Toronto Estate Law Blog : Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

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It's tax season. That wonderful time of year for number crunching, hunting for receipts and depending on your situation, hair pulling.

If you are an executor of the estate of a deceased person, you also have the responsibility of filing the deceased's "final return." To borrow from a popular expression, the two certainties, death and taxes, follow each other. Final tax returns for those who die during the period from January 1 to October 31 are due April 30 of the following year.*

While there are no inheritance taxes in Canada there are a number of taxes that arise as a result of your death and must be included in the final return. Some of those taxes include the following:

Capital Gains Tax. For the purpose of calculating tax, the CRA deems a deceased to have disposed of all her capital property immediately before her death. This is referred to as a ``deemed disposition.`` Depending on the deemed proceeds of disposition, there may be a capital gain or loss. Certain types of capital property are exempt from this rule and an expert should be consulted for specific advice.

RRSPs and RRIFs. These tax sheltered investment vehicles lose their status as such at death. When you die, the tax holiday ends and your RRSPs and RRIFs are collapsed. There is a deemed sale of any securities held in the RRSP or RRIF and any income made in the year preceding your death must be included in the final return. There are a few notable exceptions to this rule, such as a spousal rollover and transfers of your plan to minor and/or mentally infirm children.

There are many creative ways of reducing the taxes that surface after your death. The benefits of doing so may be substantial and result in considerable savings for your estate. When you consider the fact that you spend a lifetime building your assets, speaking to a profession about your estate is advisable. Your beneficiaries will thank you.

Jason Allan

*For more information on how to file a final return, visit the Canada Revenue Agency's website 

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The Ontario Bar Association (OBA), Trusts and Estates Section, year end dinner is taking place on Wednesday, May 30, 2007 in the Imperial Room at the Fairmont Royal York Hotel in Toronto. The Reception begins at 5:30 p.m. with Dinner at 6:30 p.m. Corina Weigl, the Chair of the Section, will bring the past year to a close as well as proceed with the election of the OBA, Trusts and Estates Section Executive for the 2007/2008 year. The Section will also pay tribute to this year’s recipient of the Award for Excellence in Trusts and Estates, Brian Schnurr.

The Award for Excellence was created to recognize exceptional contributions and achievements by members of the OBA to the area of trusts and estates.

The criteria for the award is demonstrated leadership in the trusts and estates bar through knowledge, experience, skill, commitment, passion and strength of character, plus all or some of the following:

• academic excellence through teaching at the Bar Admission Course, lecturing at a law school, participating in Continuing Legal Education and/or academic writing;

• participation in the OBA Trusts and Estates Section Executive or the Law Society of Upper Canada on wills, trusts and estate matters; and

• contribution to the development of wills, trusts and estate law.

Brian’s distinguished and esteemed career has included his unwavering commitment to, as well as the achievement of, excellence in these areas.

In addition to the Award for Excellence, the Widdifield Award and the Hoffstein Book Prize will be presented.

For more information, please contact Peter Guennel, OBA Sections Co-ordinator, at (416) 869 1047, ext 340, or by email at award@oba.org or by visiting online.

Enjoy.

Craig

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Typically, at the beginning of each day in motions courts, the sitting Judge purges the list of matters scheduled to be heard that day; that is the Judge goes through the list to see which matters are on consent, those that are not opposed and those in which the parties wish to proceed. With the latter matters, the Judge may inquire as to the amount of the time the parties anticipate for their respective submissions. The Judge then usually hears the consent matters and those that are not opposed first because they may be able to be heard quite quickly and minimize the time in Court for the lawyers on those matters.

Before appearing in Court on a date, counsel are required to file with the Court, either two or three days (depending on the respective Court office) before the hearing date, a Confirmation of Motion form, confirming if the matter is proceeding, and if so, on what basis and in respect of what issues. The Court files pertaining to the matters proceeding on a given day are, generally speaking, given to the sitting Judge the day before.

Often matters which were confirmed on the Confirmation of Motion form as proceeding end up getting adjourned on consent, or proceed on fewer issues than indicated. Judges become frustrated when such situations arise if counsel, knowing that the status of a matter has changed, did not advise the Court as soon as possible with the result that the Judge needlessly spent significant time reviewing a file which in the end was not proceeding, in whole or in part.

On March 27, 2007, at an Ontario Bar Association, Trusts & Estates section meeting attended by a panel of several Justices, Justice Perell noted that to assist Judges in preparing for the next day's matters, counsel can do the following:

(i) specifically list on the Confirmation of Motion form the materials that are being relied upon by the parties,

(ii) if the file is extensive, have someone attend at Court the day before the hearing date to organize the Court file and determine if all of the materials necessary for the hearing are in the file and, if not, to file a copy

(iii) write to the Court office should the status of the matter change between the filing of the Confirmation of Motion form and the hearing date, and

(iv) write to the Court office, if necessary, to advise as to the materials that are required for the hearing.

By following these suggestions we all benefit as the Court will be able spend less time on the matters that need less time and more on the substantive ones that justifiably need more time and due consideration.

Have a good day.
Craig

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The 2007 Bencher Election and the respective campaigns by the Benchers seeking election (or re-election as the case may be) have been ongoing for quite some time now. Indeed, the process itself is pretty much at its end, except the voting. Many may have already voted. The deadline for voting in the election is April 30, 2007 at 5:00 p.m. EDT. Voting may be done by way of internet, telephone or mail.

There are 40 Bencher positions that are up for grabs - 20 from outside of Toronto and 20 from within Toronto.

The Law Society of Upper Canada is governed, however, by a Board of 48 Benchers. Forty of these 48 Benchers are the lawyers from across Ontario that are being elected on a regional basis as part of this election. The public is represented by the Law Society's eight lay Benchers who are appointed by the  Lieutenant Governor-in-Council (of the Ontario Government). There are also several ex-officio Benchers including former Attorneys-General of Ontario and former Treasurers of the Law Society.
The Benchers meet every month (Convocation) to deal with matters related to the governance of the legal profession and to make policy decisions. Benchers also sit on various Law Society Committees, and they participate on panels that hear cases concerning the conduct and competence of lawyers.

 

Members of the Law Society of Upper Canada in good standing are eligible to vote in the bencher election.

It is obviously important for members to vote in the current election in order to help determine the direction and governance of the profession for the next four years. As the adage goes, if you don't vote then you can't complain.

Enjoy.

Craig.

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On April 26, 2007, The Law Society of Upper Canada will be honouring and presenting our own Rodney Hull with the Law Society Medal.

The Law Society Medal was struck in 1985 as an honour to be awarded by the Law Society of Upper Canada, the governing body of the lawyers of Ontario, to members who have made significant contributions to the profession.

The tribute is given for outstanding service within the profession whether in the area of practice or in the academic sphere or in some other professional capacity where the service is in accordance with the highest ideals of the legal profession, whether by devotion to professional duties over a long term or for a single outstanding act of service.

This honour is yet further recognition of Rodney’s distinguished career, which has included service to his profession on so many fronts.

He has been a lecturer at the Ontario Bar Admission Course and at Law Society of Upper Canada, Canadian Bar Association and Canadian Tax Foundation programs. He has also made extensive contributions to academic and professional journals in Canada. He is also the author of two standard reference texts.

Rodney was called to the Bar in 1957 and appointed a Q.C. in 1969. Aside from being a certified specialist in Civil Litigation, he is a Fellow of the American College of Trust and Estate Counsel and an Academician, The International Academy of Estates and Trust Law.

Rodney was also awarded the Ontario Bar Association Award of Excellence for Estates and Trusts in 2005.

Congratulations Rodney, the firm is very proud of you and your many outstanding accomplishments.

Craig

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Listen to "The Hull & Hull website and a Practice Tip"

Read the transcribed version of "The Hull & Hull website and a Practice Tip"

During Hull on Estates Episode #56, Ian Hull and Suzana Popovic-Montag review the updates on the Hull & Hull LLP website and discuss the available resources such as Hull & Hull TV (streaming videos), the Probator articles, and of course links to the blogpage/podcasts.

Ian discusses a book he has recently read, Getting Things Done by David Allen. Ian heard about this book on the Marketing Monger podcast.

Ian and Suzana's Practice Tip for this podcast helps the process of fiduciary accounting go smoothly.

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Listen to "Tax Considerations for Separated Spouses"

Read the transcribed version of  "Tax Considerations for Separated Spouses"

During Hull on Estate and Succession Planning Podcast #57, Ian Hull and Suzana Popovic-Montag discuss tax considerations to keep in mind within the context of separated spouses.

They cover such issues as tax liability, spousal support and child support deductability and the deductability of legal fees.

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On April 12, 2007, I attended, with colleagues from Hull & Hull LLP, the gala tribute for the Chief Justice of Ontario, The Honourable R. Roy McMurtry, who is retiring at the end of May 2007. The event was held at the Toronto Convention Centre.

Prior to the gala, during the day, a conference was held in celebration and remembrance of the 25th anniversary of the Charter of Rights.

The gala event was co-hosted by the Treasurer of the Law Society of Upper Canada and the President of the Advocates’ Society.

The night was filled with a combination of in person tributes (including from the Lieutenant Governor of Ontario, The Honourable James K. Bartleman, The Right Honourable Beverley McLachlin, P.C., Chief Justice of Canada, and The Honourable Madam Justice Rosalie Silberman Abella, Justice of Supreme Court of Canada) and those by way of video from various politicians, lawyers, colleagues and friends of the Chief Justice.

Our own Rodney Hull was included with those on the video tribute.

The tributes were a captive and eloquent blend of endearment, high esteem, personal notes and often wit, and covered the Chief Justice’s career as a lawyer, the Chairman and CEO of the Canadian Football League, a politician, his tenure as the Attorney General of Ontario and the Solicitor General of Ontario, his significant role in the patriation of the Canadian Constitution in 1982 and the creation of the Canadian Charter of Rights, and his appointments as, or to, Canada’s High Commissioner (Ambassador) to Great Britain, the Associate Chief Justice of the Superior Court (Trial Division) in Ontario (1991), the Chief Justice of that Court (1994) and the Chief Justice of Ontario (1996).

Believe it or not, towards the end of the evening, the Justices of the Court of Appeal sang a “tribute” to the Chief Justice (prepared lyrics to the music of “This land is our land, this land is your land”).

Before the night was over, two of the Chief Justice’s children, one of whom is a Judge of the Queen’s Bench in Alberta, and the other, apparently an actor/writer/comedian, spoke, or what might fairly be described as a roasting, of their father.

It was truly an impressive evening by and on all accounts, for an inspirational man considered by many to be a nation builder.

Enjoy.

Craig

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Listen to "Joint and Several Liability of Trustees"

During Hull on Estates Episode #55, Sean Graham and Paul Trudelle discuss joint and several liability of trustees with respect to the administration of an estate. They  focus on avoiding liability when there are two or more estate trustees.

Paul and Sean examine this estate topic with respect to the case of Fales v. Canada Permanent Trust Co. and  Cooper (No. 2) Re.

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It’s trite, but true, that we sometimes don’t appreciate what we have until it’s gone. That may be the case in respect of the Lawyer Certified Specialist Program. The Law Society of Upper Canada is contemplating terminating it by the end of this year and forcing lawyers with such designations to give them up by the end of next year.

The Program is self-funded and has been running for almost two decades. It is intended to help lawyers acquire the skills and knowledge to qualify for certification as a specialist in a given practice area,* and is touted by LSUC as a recognition of professional excellence.**

The reason for its pending demise may be that there are not enough lawyers coveting the title. Perhaps this is due to the arduous application requirements, which include at least seven years of law practice, mastery of the area, continuing professional development and several hours of self-study. Or, maybe it is because lawyers feel their work speaks for itself and no extra investment is needed to have their expertise recognized.

Before the Program’s existence was threatened I hadn’t made it a top-priority to seek the distinction. I am now disheartened at the prospect of being denied the opportunity to do so. If you are too, I suggest you write to the Treasurer and Benchers of LSUC to express your views.

Keep it alive!

Natalia Angelini

* Article by Edward C. Corrigan entitled Lawyer Certified Specialist Program, found in Trail Blazers, March 2007 edition, Vol. 32, No. 6.

** LSUC Website: www.lsuc.on.ca


Natalia R. Angelini

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Does being discharged as a trustee of an estate automatically save you from future liability for estate-related activities? This is an issue the Alberta Court of Queen's Bench recently ruled on in Svoboda v. Kuzel [2006] A.J. No. 1657.

Paul Kuzel was discharged as trustee of an estate and was granted compensation for his work done administering the estate, subject to deductions for, among other things, improper personal benefits received by him from the estate.

Mr. Kuzel sought an order expressly acknowledging that he was released from any further claims by the estate. The Court denied Mr. Kuzel’s relief, and in so doing noted the importance of not offending the general theme overarching the law of trustee liability, which seeks to protect beneficiaries and the incapacitated by providing remedies against trustees who abuse their position.

In other words, granting blanket immunity could leave disappointed beneficiaries without any recourse and, in effect, reward a dishonest trustee where wrongdoing was not discovered until after the discharge.

Although Mr. Kuzel’s alleged misconduct had already been disclosed, I am pleased to see that a cautious approach taken by the Court will send a message to rogue trustees that they can not escape liability so easily.

However, I do wonder if this will deter honest prospective trustees from assuming their assigned role out of fear that there may be no end to the scrutiny of their estate administration activities….

Thanks for reading,

Natalia Angelini

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Access to justice in Ontario is a hot topic and a priority for Attorney General Michael Bryant. In fact, he is the force behind various changes we are seeing in the legal arena that according to Jim Middlemiss (in his article Smile, you’re on CA Camera published in the March 2007 edition of Canadian Lawyer) include the introduction of the Access to Justice Act, 2006 that reforms the justice of the peace system and regulates paralegals.

Another change being made affects the Ontario Court of Appeal where cameras are being allowed in the courtroom for some hearings as part of a pilot project. Now, more than ever, counsel will have to enter this court with robes ironed, hair styled and legal arguments ready. The pressure is on. Not only do counsel have to persuade appellate judges of the merit of their client’s case, counsel has to do it on national television!

While the objective is a worthy one – providing an unobstructed view of our justice system at work – I must admit I am more interested in the impact televised hearings will have on the form and presentation of legal argument. I expect that some lawyers may be unnerved by the watchful eye of the public, some may be eager to make a name for themselves and some may not be fazed at all.

My hope is that it will further add to the caliber of advocacy and professionalism and inspire the public to take an interest.

Until tomorrow,

Natalia Angelini

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Yesterday I reviewed the decision of Holmes Estate (Re) [2007] B.C.J. No. 45. You will recall that a gift in the testator’s Will to “all my nieces and nephews” was interpreted in the circumstances to mean a bequest to the children of the testator’s siblings including the 18 nieces and nephews of the testator’s late wife.

One such niece, Patricia Meadows, had been married to Alfie Meadows. Alfie was seeking entitlement to a share in the residue of the estate belonging to Patricia, who had died before the testator. He was doing so on the basis of the language contained in the Will that if any of the testator’s nieces or nephews predeceased him, that person’s share was to be paid to their surviving spouse.

The problem for Alfie was that he had been convicted of Patricia’s murder! The Court quite justly denied Alfie entitlement to Patricia’s share in the estate by applying the general rule of public policy that a person is precluded from benefiting from a crime.

The irony in this case is that while Alfie’s crime didn’t pay for him, it did benefit the surviving nieces and nephews, as the gift was a class gift (when a member of the class is disqualified their share is divided amongst the remaining members).

While this case made for an interesting read, I can only hope that the decision will help deter similar claims from arising again.

Have a good day,

Natalia Angelini

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Listen to "Estate Planning Issues for Separated Couples"

Read the transcribed version of "Estate Planning Issues for Separated Couples"

During Hull on Estate and Succession Planning Podcast #56, Ian and Suzana discuss the circumstances surrounding separated couples, remarriage and common law separations.

They discuss the impact that these separations have on estate planning including financial, tax and property ownership considerations.

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It was recently held that a gift in a Will given to “all my nieces and nephews”, included not only the children of the testator’s siblings, but also the 18 nieces and nephews of the testator’s late wife: Holmes Estate (Re) [2007] B.C.J. No. 45.

The Court reviewed the prior judicial interpretation of the terms “niece” and “nephew” as used in Wills. It was satisfied that the words nieces and nephews could, in their ordinary meaning, apply to the children of the testator’s late wife’s siblings, and noted that while years ago the meaning of these words were confined to children of a testator’s siblings, the New Concise Oxford English Dictionary presently defines these terms as including the children of a brother-in-law or sister-in-law.

The Court then turned to the question of what the testator meant by “nieces” and “nephews”. After considering the surrounding circumstances, it concluded that the testator intended to benefit his late wife’s nieces and nephews. Circumstances in support of this finding were that these family members were named beneficiaries in his earlier Wills and that he had ongoing relationships with several of them. One additional and unique fact was that the alleged ambiguity was brought to the testator’s attention in his lifetime, and he indicated he was satisfied with the wording of his Will.

This decision is demonstrative of the reality that as definitions of families change so may their entitlement in the estate planning context (intentionally or fortuitously), which lawyers may want to keep in mind when crafting testamentary instruments.

Have a good day.

Natalia Angelini

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It’s always good to end the week on a high note and once again the baby boom generation is in the news. A recent report by Decima Research says almost $1 trillion in cash and other assets will be transferred to the children of baby boomers in the years to come. The baby boomers are without a doubt the richest generation that Canada has produced to date. Even in death, the baby boomers will continue to shape our society.

In the past, the typical inheritance was likely considerably less than $100,000. However, when asked, more than 50% of the children of baby boomers expect to receive $283,000 on average. This figure represents a significant increase from the past and is indicative of the wealth that baby boomers have accumulated over the years. Half the $283,000 will be received in cash and the rest in real estate and valuables.

However, to me it is also clear that baby boomers will live longer than past generations and likely spend at a greater rate than their parents ever did as they fight the ravages of old age. Ultimately, there may not be as much to pass along as their children would like to think. The baby boomers also have an altruistic streak and may leave some of their wealth to their favourite charity.

Regardless of who gets the money, the need for proper estate planning is clear. Now is the time for boomers to get their personal affairs in order if they haven’t already. Baby boomers should let their children know now what their wishes are in order to avoid family fights in the future when their estates are being distributed. If parents are afraid that their children will react angrily if treated differently, they should nevertheless let them know and the reason why. The emotional and financial costs to the next generation is far greater than the immediate upset if a parent tells a child that he or she is being treated differently under the terms of their Will or that a charity is slated to receive the bulk of their estate. Perhaps a family conference with an outside facilitator is the way to go. Unfortunately, no matter what the baby boomers do, estate litigation is likely to increase as their children fight over their inheritance or try and prove what the “true wishes” of their parents were.

Finally, the generation which benefits from this trillion dollar transfer will have to carefully decide what to do with the windfall. Many will pay off their mortgages or other debts affording them the opportunity to accumulate their own personal fortune and pass it on to the next generation. Estate planning will always be with us… the sooner it’s done the better.

Thanks for reading and enjoy the weekend.
Justin de Vries

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I was recently in the Brampton courthouse. I imagine that Brampton is one of the busiest courthouses in the Province. It serves the Regional Municipality of Peel, which includes Mississauga and Brampton. The courthouse is busy with both criminal and civil matters. While I was there, I heard requests over the loudspeaker for Polish, Punjabi, Vietnamese, Chinese, and Spanish interpreters.

For my part, I was scheduled to speak to a guardianship application, which was to be adjourned on terms. The problem I faced was securing a full day hearing date for the return of the application. My matter involves a widow, whose health is declining. She has been declared incapable of managing her property and making personal care decisions. The application was brought by the widow’s nieces (my clients) to be appointed co-guardians of property and personal care for their aunt. The application is hotly opposed by the attorney for property and personal care, who my clients believe was appointed under suspicious circumstances.

While the adjournment was granted, it was also crucial that I obtain a timely hearing date for the application. However, the presiding judge apologized and advised that the first available date was not until late September 2007. More than six months would pass before the application would be heard. Her Honour explained that the region was understaffed when it came to judicial resources and simply could not accommodate all matters despite their apparent urgency. Her Honour also indicated that criminal matters usually took precedence over civil matters, as the right of an accused to a fair hearing would be prejudiced by undue delay.

The bottom line is that parties intent on litigating, whether in the estate context or otherwise, should understand that institutional delay will often push their “day in court” well into the future. Justice delayed is justice denied. However, that is the reality that litigants face in today’s overburdened court system.

It is for this reason that many alternatives to litigation are frequently promoted. Mediation is a good example, as is binding arbitration in commercial litigation matters. A party should therefore carefully consider what options they have before necessarily assuming that a court hearing is their best course of action.

Enjoy!
Justin de Vries

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Much has already been written about the trial of Conrad Black currently unfolding in Chicago. There are, of course, constant press dispatches and on-going, daily TV coverage. I will leave Conrad Black’s innocence or guilt to the jury sitting in Chicago. However, on a more subtle level, there are lessons to be learned for any party in protracted litigation.

When Conrad Black was first charged with fraud and racketeering, he was widely condemned. His critics took a certain amount of glee in seeing “Conrad brought low”. He was after all getting his proper comeuppance after years of malfeasance. However, Conrad Black did not flinch or bow to the pressure. He maintained his innocence rather convincingly throughout and clearly believed in the strength of his case.

To my mind, what has been impressive is Conrad Black’s perseverance in the face of adversity. Persevering is key to successfully litigating. It has been said that litigation is not a tea party; in fact, it’s more akin to war. A party has to have, or quickly develop, a thick skin. The opposing party and their counsel will hurl all sorts of allegations against you, belittle your case, and try to marshal evidence that at first blush may seem crushing and unanswerable. However, a party has to believe in the righteousness of their case and not lose faith.

Obviously, a party should have only commenced litigation or mounted a defence after carefully considering the facts and the law. If it was concluded that litigation was unavoidable, then a party should not waiver but persevere. A party should always consider reasonable settlement options, but nevertheless carry on undaunted.

Litigation can be difficult, expensive, and in the estate context emotional. Many litigants begin to waiver midstream wondering whether they made the right decision, if the proper evidence has been gathered, and if their case is as strong as it first appeared. However, with the help of good counsel, a party will weather the storm.

When in doubt, stop for a moment and think of Conrad Black who persevered despite the tremendous pressure and the clamour of his critics. Who knows, he may ultimately win.

Enjoy!

Justin de Vries

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Listen to "Contemplation "In Contemplation of Marriage""

Read the transcribed version of "Contemplation "In Contemplation of Marriage""

During Hull on Estates Podcast #54, David Smith, Partner at Hull & Hull LLP, discusses his upcoming Probator article (check the Hull & Hull website soon) which concerns making a Will in contemplation of marriage.

David discusses the circumstances that surround this clause, Section 16 of the Succession Law Reform Act and how this issue can cause litigation. 

 

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Listen to "Insurance Planning"

Read the transcribed version of "Insurance Planning"

During Hull on Estate and Succession Planning Podcast #55, Ian and Suzana discuss insurance planning in the context of wealth and estate planning strategies.

They cover the advantages of integrating insurance policies into your estate plan focusing on disability insurance, critical care insurance and life insurance.

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In McMullen v. McMullen [2006] B.C.J. No 2900, an 86 year old widower commenced an application against two of his three daughters, who held his power of attorney. The application was to set aside the transfer of a 99% interest in the father’s condominium property to the husbands of his two daughters. The daughters, in turn, brought an application for an order requiring their father to submit to a psychiatric assessment.

According to the medical evidence before the court, the father had some medical problems, but no documented cognitive problems. At worst, he suffered from depression. However, the two daughters alleged that their father’s spending habits had changed and his investments had been depleted. The daughters claimed that their father was sending money to a new female acquaintance in the United States. The family contacted medical professionals and legal authorities with concerns that their father was being financially abused, but to no avail.

When the daughters confronted their father with respect to his worsening financial situation, he became angry and denied he was being financially exploited. He asked his one daughter to stop monitoring his bank account though she did not accede to his request, as she considered it her duty under the power of attorney. The two daughters then transferred the father’s condominium property to preserve his only remaining asset and provide for his future care.

However, the daughters did not immediately register the transfer of the condominium property, as they thought it would cause emotional distress. It was not until a year later that the daughters finally registered the transfer of the condominium without telling their father or providing consideration. The father commenced the application when he ultimately discovered the transfer.

The court allowed the application by the father and the condominium transfer was declared null and void. While the daughters acted in what they considered to be in their father’s best interests, there was nevertheless no evidence to show that the father was incapable of managing his financial affairs. The daughters had therefore breached their duties as attorneys by acting contrary to their father’s intentions. The court dismissed the daughters’ application, as the father was not required to submit to a psychiatric assessment where his mental capacity was not an issue.

The case holds that even when a family fears that an elderly parent is being financially exploited, but mental incompetency is not an issue, a power of attorney does not give the family carte blanche to do what they think is in the best interests of that parent. A power of attorney for property has its limits even in the most egregious situations.

Enjoy!

Justin de Vries

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I recently attended a client meeting where the issue of mediation was hotly debated. My client expressed reluctance in participating in a process with a party that my client regarded as intransigent and obstinate. My client also thought that proposing mediation would suggest to the other side that our case was weak and we were looking for a way out. After persuading my client that mediation was at least worth considering, a more substantive debate arose as to when to mediate. This debate deserves some comment.

In many ways, mediation is all "the rage" and early mediation is especially championed in the estate setting. In general, society is reluctant to see family members fight over what is perceived as a windfall. The courts reflect and promote this view. My colleagues and I have all blogged on the merits of mediation and I won't repeat them here. But parties can mediate too early. Often parties attend mediation without knowing the full extent of the estate assets or merely having a vague idea. Liquid assets might be readily ascertainable, but have all the liquid assets been uncovered i.e. have proper inquiries been made? Assets such as art, vintage cars, or family antiques are harder to evaluate and may require a professional appraisal, all of which takes time.

Moreover, the parties have often not exchanged relevant documents before attending mediation, something which they would be required to do if mediation took place at a later stage. Exchanging relevant documents will help a party better understand the risks they face in pursuing litigation, the weakness of their case, and the strength of their opponent's case (and vice versa). Forewarned is forearmed.

Back to my client meeting where it was decided that it was too early to mediate. An allegation had been made that an estate trustee had stolen money from the estate. However, no one was quite sure how much was taken and whether the estate trustee acted alone or in concert with an investment advisor. Some sort of accounting was required, supported by back-up documentation before mediation could take place and ultimately be effective. A court order might even have to be obtained to get at the necessary information. Mediation would happen, but at the right time with the right information. It is imperative that a party know their case so that they know when to mediate and how best to settle.

Justin de Vries

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This blog completes my week-long rogue’s gallery of criminal convictions in estate matters. So far I’ve talked about the Criminal Code in general plus specific cases involving breach of trust and theft.

On to fraud.

In R. v. Moore (1998 Carswell Nfld 276), an accused along with a deceased’s four siblings signed and filed with the court false documents stating that the whereabouts of the deceased’s four children were unknown, that the deceased left no will, and that the accused knew of no one else with an interest in the estate. This is chronicled at length in a set of reasons dealing with the deceased’s remarkable and inspiring life. The accused, though equally remarkable, was hardly inspiring. The criminal charges marked the culmination of her complex scheme of lies and deceit.

The accused claimed she doubted whether her brother was born to the deceased, and said her doubts in this regard justified her behaviour. The Court found that the accused was “resourceful, and articulate”, but used her talents by “persist[ing] in [a] despicable charade” to defraud her brother, nieces and nephews.

For all her trouble, the accused received $10,000, plus a conviction for fraud. It is often bizarre the extent someone will go for what seems, objectively, to be a small amount of money.

An interesting aspect of the case is that the deceased in question, mother of the accused/convicted, was by all indications a font of kindness and compassion, taking several children under her wing during her lifetime. The reasons dwell at length on what a fine person the deceased was, implying quite clearly that the accused failed to measure up to her mother’s legacy.

We will not be posting a blog on Good Friday, April 6, 2007.

Thanks for reading.

Sean Graham

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On Monday I suggested that criminal proceedings in estate matters might become more common and on Tuesday I followed up by discussing a case where a lawyer was convicted for misusing trust funds.

R. v. Saunders (2000), 189 N.S.R. (2d) 43 dealt with criminal charges against an executor who took money and GIC’s from the estate for his personal use. He then failed to comply with a Court Order that he pay the money back. When charged with theft, he claimed to be ignorant that he did not have the authority to use the estate’s money as his own and argued that the Order to return the money was “irrelevant and wrong”. Finally, the accused claimed that he believed he had the power under civil law to do what he did, so there was no intention to commit a crime.

The Court found that, while the executor’s powers to deal with estate monies were broad, they only extended to what was necessary for the administration of the estate and he could not convert those monies to his own use. The executor, a lawyer of 40 years’ worth of experience, claimed that he genuinely believed his conduct was legal. The Nova Scotia Supreme Court did not believe that testimony and the executor was convicted of theft. He appealed and lost.

As in the Bunn case I discussed yesterday, the mens rea (intent) requirement was easier for the Crown to satisfy because the defendant was a lawyer. A layperson doing the same thing and claiming ignorance might be harder to convict and the Crown less willing to lay charges.

Thanks for reading.

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Yesterday I suggested that criminal charges in Estates, capacity and trust cases might become more common.

In R. v. Bunn (2000), C.C.C. (3d) 505,  the Supreme Court of Canada considered the sentencing of a Manitoba lawyer convicted of converting some $86,000 worth of trust monies to his own use. The accused acted as attorney for property for Soviet/Russian beneficiaries of Manitoba and Saskatchewan estates. He received monies in trust, but instead of paying it all to the beneficiaries, he redirected some of it to himself.

This conduct was discovered by the Law Society of Manitoba when conducting a spot audit of the accused. The accused was disbarred. Some compassion may be warranted: the accused cared for a disabled wife, was the sole income earner in the family, suffered financial woes for years, and lost his reputation and 20-year law career.

At trial the accused was sentenced to two years in a federal penitentiary, but the Manitoba Court of Appeal substituted a conditional sentence of two years less a day.

The Supreme Court of Canada, in a 5-3 decision, upheld the Appeal decision. The majority decided that the need for restorative justice and the benefits of reducing prison terms outweighed the minority’s desire to denounce the accused and promote general deterrence.

Lawyers tend to be easier targets in these cases because of the need to establish mens rea (the intent to commit a crime). It would be difficult for any competent lawyer to claim ignorance of proper usage of trust monies, but laypersons may be a different matter.

Thanks for reading.
Sean Graham

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Listen to "Tips for Controlling and Managing Estate Litigation"

Read the transcribed version of "Tips for Controlling and Managing Estate Litigation"

During Hull on Estates Episode #53, Craig Vander Zee and Bianca La Neve conclude their discussion on tips for controlling and managing estate litigation. They focus on the hearing of issues, applications vs. actions, oral discovery and mediation. 

Look in the Hull on Estates archives to find more podcasts on managing estate litigation.

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Listen to "Estate Planning Considerations in the Context of Married and Unmarried Spouses"

Read the transcribed version of "Estate Planning Considerations in the Context of Married and Unmarried Spouses"

During Hull on Estate and Succession Planning Episode #54, Ian and Suzana discuss how to avoid Will drafting problems when creating beneficiary designations for insurance trusts.

They also discuss the importance of including funeral arrangements in your Will, and the various Provincial approaches to the revocation of wills after marriage and after a divorce.

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MacLeans magazine’s Mark Steyn is providing an acerbic day-by-day report on the trial of newspaper magnate Conrad Black in Chicago. The trial continues a pattern by the US government to lay criminal charges in cases of alleged corporate malfeasance more vigorously following the Enron scandal.

As the historic intergenerational wealth transfer currently underway gathers steam, a well-publicised case could easily drive greater government interest in prosecuting breach of trust accusations just as Enron did in the corporate realm. Virtually all lawyers practising in the area have seen serious misappropriation of property or abuse of the vulnerable by those in a position of trust. Is this criminal? If so, will the police and crown attorneys be willing to treat it as such?

The Canadian Criminal Code certainly indicates so: it includes provisions dealing with Theft by person required to account (section 330); Theft by person holding a power of attorney (section 331); Misappropriation of money held under a direction (section 332); Criminal breach of trust (section 336); Fraud (section 380); and Assaults (sections 264 to 266). These provisions could be invoked given the right circumstances in an Estate, elder abuse or capacity case.

The Police often perceive misappropriation by fiduciaries as a civil matter. On the other hand, they are increasingly aware of elder abuse or abuse of the incapable, and far more willing to intervene.

As high-profile cases involving misappropriation of funds or abuse of incapable persons receive greater media attention, look for the legal consequences to branch out from the civil context to involve criminal charges as well.

Thanks for reading.

Sean Graham