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Back From the Dead

Posted in Estate & Trust, In the News, Pets

Earlier this month, a cat living in Tampa, Florida was hit by a car.  Unfortunately, collisions between pets and motor vehicles are not in themselves uncommon.  What is unique about this particular case is that Bart the cat, who was declared dead and buried on January 16, 2015, emerged from his grave five days later, very much still alive.

While there may not be any legal implications of an improper declaration of death when its subject is a cat, such a declaration may have a profound impact on the administration of the estate of a human being, as well as that person’s ability to resume control over his or her own affairs.

Under the Declarations of Death Act, individuals residing in Ontario can be declared dead, notwithstanding the inability to locate the body of the person who is presumed to be deceased.  Sometimes the Act (and comparable legislation in other jurisdictions) is applied in situations where, like Bart, no death has actually occurred.  Last spring, for example, a man living in Illinois was required to go to Court after being declared dead prematurely.  While he was able to establish that he was still alive with little difficulty, it was ordered that he personally pay the legal fees related to the administration of his Estate to date.

Such cautionary tales should serve to remind us that applications under the Declarations of Death Act should be used only as a last resort, when it is certain that the relevant individual is, in fact, dead.

Bart, who was badly injured, is reported to be on his way to making a full recovery.

Have a great weekend.

Nick Esterbauer

An Estate Going to the Dogs

Posted in Charities, Pets, Wills

Two charities are proceeding to an Irish High Court for the adjudication of a dispute over the charitable bequest made pursuant to a Last Will and Testament.

The Will in question, executed by Elizabeth Burke of Limerick, Ireland, provided that five hundred thousand of an Estate valued in excess of twelve million euros would be left to the Limerick branch of the Royal Society for the Prevention of Cruelty to Animals.  Problematically, no branch of the charity currently operates in Limerick.

However, two other charities which serve similar causes in the region do exist: the Limerick Society for the Prevention of Cruelty to Animals and Limerick Animal Welfare.

The matter was originally heard by the Commissioners for Charitable Donations and Bequests to determine the proper recipient of the bequest.  The Commission consists of three High Court justices and a retired Supreme Court justice.  It decided that, because it could be determined that Ms. Burke intended to benefit charities that protect animals from cruelty and that both work toward this same charitable purpose, the five hundred thousand euros should be split equally between the two charities.

Now, the Limerick Society for the Prevention of Cruelty to Animals has appealed the Commission’s decision to the High Court, claiming that it is the successor organization to the Limerick branch of the Royal Society for the Prevention of Cruelty to Animals.  The matter will return to court next month.

In such circumstances, Ontario courts will similarly apply the cy-pres doctrine to determine the “general charitable intention” behind a gift and to prevent the failure of a charitable bequest for uncertainty.

When making a bequest to a charity, it is important that the charity is properly identified, such that a Court Application concerning the interpretation of the relevant Will will not be required to give effect to the testator’s wishes.

Thank you for reading.

Nick Esterbauer

The Golden Age of Retirement

Posted in Estate & Trust, Estate Planning

By the year 2050, an estimated one third of Canadians will be 60 years of age or older.

We were raised thinking of the default retirement age as 65. Regardless of what age they retire at, Canadians have more active lives in retirement than ever before. Nowadays, with people living well into their nineties – even past 100 – retirees have many years to enjoy life without the stress of busy careers. Travelling, joining clubs and spending time with loved ones are common goals among the demographic.

Like other life events such as marriage and the birth of children, retirement is a major change in lifestyle and can act as a trigger, encouraging you to consider your estate plan. Depending on your situation, retirement may re-enforce or raise questions about any plans you had previously put in place. Either way, evaluating whether you have a plan in place, and if so, the plan itself, at the time of retirement can be ideal.

People at retirement age are often in the position at which they have a good grasp of their financial situation, while still having the requisite capacity to make important estate planning decisions. Putting a plan in place at this point will likely not be as contentious as later in life, when capacity could come into question and raise contentious issues after death.

One thing to keep in mind is that the baby boomer population in Canada is more indebted than ever before. The population in or approaching retirement is expected to have mortgage and other debt in retirement. They can end up outliving their money, which in turn may put a strain on family members. Doing what you can to avoid this situation includes engaging in proper financial planning at an early stage and employing the help of professionals to help you do so. Just knowing plans are in place can help aid a smooth transition into the ease of retirement.

Thank-you for reading,

Suzana Popovic-Montag

New Power of Attorney Legislation Introduced in Saskatchewan

Posted in Elder Law, Power of Attorney

At the beginning of the month, Saskatchewan introduced new rules with respect to Powers of Attorney to help protect aging individuals, specifically those with diminished mental capacity.

The amendments introduced within the Powers of Attorney Amendment Act, 2014, are most notably as follows:

  • An attorney for property must now provide a final accounting when he or she ceases acting as attorney;
  • The enforcement of restrictions with respect to the quantum of annual compensation claimed by an attorney for the management of the donor’s affairs;
  • Attorneys for property are now permitted to make gifts on the grantor’s behalf, if the Power of Attorney for Property permits the gifting explicitly or otherwise if the attorney believes that the grantor would have made the gift him/herself had the grantor been capable of doing so; and
  • Limitations with respect to the total value of gifts that may be made by an attorney on the donor’s behalf in one year.

The consultation process which preceded the new Act included discussions with over one hundred groups and individuals who represent people who may have diminished mental capacity.

In the context of an aging population, it is increasingly important that sufficient safeguards are in place to protect the interests of individuals who may be vulnerable to financial abuse by those who are appointed to assist them with their personal finances.  It will be interesting to see if, in coming years, additional measures to protect incapable Canadians are enforced throughout other provinces as well.

Thank you for reading.

Nick Esterbauer

To Litigate or To Mediate?

Posted in Litigation, Mediators

The loss of a loved one coupled with an actual or perceived impropriety in the handling of his/her estate often results in contentious estate litigation. And, while litigation may ultimately resolve the dispute, it is not always the best means of dealing with such emotionally charged disagreements.

Mediation is a highly effective alternative to litigation. In fact, Rule 75.1 of the Rules of Civil Procedure requires that parties to any estate dispute commenced in Toronto, Ottawa and Windsor, submit to mandatory mediation prior to attending court for a trial on the matter.

There are many benefits of such mediation at the early stages of litigation:

Mediation is faster and far cheaper than going to trial:  Litigating an estate dispute to trial can be an expensive undertaking. If a dispute can be settled early through mediation the overall costs can be significantly reduced.

Mediation is confidential:  Court is a public forum and sealing orders are rarely granted for estate litigation matters. Mediation occurs outside the court and can keep family matters private.  Further, all discussions at mediation are “without prejudice”, therefore, if no agreement is reached those mediation discussions cannot be used in litigation proceedings by any party without the permission of the others.

There is greater control over the process with mediation: Unlike at trial where you are assigned a judge, you can choose a mediator with skills and experience directly relevant to your estate dispute. You can also guide the discussions that take place at mediation to ensure your concerns are being addressed.

Mediation is less intimidating:  Rather than an adversarial court setting, mediation takes place at a neutral location; it is informal and is designed to promote open communication and understanding. The mediator will not judge the merits of each party’s interests, nor render any decision. Rather, he/she will assist the parties in considering the strengths and weaknesses of their respective cases and work with them to discover a mutually acceptable outcome.

Mediation has higher rates of compliance:  Mediation is a collaborative process. Unlike court proceedings, there is no clear winner or loser. If the parties are able to negotiate a resolution of the dispute, a written mediation settlement agreement is signed by all the parties, at which point the agreement will become an enforceable contract. As every party is actively involved in the process, each is more likely to take ownership in the outcome and abide by the ultimate agreement.

There is a broader scope of remedies available with mediation: At mediation, unlike at court, remedies can be tailored to each party’s needs. Options can be presented back and forth until each party is satisfied with the terms of the agreement.

The Attorney General’s office has put together a fact sheet, which provides some additional information on mediation practice and procedure, which can be accessed here.

Given the many benefits mediation has to offer it is certainly worth considering as an alternative to litigation in the early stages of your estate dispute.

Thank you for reading,

Ian Hull

Hull on Estates #403 – Costs in litigation

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

Listen to Hull on Estates #403 – Costs in litigation

Today on Hull on Estates, Noah Weisberg and Paul Trudelle discuss the recent Court of Appeal decision of Heston-Cook v. Schneider and the effects this has on cost awards in estate matters, including blended awards. Noah Weisberg and Paul Trudelle also discuss the Court of Appeal decision of Sawdon Estate v. Sawdon, which applies blended awards.

If you have any questions, please email us at or leave a comment on our blog page.

Click here for more information on Noah Weisberg.

Click here for more information on Paul Trudelle.

Blended Costs

Posted in Archived BLOG POSTS - Hull on Estates, Estate & Trust, Estate Planning, Trustees

“Blended costs” were endorsed last year by the Court of Appeal for Ontario in Sawdon Estate v. Watch Tower Bible and Tract Society of Canada. The policy underling such costs orders is that there are situations in which a successful trustee will be entitled to costs where he or she is successful in litigation, but may still be out of pocket. In such cases, the Estate should make up the shortfall as because the money was spent on due administration of the Estate.

In the recent case of Heston-Cook v. Schneider, 2015 ONCA 10 (Ont. C.A.), two sisters were beneficiaries of their mother’s estate. The mother’s house went to one daughter (Estate Trustee, respondent on the appeal) and $100,000 out of residue went to the other sister (appellant).

After the transfer of the house and the acceptance of the specific legacy, the appellant brought claims against the estate trustee for breach of fiduciary duty – basically a POA accounting but with the nice twist that she wished disgorgement of money that should have been spent on the mother`s care while alive.

The respondent brought a Rule 21 motion to strike the Claim. The Motion Judge adjourned the Rule 21 Motion in order to allow the Appellant to apply to remove and replace the respondent as estate trustee so she could press the breach of fiduciary duty claim as she otherwise lacked standing.

Wilton-Siegel J. sat as the Motion Judge on the removal application and dismissed it. He awarded full indemnity costs of $12,000.

In the Court of Appeal, the appeal was dismissed. There was no error in principle by Motions Judge in respect of the substantive decision. The costs award, however, was varied. The Endorsement provided at para 14:

A blended award, in which costs on a partial indemnity scale are awarded against the unsuccessful party and the remainder of the costs are paid from the estate would appear to strike the appropriate balance. See e.g. Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101 (CanLII) at para. 96. In our opinion the motion judge erred in principle in ordering the appellant to fully indemnify the respondent.

This is a nice case that deals with the common occurrence of the need for proper standing to press a claim on behalf of the estate. A beneficiary ill-advisedly brought the claim in her own name. The Motions Judge on an application to remove and replace the Estate Trustee obviously thought the underlying claim was weak and sanctioned the claimant through an order for full-indemnity costs. The Court of Appeal agreed that the successful Estate Trustee should be fully indemnified, but the full indemnification was to be borne by the Estate in part ($4500) and in part by the unsuccessful applicant ($7500). In other words, the unsuccessful claimant ought not to have been punished (and hence partial indemnity costs – in effect – were ordered) but the estate trustee ought not to suffer (and hence was entitled to a full indemnity).

A nice short case that continues a principled approach to costs.

David Freedman

A Different Breed of Estate Planning

Posted in Pets

A recent article in the Daily Mail tells the story of Bella Mia Bolasny.  Bella Mia lives a life of luxury.  She travels around the world, eating at five star restaurants.  Her specially designed walk-in closets hold more than a thousand outfits, not to mention jewellery.  She was given an allowance of $100,000 a year to put towards hair and fashion.  In her spare time, Bella Mia gives back to the community by visiting the Ronald McDonald House each week, as well as visiting nursing home residents and spreading cheer.

Bella Mia’s mother, Rose Ann Bolasny, recently changed her estate planning to provide that Bella Mia will inherit a newly purchased home in Florida.  She is also a beneficiary of a significant trust.

Bella Mia is three years old.  She is a dog.

Bella Mia’s mother is not the only one making arrangements for the care of her pet for when she is no longer around.  Pet care can be very costly.  Food, grooming, and veterinary bills can very quickly add up to tens of thousands of dollars over the course of a pet’s lifetime.  Asking someone to take on a pet after your death can be asking that person to accept quite a burden.  In order to ease this burden, it may make sense to leave some money for the care and maintenance of the pet.

Pets are, at least legally, not considered to be human and therefore they cannot own property in their own right.  For this reason, money should not be left directly to a pet.  Further, depending on the jurisdiction, leaving money to a person for the purpose of taking care of a pet may be invalid.  Under Ontario law, it is possible that this would be treated as a purpose trust, which are, in most cases, invalid if the purpose is not a charitable one.  The care of a Maltese would be unlikely to meet the definition of a charitable purpose under Ontario trust law, but It is difficult to find a case that’s on all fours.

For Ontario pet owners, an option might be to simply leave a gift to the person you intend to care for the pet, paired with a wish that the money be used for that purpose.  The wish would likely be unenforceable, however.  A testator setting up this kind of arrangement should be careful to find someone trustworthy who loves your pet as much as you do.

Josh Eisen

Ultra High Net Worth Individuals Plan for the Future

Posted in Estate Planning, In the News

Wealth-X and NFP’s Family Wealth Transfers Report looked at when the world’s ultra high net worth individuals are expected to pass along their wealth in upcoming years and how much would be transferred. Ultra high net worth individuals are defined as those with assets worth at least US$30 million. The Report settles on US$16 trillion as representing what will be passed to the next generation in the next 30 years.

While such an extraordinary number may come as a shock, it represents a very successful, entrepreneurial generation of people. Many baby boomers were “self-made” and their hard work and dedication paid off. Whether such talent, skill and worth ethic is present in the descendants of successful baby boomers will become apparent in upcoming years when fortunes are transferred into fresh hands.

As the report highlights, the manner of transferring this wealth will likely come into play in the next few decades. Succession planning amongst the world’s wealthiest can be complex and challenging, even to professionals.

Wealthy individuals have many options at their disposal to assist in developing the best estate plan for their situation. Trusts, for example, can be used in a variety of ways to assist in reducing taxes, sheltering assets from creditors and placing restrictions on when and how beneficiaries receive their inheritance.

Presumably, a portion of the world’s ultra high net worth individuals made their fortunes from business ventures and wish to pass along business interests. Estate planning options for business owners may include drafting multiple wills. Having a primary and secondary will reduces the amount of Estate Administration Tax payable (in Ontario), while allowing the business owner to outline who takes over the business and how the transition is to take place.

For successful business owners, developing a strategy for the running of a business upon incapacity can also come into play. A Continuing Power of Attorney for Property allows a business owner to choose who is in charge in their place in the event they become incapacitated.

Other wealth transfer planning issues likely to come into play, according to the report, include dealing with differing legislative schemes internationally and proper planning for charitable giving. The report highlights the importance of early planning and encourages wealthy individuals to engage the services of advisors, lawyers and estate planners in this endeavour.

Thank you for reading,

Suzana Popovic-Montag

File Your Estate Information Return On Time

Posted in Executors and Trustees

Under the new regulation to the Estate Administration Tax Act, 1998 (the “EATA“), effective January 1, 2015, estate trustees applying for certificates of appointment will need to file a new form, the Estate Information Return, with the Ministry of Finance.  The Ministry has provided some information on the new rules regarding estate administration tax here.

Under s. 3(1) of the new regulation, an Estate Information Return must be filed no later than 90 days after an estate certificate is issued to the estate representative.  S. 2 of the regulation provides that Estate Information Return is deemed to have been given to the Minister on the day on which it is received by the Minister.  For this reason, it is advisable to file an Estate Information Return in a way that provides confirmation of the time of receipt (e.g. by fax).

An Estate Information Return will not be required where the application is for a certificate of appointment of succeeding estate trustee with a will, a certificate of appointment of succeeding estate trustee without a will, a certificate of appointment of succeeding estate trustee with a will limited to the assets referred to in the will, or a certificate of appointment of estate trustee during litigation.

An Estate Information Return can be filed by mail to:

Ministry of Finance, Advisory and Compliance Branch
33 King St. West
P.O. Box 625
Oshawa, ON L1H 8H9

An Estate Information Return can also be filed by fax to 1-866-888-3850.  It can also be filed in person or by courier to the Ministry of Finance, 33 King St. West, Oshawa, ON, L1H 8H9.  Some ServiceOntario locations may accept filing in person, as well.

The consequences of failing to file or of filing a false or misleading Estate Information Return can be quite severe.  Under s. 5.1(1) of the EATA, it is an offence to fail to comply with s. 4.1, which requires the filing of an Estate Information Return.  Under s. 5.1(2) of the EATA, it is an offence to make or assist in making a statement in filing an Estate Information Return that, at the time and in light of the circumstances under which it was made, is false or misleading in respect of any fact, or that omits to state any fact that the omission of which makes the statement false or misleading.  An offence can be punishable by a fine of at least $1,000, imprisonment for a term of up to two years, or both.

There is a defense available under s. 5.1(3).  “No person is guilty of an offence under subsection (2) if the person did not know that the statement or omission was false or misleading and in the exercise of reasonable diligence could not have known that the statement or omission was false or misleading.”

It is important to take the time to become familiar with the details of the new rules and forms.  There are still a lot of open questions with respect to how the Ministry’s new auditing and enforcement powers will be used to collect estate administration tax, but it looks like the new Estate Information Return is here to stay.

Josh Eisen