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A Recent Review of Conflict of Laws in the Estates Context

Posted in Estate & Trust, Litigation, Wills

A recent Ontario Supreme Court of Justice – Ontario Divisional Court decision, Park v. Myong, 2015 ONSC 2287, presents an interesting review and discussion of law of jurisdiction and conflict of laws in the Estates law context. In this motion for leave to appeal, the applicant, Jung Mi Park was seeking to appeal an order of Justice Penny staying her application pending the determination of a related proceeding in the state of California. The facts of this case are set out below.

The deceased, Jung Myong, died on April 30, 2013, while living in California. She had four adult children, all living in the United States, with whom she had not had contact for twenty years. The deceased’s Will was prepared and executed in California. She held significant assets, including real estate, both in California and Ontario. The applicant, Ms. Park, was the named executor pursuant to the deceased’s Will and lives in Ontario with her two children. The deceased’s Will makes two specific bequests to Ms. Park’s children; there are no other bequests and no residue clause.

During October of 2013, Ms. Park and the children obtained probate of the deceased’s Will in California, appointing the son of the deceased, Charles Myong, as the administrator of the estate. During January 2014, Mr. Myong filed a petition in California to determine entitlement to estate distribution, asserting that due to the absence of a residue clause, the residue passed on intestacy to the deceased’s children. Ms. Park filed a statement of interest in response to the petition, which (i) opposed the relief sought by Mr. Myong, (ii) asserted that the absence of a residue clause was an error of the drafting solicitor, and (iii) sought rectification of the Will so as to leave the residue to her. Ms. Park’s position is supported by the drafting solicitor who deposed that she had been instructed by the deceased to name Ms. Park as the residuary beneficiary but that the residue clause was left out of the Will due to a clerical error.

In March of 2014, Ms. Park commenced an application in Ontario seeking (i) a declaration that Mr. Myong, as administrator, holds the assets present in Ontario in resulting trust for her, and (ii) an order that the Will be rectified by naming her as the sole beneficiary. Mr. Myong responded by filing a cross-application seeking a stay of the Ontario application until his petition in California is determined or finally settled. Ms. Park then commenced proceedings in California in September 2014 against Mr. Myong in his capacity as administrator, claiming that the estate assets were all held for her either by way of contract or resulting trust. Finally, on October 23, 2014, Justice Penny stayed the Ontario application pending the decision or settlement of the California petition.

In deciding against granting the applicant leave to appeal Justice Penny’s order, Justice Lederer reviewed the test for when such leave should be granted:

The test on a motion for leave to appeal is well-known. It is found in r. 62.02(4) of the Rules of Civil Procedure. One of two tests, each of which includes two requirements, must be satisfied. Leave to appeal will be granted if there is a conflicting decision and, in the opinion of the judge hearing the motion, it is desirable that leave be granted. In the alternative, leave to appeal will be granted where there is good reason to doubt the correctness of the order and that the proposed appeal involves matters of such importance that, in the opinion of the judge, leave to appeal should be granted. (para 18)

In the case at hand, Justice Lederer found that there were two issues to be determined in the stayed Ontario application: (i) the intentions of the testator and identification of the beneficiaries, and (ii) ownership of the real estate located in Ontario. With respect to having these issues determined, he found that Justice Penny’s order did not prejudice Ms. Park since the first issue is captured by Ms. Park’s request for rectification in California, which will determine the residuary beneficiaries, and the second issue can be recommenced in Ontario if the first issue is not found in Ms. Park’s favour.

For the determination of the first issue, Justice Penny concluded that convenience and cost favoured California as the convenient forum since the Will was drafted in California, the drafting solicitor (a critical witness) resides in California, the residuary beneficiaries on intestacy reside in California and the Will was probated in California. Justice Lederer agreed with this determination. Furthermore, since the outcome of the first issue determines whether it is even necessary for Ms. Park to pursue the second issue regarding ownership of real estate in Ontario, Justice Lederer agreed with Justice Penny that the rectification issue is the key issue in this litigation and should be determined first. Consequently, Justice Lederer found that Justice Penny’s decision to stay the application pending the outcome of the rectification issue in California was the correct decision in the circumstances.

For a more indepth review of Justice Lederer’s decision, including his consideration of Ms. Park’s counsel’s argument that the issues involved the question of title to real estate in Canada, and should be dealt with in the jurisdiction where the land is located, you can review his full decision here. Otherwise, congratulations for getting through a blog posting on question of jurisdiction and conflict of laws on a Friday!

Thank you for reading.

Andrea Buncic

Cottage Value: Date of Death versus Date of Distribution

Posted in Executors and Trustees

As the cottage season fast approaches, many Estate practitioners can’t help but reflect on what has proved to be one of the most contentious assets of any Estate. For this reason, it is beneficial to review some of the Ontario case law that can apply to matters involving cottage properties. In one such case, the Fray v. Evans, 2013 ONCA 776 decision, the Court of Appeal discusses the correct date for valuing the Appellant beneficiary’s interest in the Estate residue, including real property.

In this case, the deceased, Gail Evans, passed away intestate in 1992, and was survived by her second husband (the Respondent) and her two sons from her first marriage, Richard (the Appellant) and Donald. As Gail died intestate, the Respondent husband was entitled to a preferential share ($75,000.00 as stipulated by regulation in 1992), and the Respondent along with the Appellant and Donald were each entitled to 1/3 of the residue. At the time of Gail’s death, the residence was valued at approximately $200,000.00, and the largest asset in Gail’s Estate was a residence owned in common with the Respondent, Gail owning a 90% interest and the Respondent owning the remaining 10%.

After only receiving approximately $27,000.00 as of 2011, the Appellant retained counsel to request that the Respondent finalize the administration of Gail’s Estate (Donald had received approximately $22,000.00 by this time). The Respondent replied that the entitlements of the Appellant and Donald had been fully satisfied; and, by calculating the value of the Appellant’s entitlement in the Estate and residence based on their value at Gail’s date of death, the application judge agreed.

On appeal, the Appellant submitted that the Respondent had failed to liquidate the Estate assets and make a distribution of the residue to the beneficiaries. He further argued that the application judge erred in calculating the value of the sons’ entitlement as at the date of death rather than at the date of distribution. Lastly, he submitted that the residence had vested automatically in the three beneficiaries three years after Gail’s death pursuant to s. 9 of the Estates Administration Act, and that as a result, the appreciation in the residence ($650,000.00 as of the date of the application) should accrue to the benefit of all residual beneficiaries and not just the Respondent.

In its decision, the Court of Appeal held that, while the valuation date for the purposes of calculating entitlement to a preferential share is the date of death, such date does not determine the precise value of the Estate residue; as this may only be ascertained on collection and conversion of the Estate assets, and distribution of the beneficiaries’ respective shares. As such, the Court of Appeal held that the value of the sons’ entitlement to the residue and residence crystallized at the date of distribution rather than date of death and, as a result, had accrued the same increase in value as the respondent’s.

While the residence in this case was a house, the same principles would apply in determining a beneficiary’s interest in a family cottage. As such, these principles are important to consider when negotiating settlements or administering estates where a cottage is involved, and also where estates are administered long after a deceased’s date of death.

Thank you for reading.

Andrea Buncic

Charitable Giving and the “Warm Glow”

Posted in Charities, In the News, TOPICS, Wills

It’s hard to ignore the news of slashed oil prices in Canada. Low oil prices have meant a break for drivers across the country, yet they have also resulted in negative economic impacts, particularly in Alberta. Now, that Province is attempting to make up for the shortfall by revisiting tax breaks.

News outlets report that the Alberta government has announced that, by 2016, the tax credit rate will drop from 21% to 12.75% for charitable donations exceeding $200. The Alberta government has rationalized that tax credits are not generally a main motivation for charitable donors. However, according to a Calgary Herald article published last week, charities in Calgary are worried that this measure will result in a drop in donations.

While charitable donors may continue to give, the tax credit dip clearly has the potential to adversely impact donations. It appears that taxes, in fact, are a factor when it comes to charitable giving.

Taxes also come into play when discussing charitable giving in the context of an estate plan. Recently, British researchers, in a report titled A warm glow in the after life? The determinants of charitable bequests, examined the behavioural science behind why people donate. Significant points made in the article include:

  • most people would like to donate more than they currently do;
  • people are more attracted to charitable pleas featuring a narrative – such as one individual’s story;
  • people can be influenced by what their peers choose to do; and
  • giving can be contagious – when people see others giving, they may tend to do the same.

Further, of note, was the finding of the Report that when considering wills, the likelihood of an individual choosing to leave gifts to charity doubles when the concept is suggested.

Thank-you for reading.

Suzana Popovic-Montag

Hull on Estates #414 – Costs Endorsement of the Hon. Justice Skarica

Posted in Hull on Estate and Succession Planning, Hull on Estates, PODCASTS / AUDIO, PODCASTS / TRANSCRIBED, Show Notes

Listen to Hull on Estates #414 – Costs Endorsement of the Hon. Justice Skarica

Today on Hull on Estates, Andrea Buncic and Paul Trudelle discuss the recent Superior Court of Justice decision De Cruz Lee v. Lee, 2015 ONSC 2012, and in particular the Costs Endorsement of the Hon. Justice Skarica released recently on March 27, 2015.

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 Andrea Buncic.

Click here for more information on Paul Trudelle.

Estate Planning and Heritage Design

Posted in Estate & Trust, Estate Planning, In the News, TOPICS

An article that appeared in the Wall Street Journal this past weekend highlights an important issue that is often overlooked when individuals plan for the distribution of their wealth after death.

The article suggests that 70% of wealth inherited by a younger generation is lost, and that, by the time that the inherited wealth makes it to a subsequent generation, only 10% of its original value typically remains.

In Canada, where 40% of individuals rely on a family inheritance to fund their retirement, such poor rates of intergenerational wealth preservation could present a serious problem.

In addition to obtaining formal lawyer assistance in creating a formal estate plan, the article refers to a new approach to preserving wealth called “heritage design”.

Heritage design uses “pre-inheritance” intergenerational experiences to foster the preservation of family wealth.  This approach, which supplements estate planning, involves annual meetings with the testator and his or her beneficiaries, at which time family values and traditions are reinforced and younger generations learn how to manage funds which they can expect to eventually inherit.

Family meetings during which an estate plan is discussed and explained to beneficiaries has the potential not only to assist in the preservation of family wealth from generation to generation, but also can help prevent disputes over the intended distribution of an estate after death.

 

Thank you for reading.

Nick Esterbauer

Nine Mediation Pitfalls to Avoid

Posted in Estate & Trust, Litigation, Mediators

In my recent post, To Litigate or To Mediate, I discussed the benefits of participating in mediation at the early stages of litigation.

Today, I’d like to discuss some of the mistakes commonly made by lawyers when preparing for and attending mediation. From my experience, each of the following mistakes can dramatically impact the likelihood of achieving a successfully mediated resolution.

(1)    Choosing the wrong mediator – a mediator’s knowledge, experience, and approach to the dispute can have a significant impact on the outcome of the mediation. As such, it is important to choose a mediator that has considerable knowledge and experience relevant to your dispute

(2)    Failing to prepare the mediator – a mediator who has a thorough understanding of the facts, issues and positions of the parties will be better placed to assist the parties in reaching a settlement. To assist the mediator in this regard, each party should provide the mediator with a mediation brief outlining the facts, issues and the law they feel are relevant prior to the mediation.

(3)    Arriving unprepared for the mediation – to make the most of the mediation each side should arrive prepared. Counsel for each side should have a command of the facts, the law and a considered plan for approaching the session. Also, it is important not to forget a calculator and any relevant documents, including court orders.

(4)    Failing to prepare the client – if your client understands the purpose of the mediation, the strengths and weaknesses of his or her case and how the mediation is expected to unfold, he or she will be better placed to achieve more at the session.

(5)    A lack of commitment to resolve the dispute – 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. Unfortunately, this can result in parties attending mediation, not because they wish to settle the dispute, but rather because they have been ordered by the court to attend. The mediation should be approached, by both sides, with a commitment to resolve the dispute.

(6)    Failing to listen to the other side – listen to the other side to identify their interests, perceptions and motivations. Doing so is extremely useful for generating options to settle the dispute.

(7)    Failing to set aside sufficient time for the mediation – while there will often be significant downtime during the session, it is important to set aside sufficient time for the parities to thoughtfully consider a range of options and positions. A settlement is significantly less likely to occur if the parties run out of time or feel rushed into making a decision.

(8)    Failing to ensure all the necessary parties attend – to get the most out of any mediated session all relevant parties should be present, however, it is essential for the person(s) with settlement authority to attend the mediation. If the individuals attending do not have authority to settle the dispute, no agreement will be finalized at the session.

(9)    Failing to ensure the settlement is properly documented – any agreement reached by the parties at the mediation will be non-binding unless and until reduced to a written agreement that is signed by all the parties. A draft settlement agreement can be prepared by counsel prior to attending mediation, such that agreed terms can be finalized efficiently prior to the close of the mediation session.

While mediation can be a challenging process to navigate, it has the potential to result in a viable and effective settlement. By avoiding these common pitfalls you can significantly increase your chances of reaching a successfully mediated settlement.

Thank you for reading,

Ian Hull

Hull on Estates #413 – Answering legal questions with advanced computing tech

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

Listen to Hull on Estates #413 – Answering legal questions with advanced computing tech

This week on Hull on Estates, Moira Visoiu and Josh Eisen discuss a recent article published in the Law Times describing the trend toward the use of advanced computing technology to answer difficult legal questions and how this might be applicable in the context of estate litigation.

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

Click here for more information on Moira Visoiu.

Click here for more information on Josh Eisen.

The Supercentarians Amongst Us

Posted in General Interest, Health / Medical, In the News, News & Events

A “supercentarian” is someone who has lived beyond his or her 110th birthday.  It is a milestone that is only achieved by approximately 0.001% of centarians.

Sadly, the world’s oldest person recently passed away on April 1, 2015 not long after celebrating her 117th birthday.   The late Misao Okawa was born in Osaka, Japan in 1898 and she passed away peacefully in her sleep.

According to the Toronto Star, there are only four people alive today who were born in the 1800’s.  Although the majority of the world’s centarians reside in Japan, all four of these supercentarians who were born before the 1900’s are women from the U.S.A. and Italy.

Gertrude Weaver of Arkansas, Jeralean Talley of Georgia, and Susannah Mushatt Jones of Alabama were all born between 1898 and 1899.   Emma Morano of Italy still lives alone in her own apartment in Northern Italy today at 115 years old.  These women have lived through the World Wars, countless changes in governments, and the dawn of the digital age.

Born after these incredible women, the world’s oldest man, Sakari Momoi of Tokyo, Japan, is 112.

Whatever their secrets to longevity may be, I’m guessing that all these supercentarians have all benefited from the intergenerational support of their families which means their children, grandchildren and great-grandchildren.

Thanks for reading – have a super weekend!

Doreen So

When will the Costs Hammer Fall?

Posted in General Interest, In the News, Litigation, News & Events, Public Policy, TOPICS

Following the theme of my last blog, a very colourful Endorsement was recently rendered by the Honourable Justice Skarica, in a matter unrelated to estates, in which the opening sentence of was as follows,

“This is a costs order that is essentially meaningless”.

Ms. De Cruz Lee was the Applicant in De Cruz Lee v. Lee.  Ms. De Cruz Lee was at one time married to the Respondent Mr. Lee.  Ms. De Cruz Lee went through two different lawyers before representing herself at trial.  Although the trial was originally scheduled for 1-2 days, it went on for 9 days in total.  The claims at issue before Justice Skarica were so extreme that this case was even covered by the Toronto Star here.

Ultimately, Justice Skarica concluded that he could not find any evidence to substantiate Ms. De Cruz Lee’s allegations of fraud, conspiracy and human trafficking against Mr. Lee and he was awarded with $53,000.00 from the proceeds of the sale of the home that he shared with the Applicant.

Notwithstanding the fact that Ms. De Cruz Lee was judgment proof, Justice Skarica ordered full indemnity costs against the Applicant in the amount of $34,674.05.  According to Justice Skarica, this was a case for full indemnity costs because of Ms. De Cruz Lee’s unsubstantiated allegations of dishonesty, illegality and conspiracy which were advanced without merit.

In particular, Justice Skarica was passionate about the role of costs in civil proceedings,

“Self-represented litigants whose aim it is to protract court proceedings to force the other side to expend significant resources on legal costs due to scurrilous allegations that are without any evidentiary foundation and are entirely irrelevant to the issue before the Court will meet the hammer of a cost’s award. In our resource strapped court system, there must be deterrence against such conduct that not only penalises the opposing party but also penalises those litigants who have genuine claims to bring before a court but must have their justice delayed due to Court time being spent on this type of litigation.”

Have a great day everyone and thanks for reading!

Doreen So 

Discussing Inheritance: Naughty or Not Quite Nice?

Posted in Estate & Trust, In the News

Celia Imrie is an English actress known to North American audiences for her work in Bridget Jones’ Diary, Calendar Girls and The Best Exotic Marigold Hotel. Imrie has supplemented her extensive film, television and stage career with a 2011 memoir entitled The Happy Hoofer and a second book, Not Quite Nice, which was released this year.

Not Quite Nice deals with the pressure children put on their parents to care for themselves and their children (the older generation’s grandchildren). Expectations include but are not limited to: free childcare and inherited money for education and otherwise.

In Not Quite Nice, Imrie discusses her observation of the apparent trend of children nowadays to ask about their inheritance. In an article published here, Imrie is quoted as describing the open talk about inheritance as “revolting”. (I touched on the subject of adult children awaiting inheritance in my blog post of March 18, 2015).

On the other hand, Michele Hanson, in her review of Not Quite Nice (published here), makes comments that suggest understanding, in certain cases, the necessity of inheritance discussions among parents and their children.

Hanson takes a straightforward and concise approach when describing such conversations among family members. In fact, the following quote is indicative of her article’s tone:

“Money is everything. It rules, and the less you have the more important it is. You have to talk about it and plan how to survive. Not many people can afford etiquette any more.”

I have often blogged about the importance of having a discussion with family members regarding testamentary wishes and expectations. As an estate litigator, it is my experience that refraining from engaging in such discussions can result in devastating consequences. Outlining goals and wishes during one’s lifetime allows family an opportunity to question, and hopefully, understand why decisions are made. It also allows for an opportunity to explain the reasons behind any decisions.

Thank you for reading.

Suzana Popovic-Montag

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