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Contestation of Claims Against an Estate

Posted in Litigation

Where an estate trustee becomes aware of a potential claim against the estate, but no claim has yet been commenced, it can be difficult to decide how to proceed.  Sections 44 and 45 of the Estates Act contain a seldom used procedure that may be of some assistance to estate trustees in this situation.

Under these sections, where someone makes a claim or demand against an estate, or where the estate trustee has notice of a claim or demand, the estate trustee can serve a Notice of Contestation on the claimant.  The effect of this is to accelerate the claimant’s limitation period.  The Act provides that, upon being served with a Notice of Contestation, the claimant has 30 days to apply to the Superior Court for an order allowing the claim, after which the claimant is deemed to have abandoned the claim and it is forever barred.

The Court has jurisdiction to extend the 30 day window by three months.

While potentially useful, there are some important limits on the use of this procedure.  A 2008 decision of the Ontario Court of Appeal, Omicuolo Estate v. Pasco, explored the meaning of “claim or demand” under these sections.  David Smith has previously blogged about this case as well.  Upon a thorough review of relevant case law, the Court held that this provision refers to a claim or demand against the estate by a creditor for payment of a money demand.  The Court held that a claim for dependant’s support under the Succession Law Reform Act was in the nature of declaratory relief, and therefore fell outside of the meaning of “claim or demand”, and thus sections 44 and 45 could not be used to accelerate a support claim.

In its review of the case law and relevant texts, a number of other types of claims were discussed.  A claim to enforce a gift mortis causa (or deathbed gift) was held to fall outside the scope of these sections.  These sections have been found not to apply to a claim for a judicial sale or foreclosure in the context of a mortgage.  They also cannot be used to dispute a beneficiary’s claim to a legacy.

Where, however, there is a potential claim against an estate that does fall within these sections, they can be a useful way of moving things along.

Josh Eisen

Trustees, Estate Trustees, and Adminstratrices – A Disambiguation

Posted in Executors and Trustees

Just what to call the person administering an estate in Ontario can be somewhat confusing.  A number of terms have been used over the years.  The same person can be referred to in a number of different ways by different pieces of legislation.  In some cases, there are real differences in the legal effect of these different titles.  I thought it worth taking a brief look at the legal distinctions between the various names that are given to estate trustees.

An executor is a person nominated by the testator in a will to carry out its terms.  There is a feminine form, “executrix” (pl. “executrices”), however the term “executor” is commonly applied to either gender.  An executor’s authority comes from the will itself, and he or she generally has authority to administer the estate with or without an appointment from the court.

If there is no will, there can be no executor.  Upon application, a court will appoint an administrator to handle the affairs of the intestate estate.  There is also a feminine form, “administratrix” (pl. “administratrices”), but again, “administrator” tends to be applied in a gender-neutral way.  An administrator’s authority to act is derived solely from his or her appointment by a court.

If there is a will but no executor, (e.g. where the will does not name an executor or where the named executor is unable or unwilling to act), the court can appoint an administrator to carry out the terms the will.  This person is called an “administrator with the will annexed”.  Like other administrators, an administrator with the will annexed derives authority from court appointment.

One key difference between executors and administrators is that there is a “chain of executorship”.  If an executor, Y, obtains a certificate of appointment for estate X and later dies, the executor of Y’s estate becomes the executor of X’s estate as well.  This chain can continue indefinitely.  However, an administrator’s authority to administer an estate is not heritable in this way and his or her grant of authority dies with the administrator.

Some of our legislation uses the term “personal representative”.  The Trustee Act, for example, defines a “personal representative” as an executor, an administrator, or an administrator with the will annexed.  The Rules of Civil Procedure use the term “estate trustee”, also defined as meaning an executor, administrator, or administrator with the will annexed.  Further, an executor or an administrator with the will annexed can be called “estate trustee with a will”, and administrator where there is no will can be called “estate trustee without a will”.

To make things trickier, many wills create trusts.  Usually the executor/estate trustee with a will/personal representative is also named as the trustee of any trusts created under the will (although a will can appoint different trustees).  When this happens, the estate trustee is also a trustee.  While trustees and estate trustees are generally treated similarly under the law, there are some significant differences  For example, section 2 of the Trustee Act provides a mechanism for a trustee to retire if there are three or more.  The section states that it does not apply to executors or administrators, however, who can only be removed by a court.  Some cases have treated the two offices separately as well, holding that a person can resign or be removed from one office while retaining the other.  An estate trustee can be removed as trustee but still be estate trustee.

I hope that this helps to disambiguate some of the many names that are given to a person who is in the role of administering the assets of a deceased person.  Although many of these terms overlap, it is sometimes important to appreciate the distinctions where they exist.

Josh Eisen

The Two Types of Domicile

Posted in Estate Planning, Litigation

Through the use of modern technology and communication, the world is shrinking every day. We are seeing an influx of foreign residents living and owning property situated in Canada and the reverse is also common.

For the purposes of estate planning and administration, the domicile of Canadians living or owning assets in other jurisdictions is an important consideration. A deceased’s domicile is important because it is the first step towards deciding how to administer the estate.

Generally, one’s domicile of origin is where they are born, while domicile of choice is when someone takes up residence in a new place, intending to reside there permanently. Domicile of choice can be abandoned.

Re Foote Estate is a case out of Alberta, upheld on appeal, providing direction to courts dealing with domicile in uncertain cases. Although Mr. Foote (the deceased in that case) was born in Alberta and resided there for the first half of his life, he also purchased a home in British Columbia at one point and eventually built and resided at a residence on Norfolk Island, a remote location (and former penal colony) in the South Pacific.

The issue in the case was which jurisdiction’s law should govern the administration of Mr. Foote’s estate. The court was tasked with determining whether Mr. Foote had embraced a new domicile by choice (Norfolk Island), and, in turn, gave up his domicile of origin (Alberta), as individuals are only permitted one domicile at a time. If so, the court had to then assess whether Mr. Foote abandoned his Norfolk Island domicile when he returned to Alberta for medical treatment, where he eventually passed away.

The test for changing one’s domicile requires that a person acquires residence in a jurisdiction with the intention of settling there permanently and indefinitely. The Alberta Court of Appeal upheld the Trial Judge’s finding that Mr. Foote was domiciled in Norfolk Island at the time of his death.

For further reading on the topics of domicile and international estate planning, read our blogs herehere and here and listen to our podcast on the subject here.

Thank you for reading,

Suzana Popovic-Montag

More on Rebutting The Presumption of Resulting Trust

Posted in Estate & Trust, Estate Planning, Executors and Trustees, Litigation, TOPICS, Trustees, Wills

In Mroz v. Mroz, 2015 ONCA 171 (Ont. C.A.), the Court of Appeal returned to the issue of rebutting the presumption of resulting trust that arises upon a gratuitous transfer from the owner of the property to another or into joint tenancy with another. Here, the testatrix transferred her home to one child in joint tenancy and made a Will at the same time that provided for gifts and referred to the home. In one sense the issues were ones of interpretation of the Will (essentially were the gifts charges against the home) and in another were ones of beneficial ownership (whether the inter vivos transfer of the home was a gift). In writing for the Court, Justice Gillese made three points:

First, the transfer to the daughter inter vivos firmly engaged the presumption of resulting trust as set out in the seminal case of Pecore v. Pecore, [2007] 1 SCR 795 (S.C.C.).

Second, the onus was on the daughter who held title to the which passed to her by survivorship on her mother’s death to rebut the presumption. As set out in Sawdon Estate v. Sawdon, 2014 ONCA 101 (Ont. C.A.) the onus is discharged by rebutting the presumption on a balance of probabilities with respect to the transferor’s actual intention at the time of the gratuitous transfer.

Third, the presumption cannot be rebutted while at the same time allowing the asset to be dealt with as part of the Estate. Here the trial judge had erred in both finding that the transferor wished “to gift… [the daughter] full title to the house upon Kay’s death” and at the same time to pay out bequests set our in the Will out of proceeds of the sale of the same house. Justice Gillese held that “once the trial judge found that the sale of the Property after… [the mother’s] death was to be the source of funds for bequests under the 2004 Will, she could not find that the presumption had been rebutted.” In other words, the fact that the Will provided for gifts out of or against the house, it was clear that the presumption was correct rather than rebutted – the house was part of the Estate, not the sole property of the daughter.

It is clear that evidence and common sense respecting the intention of the transferor remains key to resolving these sorts of disputes. In Mroz v. Mroz, 2015 ONCA 171 (Ont. C.A.), it would make no sense that the read the Will as placing an obligation on the Estate Trustee (pay out bequests from the sale of the house) and at the same time put that asset beyond his or her control. The presumption of resulting trust is just that; a presumption of probable intent. Where that presumption is said to be wrong in the circumstances, it must be proved to be so.

David Freedman

Alzheimer’s Disease: Can Ultrasound Technology Restore Memory?

Posted in Capacity, General Interest, In the News

I recently came across an article published in the Globe and Mail titled, Ultrasound shows new promise as Alzheimer’s treatment.

The article describes how scientist are using ultrasound technology to break apart the neurotoxic amyloid plaques that typically result in memory loss and cognitive decline in those suffering from Alzheimer’s disease.

While still in the early clinical trial stages, scientists have found that the use of the non-invasive focused beams of an ultrasound almost completely cleared the plaques in 75 per cent of the animals, without any apparent damage to brain tissue. As such, this promising new discovery could be used to treat Alzheimer’s disease and restore memory. More detailed information about the research can be found here.

Research initiatives such the one outlined above are particularly important given the increasing prevalence of dementia in today’s society. A recent fact sheet published by the World Health Organization (the “WHO”) indicates that as of 2015, 47.5 million people are living with dementia worldwide.

Unfortunately, as a result of increased life expectancies and an aging boomer population, the number of dementia cases is expected to increase exponentially in the years to come. The WHO estimates there will be approximately 75.6 million people suffering from dementia by 2030, and 135.5 million by 2050.

Accordingly, dementia is quickly becoming a global health concern. Last week, the WHO hosted its first Ministerial Conference on Global Action Against Dementia in Geneva. The conference drew researchers, health officials and ministers from more than 80 countries around the world.

As such, it is likely that we will see an increase in government spending and a rise in research initiatives in this area, such as the one outlined above, in the months and years to come.

Thank you for reading,

Ian Hull

Yahoo Japan & End of Life Digital Planning

Posted in Beneficiary Designations, Estate Planning, General Interest, In the News

In today’s society, not only are individuals amassing vast digital assets, but they are also increasingly present on social media.  More than ever, when planning your estate it is important to consider what happens to digital assets and your social presence when you pass away.  The importance of these questions have been addressed prior on Hull & Hull LLP’s Toronto Estate Law Blog, here, here, and here.

As succession law in Ontario does not provide a complete solution, individual corporations are beginning to take matters into their own hands.  Yahoo Japan is one such example.

Yahoo has created Yahoo Ending, in order to address end of life preparations known to the Japanese as ‘Shukatsu’.

According to an article in the Washington Post, this service allows the deactivation of a user’s account after their death, in addition to offering the deletion of documents, photos, and videos stored on the site, as well as automatically cancelling charges linked to Yahoo’s digital wallet.  Furthermore, a virtual memorial space can be created along with an e-mail prepared by the deceased to be sent upon their death to preregistered recipients.

Interestingly, Yahoo Ending can also assist in estimating the cost of a funeral, locating a cemetery, and even the preparation of a Will.

Users of Yahoo Ending are charged a monthly fee.

Individuals must consider the size of their digital footprint and the many accounts they may currently have open.  It is important to meet with professionals and estate planners to ensure your digital assets and social media accounts are properly considered, and planned for, in your Estate.

Noah Weisberg

The Three Certainties: Certainty of Objects

Posted in Beneficiary Designations, Litigation, Trustees, Wills

In order for a trust to be valid, three certainties must be met: intention; subject matter; and objects.  Often referred to as the ‘three certainties’ principle, stemming from the 1840’s English decision in Knight v. Knight, it is an ever popular blog topic on Hull & Hull’s Toronto Estate Law Blog.  A recent decision out of the Ontario Superior Court of Justice revisits the importance of the certainty of objects principle notwithstanding the ‘worthiness’ of such a gift.

In Stoor v. Stoor Estate, the Applicant was the named beneficiary of a trust, which included a gift over provision, in his late mother’s Will.  As the only child, the Applicant sought relief, in part, that the gift over provision found in the trust failed for uncertainty of objects.

Certainty of objects requires one to say with certainty whether any given individual is or is not a member of the class: Baden’s Deed Trust (No. 2) (Re).

Part XI of the Will directed the estate trustee to distribute the residue of the Applicant’s Trust,

…following the payment of any outstanding debts, charges, taxes and expenses of the said Paul Stoor Trust, all the rest and residue of the said Paul Stoor Trust shall be paid to my Trustees for distribution to any and all worthy individuals and or causes who shall be alive or in existence at this time, as my Trustees may, from time to time, in their absolute and unfettered discretion consider advisable“.

In determining whether the gift over fails for certainty of objects, Justice Himel considered the SCC decision in Brewer v. McCauley which held that it is the testator, through their Will, that must dispose of their property.  Accordingly, this cannot be delegated to the estate trustee, unless the gift is for charitable purposes, at which time the selection of the charities may be delegated.

A helpful summary on charitable trusts and the exceptions conferred to them, can be found at this Hull & Hull blog.

Notwithstanding the fact that the testator in Stoor Estate sought to benefit worthy individuals/ causes, Justice Himel provided case law and authority that ‘worthy causes’ or ‘worthy objects’ are not trusts for charitable purposes.

Therefore, it was held that the gift over to “…any and all worthy individuals and or causes” is void for certainty of objects.

Noah Weisberg

Inheritance Expectations

Posted in Estate & Trust, Litigation, Wills

Last week I blogged about the anticipated transfer of wealth to the Millennial generation.  While the Millennials are expected to inherit in the next few decades, the Baby Boomers have already inherited and continue to inherit their parent’s fortunes. However, some may be quite disappointed when the waiting comes to an end.

A Maclean’s article from January discusses the expectation of inheritance popular among middle-aged Canadians. It highlights the BC case of Bull Estate v. Bull, arising from David Bull challenging his mother’s uneven inheritance amongst her children – David and Susan. After David inherited significantly less than his sister from both his father and then mother’s estates, he opposed the verification of his mother’s 2010 Will in its solemn form.

In his case, David alleged that his mother had progressive dementia in the years leading up to the execution of her Will. The trial judge found against David, that the Will was, in fact, valid and it was so proven.

One piece of evidence the trial judge referred to in his decision was a Statement of Wishes left by Mrs. Bull, which was to be opened and read by David only if he contested the Will. It explained the reasons behind the unequal testamentary bequests, highlighting a laundry list of poor behaviour by David from the past.

While the circumstances of this case, in which a testator favours one child over the other(s), is not unusual, it serves as a reminder of testamentary freedom. Professional witnesses testified to Mrs. Bull’s sharp mind and clear expression of her wishes. While testators must be of sound mind and, at times, must adhere to moral obligations upon death, they also have the freedom to dispose of their estate how they please.

Although David is said to be appealing the case, the decision of Justice Gary Weatherill stands in the meantime.

Also of note is the realization that one’s inheritance may not be as expected. The Maclean’s article further noted that a large number of Baby Boomers expect some sort of inheritance and that many overestimate how much they will inherit. In a time when Baby Boomers are carrying debt, this may be an unwelcome surprise.

Thank you for reading,

Suzana Popovic-Montag

Hull on Estates #410 – Volunteering with Junior Achievement of Canada

Posted in Hull on Estates, Hull on Estates, PODCASTS / AUDIO, PODCASTS / TRANSCRIBED, Show Notes

Listen to Hull on Estates #410 – Volunteering with Junior Achievement of Canada

This week on Hull on Estates, Paul Trudelle and Nick Esterbauer discuss their experience volunteering with Junior Achievement of Canada and the importance of teaching youth about financial planning.

Should you have any questions, please email us at webmaster@hullandhull.com, or leave a comment on our blog page.

Click here for more information on Paul Trudelle.

Click here for more information on Nick Esterbauer.

Ownership of New Orleans Sports Franchise in Dispute

Posted in Beneficiary Designations, Capacity, Estate Planning, In the News

In a devoted sports city such as New Orleans, it is not surprising to learn that both the NFL’s New Orleans Saints, and the NBA’s New Orleans Pelicans, are owned by one person, Tom Benson.  Recently though, New Orleans sports fan are turning their gaze away from the stadium, and instead to the Court where a dispute has ensued over Benson’s mental capacity and the consequence of this on his estate plan, estimated to be worth approximately $1.87 billion.

A recent article in the New York Times, highlights Benson’s recent announcement that when he passes away, ownership of the Saints and Pelicans are to be passed onto his wife of ten years, as opposed to his daughter, Renee Benson, and grandchildren.  As a result of this, a claim was commenced to determine whether Benson is mentally capable and whether Benson’s property should be managed on his behalf.  It is alleged that not only is Benson mentally unfit but also is being manipulated by his wife.

In response to allegations of incapacity, Benson’s lawyers argue that “…his decisions to give the teams to his wife, and not his daughter and her children, was not a result of pique of anger, but years of disappointment”.

Any finding with respect to Benson’s capacity will surely impact his estate plan and ability to designate a beneficiary.

As Hull & Hull blog readers know, this is not the first sports franchise where ownership is put into question because of capacity – recent blog’s found here and here tell the tale of Donald Sterling and the Los Angeles Clippers.

The above dispute provides a helpful reminder to estate solicitors and planners that when meeting with clients and obtaining instructions, it is important to take detailed notes and address any issues or concerns with respect to mental capacity.  These notes can prove to be extremely helpful in any type of estate litigation.

Noah Weisberg

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