trying to get it right the first time...whatever "it" happens to be!

David M. Smith

David M. Smith - Click here for more information on David Smith.

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It is a trite principle of estate administration that "debts must be paid before beneficiaries."  Assuming this maxim is followed, the estate trustee will not assume any personal responsibility for the debts of the deceased. On the other hand, if the estate trustee distributes the estate without due consideration to creditors' entitlements, the estate trustee may be left personally exposed unless the beneficiaries return their entitlement to the estate trustee to fund any unpaid debts.

To be fully relieved from personal liability, the estate trustee must make reasonable efforts to locate and satisfy the creditors of the deceased.  Advertising for creditors is therefore an essential step in protecting the estate trustee from liability and ensuring that the creditors of the deceased have had the opportunity to be paid. But the importance of the advertisement ought not to be overstated.  If an estate trustee can be proven to have had independent knowledge of a creditor who does not claim (for whatever reason) in response to the advertisement, and if the estate trustee distributes in the face of this knowledge, he or she could conceivably be personally responsible to such a creditor.

The bottom line is that the estate trustee, understandably focused on his or her fiduciary duty to the beneficiaries, stands in the shoes of the deceased and must give more than a passing regard to the creditors of the estate.

David M. Smith

David M. Smith - Click here for more information on David Smith.

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The heirs of a man who sold a well known Vermeer painting to Hitler are seeking its return from the Austrian museum where it is currently on display.  

“The Art of Painting”, which dates between 1665 and 1668, is currently housed at the Kunsthistorisches Museum in Vienna and is considered one of Vermeer’s most important works. Its exact value is unknown, but conservative estimates put it at in excess of $211 million (US). 

Vermeer never sold it, but after his death his widow was forced to do so because of financial hardship. The painting eventually made it to Jagomir Czernin, part of the Austrian aristocracy, in the early 1900s. Czernin later tried to sell it to an American industrialist in the 1930s, but when the annexation of Austria to the Third Reich occurred, foreign sales of that nature were prohibited.

Czernin then tried to sell it to a German industrialist, but Hitler found out about the potential sale and decided he wanted to buy the painting for a museum he had previously established. Hitler, because of his office, held a prerogative to acquire goods before others and ended up purchasing the painting for what was then about $660,000.00 (US) – a price Czernin’s heirs allege was below market value. 

Czernin’s heirs are now arguing that the sale amounted to duress because his family was under threat at the time (as a result of his wife’s Jewish ancestry). Apparently, after the painting was sold Czernin spent fifteen years unsuccessfully suing to get it back. His heirs are now continuing the fight.

So far, the museum has refused to return it. It says there is no evidence of duress at the time the sale was made or that the painting was undervalued. Currently, the Austrian Commission for Provenance Research is considering the matter and is expected to make recommendations this year regarding whether the piece should be returned to the heirs.

As a postscript to yesterday's blog on the litigation involving the Toronto Humane Society, I note the decision I discussed is now available online.  

Have a great weekend!

Megan F. Connolly

Megan F. Connolly - Click here for more information on Megan Connolly.

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The Superior Court of Justice (at Toronto) ruled Tuesday that the accounting firm Deloitte & Touche be appointed to monitor the finances of the Toronto Humane Society. In his ruling (which does not yet appear to have been put online), the Honourable Mr. Justice Brown also ordered that the Ontario Society for the Prevention of Cruelty to Animals retain the control and care of the pets currently housed at the Humane Society. 

As some of you may recall, this past November the president of the Humane Society (who announced this week that he would resign) and four senior managers were arrested and charged with animal cruelty. In addition, the organization’s board of directors faces non-criminal charges. The matter is currently ongoing and no finding of guilt has been made against anyone involved.   

Apparently, in his ruling Justice Brown raised particular concern about legal fees the organization had incurred for seemingly non-essential reasons, unpaid hydro bills, incomplete financial statements, a decline in the value of its investments, and the fact that it had refused to disclose particulars regarding the liability insurance it carried for its directors and officers.

For those interested in the decision, generally court decisions are available on the website Canlii within a week or so of their release. 

In a statement, the Humane Society pledged to cooperate with the financial monitor and provide assistance in compiling the necessary financial information.   

Next up, Deloitte & Touche will provide the court with a preliminary report regarding the Humane Society’s finances and the court will hear argument about whether the organization’s board of directors should be removed and whether The Public Guardian and Trustee should conduct a formal investigation.

Have a great day!

Megan F. Connolly

Megan F. Connolly - Click here for more information on Megan Connolly.