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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Yesterday's Globe and Mail has two stories of interest.  First, more talk of Leona Helmsley with the added attraction for Hull & Hull that Ian Hull was asked to comment.

The second is an excellent article called "War of Independence" by Patrick White about Flora L'Hereux, a woman challenging a doctor's finding that she lost mental capacity.

The case took place in Alberta but the same thing could happen in Ontario just as easily. Although the specifics of Ms. L'Hereux's case are interesting and touching, White's piece provides a solid summary of the basics of an assessment, even setting out some sample questions from a capacity test.

If you link to the article, you might find it interesting to scan the questions. They look easy to most readers I expect.

Imagine, though, this scenario: you are an elderly person terrified of losing your power to control your life if you 'fail' the test; you believe that if the assessor finds you incapable you will lose all decision-making powers over your own life; you know that your mind may not be as sharp as it used to be, and sometimes you forget little details; you are visiting a doctor's unfamiliar office for the first time and have been awake all night from worrying about the assessment; and, your heart is acting up, you have a migraine from the stress and you can barely think straight.

Might not be so easy after all. I can see how mistakes could be made, and the consequences of those mistakes can be earth-shattering for the person involved.

Thanks for reading and enjoy the long weekend,

Sean Graham

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The late Leona Helmsley has remained eccentric to the end, leaving $12 million to a trust to take care of her dog, Trouble, while leaving nothing to two grandchildren, apparently "for reasons that are known to them".  Although a standout in so many ways, it seems to me Ms. Helmsley is not so unusual in wanting to see what is reported to have been a beloved pet live in comfort, even opulence, after her departure. It is no secret that people can be extremely close to their pets, in some cases closer even than to other people.

It may seem a waste to spend fortunes taking care of dogs, with so many people and causes that might benefit, but I do note that the residue of Ms. Helmsley's estate is to be given to a Charitable Trust.  It may be that once little Trouble finally follows his owner to that opulent doghouse in the sky, the remaining monies set aside for him will go to the same trust.

If a Will reflects the desire to provide for or thank those closest to you it is really not so surprising when people take extra special care to make absolutely sure their pets are protected. Sometimes those same pets made the testator's last years or months much more bearable than otherwise.

$12 million, though, should definitely keep Trouble in the finest dog food for some time. No doubt an emphatic way to say "Good dog".

Thanks for reading,

Sean Graham

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In this week's episode of Hull on Estates, David Smith and Diane A. Vieira discuss the issues surrounding spousal exclusion from the will of the deceased and how to challenge this exclusion.

Click "Continue Reading" to read the transcribed version of this podcast.

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While researching yesterday's blog on the Brooke Astor estate, I stumbled upon a number of legal blogs on the Astor guardianship dispute.  Several of these including this one noted that the lawyer for Astor had come under scrutiny during the guardianship dispute.  The issue was whether the lawyer himself played a role in unduly influencing Astor to make a Will thereby benefitting her son's charitable foundation.  Such enquiry is, of course, of grave concern and considerably different than that faced by a lawyer who makes a Will in circumstances where there is some question as to whether the testator is capable to make a Will.  Certainly, in Ontario, this latter issue has been exhaustively considered by the Court of Appeal in Bennett v. Hall.  Put simply, if a lawyer is asked to make a Will (and has been retained for that purpose) but has questions as to the capacity of the testator, it is not inappropriate to make the Will and extensively document his file with notes so that the validity of the Will, if challenged, can be adjudicated by the Court.  But what if the lawyer draws a Will under which he or she receives a benefit?  A New York Probate lawyer, Philip M. Bernstein notes in his blog that Astor's lawyer had "been named as beneficiary on several occasions and has inherited such valuable goodies as Manhatten apartments and valuable works of art including at least one Renoir and a Diego Rivera drawing as well as substantial sums of cash." While this example is clearly at the extreme end of the spectrum, trusts and estates practitioners may occasionally encounter clients who wish to name them as a beneficiary of their estate.  To accept a retainer in such circumstances is to invite allegations of suspicious circumstances and a presumption of undue influence which could cause the entire Will to be set aside.  Surely counsel of caution is to decline a retainer anytime a client wishes to confer a benefit in a Will upon the drafting solicitor, regardless of the circumstances.

Enjoy the weekend,

David

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The recent death of socialite Brooke Astor at the age of 105 has created a media circus in New York City.  Variously described as a "civic leader", "philanthropist" and "high society fixture," Astor was often quoted as coining the phrase "money is like manure, it should be spread around."  And Astor had a lot to spread, having contributed over $200 million to support various cultural institutions and causes in and around New York City. As noted in past blogs, which have occasionally touched on estate disputes concerning the rich and famous, it seems the mainstream media is not often interested in estate litigation...except when a very large sum of money is at stake. Astor died leaving an estate of some $130 million.  In the months leading up to her death, a bitter guardianship struggle ensued between her only son Anthony Marshall and his son Philip Marshall.  Philip commenced a lawsuit in the summer of 2006 against his father alleging that Anthony was improperly caring for Astor and financially taking advantage of her.  The allegations were outrageous and, if true, terribly sad.  Anthony denied the allegations but stepped down and was replaced by an institutional trustee and a friend of Astor's, respectively, as property and personal care guardians.  The guardianship proceedings also caused an inquiry to be made into the validity of Codicils made by Astor to the benefit of Anthony's charitable foundation.  In a bold move (the likes of which would probably not occur in Canada) the Manhatten District Attorney (backed up by handwriting analysis) is investigating criminal charges against Anthony respecting allegations of fraud surrounding the making of the Codicils. Where this will go is anyone's guess but it is certain to receive plenty of press.  If you don't believe me, just google "Brooke Astor and Litigation" in the days ahead and see what comes up.

Have a good day,

David

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Every so often, a case comes before the Court which seems to clearly captivate the presiding judge, has historical resonance, and just makes for interesting reading.  Re Connolly Estate (2007) 31 E.T.R. (3d) 81, a decision of the Prince Edward Island Trial Division, is such a case.  Here, Justice D.H. Jenkins considered the interpretation of the Will of the late Owen Connolly who died on December 27, 1877 (yes, you read that correctly).  At issue were the terms of a Trust created by the last of four Codicils to the deceased's Last Will.  The Trust was created "for the purpose of educating...poor children resident in Prince Edward Island who are members of the Roman Catholic Church and who are Irish or the sons of Irish fathers." (The Court pointed out that the Trust was created prior to the coming into force of human rights legislation in P.E.I. which, it implies, may otherwise have had an impact on the terms of the Trust).  In each successive year, the Trustees would create as many bursaries as the income generated by the capital of the trust would allow, such that the Trust was now paying out approximately 120 bursaries of $500 each. The Trustees sought the assistance of the Court having regard to the fact that "a blending of bloodlines has occurred, so that Prince Edward Island society has become somewhat a melting pot."  In interpreting the terms of the Trust, the Court applied the usual rules of interpretation including consideration of the surrounding circumstances of the deceased.  Evidence in this regard consisted of a short biography of the deceased published shortly after his death and an article published in the Charlottetown newspaper reporting on his death (he was clearly a prominent figure at the time).  As such, the decision reads like a history lesson of the emigration of Irish to "the colonies." The Court concluded that the Trustees were appropriately exercising their discretion by paying out bursaries to a beneficiary or a beneficiary's father who had " a significant component (50%+) of Irish ancestry."  Because such a class of children continued to exist in Prince Edward Island (albeit "melting away"), there was no risk of the gift failing.  The Court therefore had no need to invoke the cy pres doctrine to preserve the general charitable intent of the testator.  Yet another example of the unique nature of estates and trusts law!

Until tomorrow,

David

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When browsing through any bookstore, I must confess that my eyes often glaze over when passing through the business section.  In a contest with all of the other offerings out there, the history of a business dynasty or an insider's account of a trading scandal can seem, well, dry. So, it was a bit of a surprise that I found myself ordering from Chapters a little book called "The Obvious:  All You Need to Know in Business. Period." by James Dale.  Dale is the former CEO of an advertising agency and now is a business consultant.  His book came to my attention when it was profiled in the Globe & Mail's Report on Business a few weeks back. Unlike other comparable offerings, this book appealed to me as a service provider.  From the standpoint of the legal profession, particularly those of us in private practice, the advice, while (as the title implies) somewhat obvious, is worth pondering.  A survey of some of the titles of Dale's chapters give a glimpse of his thesis:  "Work is a Verb" (sad but true)... "Listen More Than You Talk"(very tough for anyone who loves the sound of their own voice!)..."Every Job is Sales"..."Simple is Better Than Complicated"..."Less is More"..."Say What You Mean"..."Energy--The Unfair Edge"...and my favourite, "Imagine You Worked for You"--what better way to improve the workplace?  Lawyers are inherently conflicted:  while they are expected to have a superior command of the English language and advocate aggressively on behalf of their clients, many will acknowledge that the most respected in their profession are those who are plain-spoken and reasonable in demeanour.  Not surprisingly, it appears from Dale's experience that these traits are commonly respected across the spectrum of business.

Have a great day,

David

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In a bit of a departure from recent blogs, today's blog is less of an opinion piece and simply an update for practitioners that has been brought to my attention.  Distributions to non-resident beneficiaries of Canadian estates and trusts have long been subject to sec.116 of the Income Tax Act.  However in a change to its procedure that is certain to create further delay in obtaining a s.116 clearance certificate, the Canada Revenue Agency (CRA) has recently announced that any non-resident beneficiary must be assigned an Individual Tax Number, a Canadian Social Insurance Number, or a Temporary Taxation Number, before such clearance certificate will be issued.  Apparently, the Auditor- General had made this one of her recommendations in her annual report.  Taking the Individual Tax Number as an example, the typical waiting period for such a number (after all paperwork has been filed) has historically been approximately 120 days. The one silver lining is that, if a non-resident benficiary is assigned an Individual Tax Number for an initial distribution, that same number should be used for any further distributions.  Nonetheless, the procedure can be cumbersome in that the non-resident beneficiary must now provide CRA with certified or notarial copies of documentation evidencing his or her name, date of birth, mailing address, and residential address (if different than the mailing address).  Photographic proof of identity must also be tendered.  In addition, a non-resident beneficiary must provide CRA with the tax identification number assigned by the jurisdiction in which they reside for tax purposes.  CRA will apparently accept the usual suspects in any attempt to prove identity: i.e. passports and birth certiciates will be the first choice but driver's licences will likely suffice to satisfy the requirement for two or more certified copies of documents evidencing identity.  The relevant form to obtain an Individual Tax Number is a T1261 which can be obtained at the following link: http://www.cra-arc.gc.ca/E/pbg/tf/t1261/t1261e.pdf. 

Until Tomorrow, 

David

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I am currently embroiled in several guardianship fights where the grantor’s capacity to grant a power of attorney is very much at issue. I therefore read with interest an article, co-authored by our own Ian Hull, regarding the legal and medical methodology in assessing testamentary capacity and evaluating undue influence. The article was published in the American Journal of Psychiatry in May 2007. 

The article addresses a variety of issues. However, the one that I want to consider today is the common cognitive screening tests used by the medical profession to assess testamentary capacity. 

By way of introduction, the article states:

Clinicians and legal experts must understand that cognitive tests are not diagnostic of dementia and cannot be used as a measure of capacity. Their value lies in the ability to screen for cognitive impairment and to reflect changes in cognition over time. The Mini Mental Examination (MMSE) and the clock-drawing test are the two most common used cognitive screening tests.

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In the context of estate litigation, mediation, as well as pre-trial conferences, often lead to settlements. The importance of carefully documenting a settlement should not be overlooked. Where required, a Rule 7 motion (court approval of a settlement where a party is under a disability) will have the effect of forcing the parties to document their settlement by way of a supporting affidavit, proposed minutes of settlement, and/or a draft order. As a result, the parties know exactly where they stand and what they can expect in the future.  While a successful pre-trial conference may result in a court order on the spot, such an order, if granted, usually indicates that the parties have simply settled without canvassing the terms.

Too often a settlement is not properly documented and subsequent problems inevitably arise. It has been my experience that parties attending mediation or a pre-trial conference are anxious to leave. They may be emotionally exhausted both from the day and from the litigation generally and suffering from financial fatigue. In fact, the parties may have a hard time just being in the same room. Counsel too becomes frustrated by a long and arduous day and when a settlement is finally reached are anxious to leave. Counsel mistakenly believe that the matter can be “written up” at a later time. 

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It is widely assumed, and accepted for that matter, that a formal passing of accounts affords full protection to an estate trustee. The familiar mantra is that those with a financial interest in an estate are not only required to object to the accounts proffered, but must concurrently raise any other issue regarding the overall competency of the estate trustee (succinctly summed by the phrase “you snooze you lose”). However, I recently came across an Ontario Court of Appeal (“C.A.”) case that challenges that proposition.

By way of background, section 49(2) of the Estates Act states: “The judge, on passing the accounts of an executor… has jurisdiction to enter into and make full inquiry and accounting of … the whole property that the deceased was possessed of… [including] its administration and disbursement”. Section 49(3) authorizes a judge to order the estate trustee to pay damages if the estate trustee occasioned financial loss to the estate through misconduct, neglect, or default. It is worth noting that the language is permissive, not mandatory, seemingly providing a beneficiary with the opportunity to make a later complaint.

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The issue of limitation periods continues to bedevil the profession (and the courts for that matter). It is a subject that I seem to return to time and time again in both my blogs and more formal CLE presentations.

In the latest word from the Ontario Court of Appeal, the Court considered the transition rules under the new Limitations Act, 2002 (the “new Act”) and the appointment of a litigation guardian. 

In Philion (Litigation Guardian of) v. Lemieux (Estate of), www.canlii.org/en/on/onca/doc/2007/2007onca281/2007onca281.html, a minor was injured in a car accident before the new Act came into effect on January 1, 2004.  The minor had not yet commenced legal proceedings, but a number of other lawsuits have been launched as a result of the accident.  A “potential defendant” brought a motion to have the Children’s Lawyer appointed as litigation guardian for the “potential minor plaintiff” under s. 9 of the new Act. The affect of the appointment would be to cause the two-year limitation period to begin to run immediately as opposed to when the minor reached the age of majority. A litigation guardian was appointed by the lower court. The minor’s mother appealed hoping to delay the running of the limitation period. Tragically, the minor had suffered a severe brain injury and it was too soon to determine whether the minor’s condition would improve or deteriorate over time.

To cut a long and legally complex story short, the court held that in accordance with the transition provisions of s. 24 of the new Act, the former limitation period applied. As a result, s. 9 of the new Act was not available to the potential defendant. The appeal was allowed. In its decision, the Court rejected a strict interpretation of the words “former limitation period” as referred to in s. 24. 

Interpreting limitations periods, and in particular the transition provisions under the new Act, are notoriously difficult. However, if nothing else, the Philion decision provides further guidance to the profession as to how to navigate the choppy waters of the transition provisions of the new Act.

Hope this helps and until tomorrow…

Justin

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This summer's edition of VOX announces the unveiling of the newly renovated Toronto Lawyers Association's (TLA) Lawyers Lounge (located at 361 University, 2nd Floor), and highlights some of its features, which I review below. 

Aside from the Lounge sporting a modern and functional new look, the upgrades and benefits include easy access to courthouses, wireless internet and a generous working space.  While downtown practitioners make frequent use of the Lounge, it is especially helpful for members who practice outside the city centre.  With the library just one floor above, it also makes for a handy place to work when preparing for court or during breaks between court attendances.  Another option TLA members should contemplate is using the space to hold meetings, functions and receptions.  

The new digs are an additional perk offered to TLA members that should be enjoyed.   A great time to drop by will be at the Open House scheduled for September 10 - 14, 2007.    

Have a good weekend!

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Can a dependant's need only arise once?  This was the question recently answered by the Manitoba Court of Appeal in Zenyk v. Kowalyk [2007] M.J. No. 135.

In this case the deceased, a mother of four, provided in her Will that two of her children, including her son with cerebral palsy, could live in her house for one year after her death, after which time the house was to be sold and the proceeds added to the residue of her estate.   The one year anniversary of the mother's death came and went, and the son never moved out of the house.  When two of the daughters brought an application for an order to remove him, he brought a dependant support application seeking possession/transfer of the house. 

There was no dispute that the son fell within the definition of a "dependant" at the time of his mother's death.  However, the son's application was commenced pursuant to a legislative exception to the six-month limitation period (see section 6(3)(b) of The Dependants Relief Act, C.C.S.M., c. D37).  The daughters argued that his application should be denied, because in order to fall under that exception the son's need could only arise once, after the expiry of the limitation period. 

While the trial judge agreed with the daughters' argument, the Court of Appeal did not.  In coming to its decision, the Court found that the trial judge's approach was not in keeping with the remedial purpose of the Act. Its interpretation of the Act contemplates the court being able to consider the changing circumstances of a dependant.

This decision reveals Manitoba's perspective is drawing closer to Ontario's, which has legislated that courts have the discretion to allow, if they consider it proper, an application to be made at any time as to any portion of the estate remaining undistributed at the date of the application (see section 61 of the Succession Law Reform Act, R.S.O. 1990, c. S.26).

Have a great day!

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As litigators, we use the Rules of Civil Procedure to ensure the required procedural steps are taken when preparing, serving and filing court materials.  However, when it comes to estate matters knowing the Rules isn’t always enough.  

For instance, the Toronto estates court office recently refused to allow a guardianship application to proceed together with an application seeking a passing of attorney accounts, notwithstanding that they were related matters and that there is no such requirement to commence two separate applications under the Rules or applicable legislation. 

To avoid this type of situation happening to you, I recommend familiarizing yourself with the practice of the estates court office you are dealing with, which may have its own protocol. Reading the Practice Directions will also assist. In so doing you will learn, for example, that while pursuant to the Rules a notice of application can be issued by a court office either on its own or as part of an application record, the Toronto estates court office will not issue a notice of application if it is not accompanied by the record.  

While the obligation to have an application record assembled at the get go can become a hindrance when an urgent court date is needed for interim relief, i.e. a motion for a certificate of pending litigation, one way to cope in that circumstance is to have a Caution registered on title to the property in question, which will give you a 60 day window to get your application materials completed and your motion date booked. 

Hope this helps!

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Listen to "Vacation and Recreational Properties"

Read the transcribed version of "Vacation and Recreational Properties"

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss litigation involving vacation and recreational properties. This is an emotional as well as a legal issue. They talk about the realities of passing properties on to younger generations.

Click "Continue Reading" for the transcribed version of this podcast.

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Listen to "Trusts"

Read the transcribed version of "Trusts"

In this episode of Hull on Estates, Ian and Suzana have a discussion dealing with the use of trusts. They use the example of a case where a family put their cottage into a cottage trust, and when the children grew older, the children wanted cottages of their own.

Click "Continue Reading" for the transcribed version of this podcast.

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While I had initially thought this was a two blog series, it has become three blogs. In yesterday’s blog I noted the Ontario Court of Appeal’s (“C.A.”) decisions of Forest v. Lacroix Estate and Murano v. Murano (which affirmed that Rule 60.11 contempt orders cannot be used to enforce orders for payment of money) and I provided the background to the recent case of Dickie v. Dickie, [2007] S.C.J. No. 8, [2006] 78 O.R. (3d)1 (Ont. C.A.). Today’s blog will focus on the C.A.’s decision in Dickie while tomorrow’s blog (Part III) will address the S.C.C’s decision.

Again, the Dickie case involves a dispute between a husband and wife that separated. The husband had been found in contempt for failing to comply with orders to provide a $150,000 irrevocable letter of credit to secure his child and spousal support obligations and to provide security of costs in the amount of $100,000.

As a preliminary matter, the wife submitted to the C.A. that it ought to decline to hear the appeal on the basis that the husband had continued to flaunt not only the orders for security which were the subject matter of the contempt motion, but also the underlying support orders. The C.A., by majority decision, allowed the appeal to proceed. The C.A., again by majority decision, allowed the husband’s appeal and set aside the finding of contempt on the basis that Rule 60.11 cannot be used to enforce either security order because each was an order for payment of money. 

The dissent of the C.A. (Laskin J.A.) is particularly interesting, however.

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In Forest v. Lacroix Estate (2000), 187 D.L.R. (4^th) 280, the Ontario Court of Appeal (“C.A.”) affirmed that Rule 60.11 contempt orders cannot be used to enforce orders for payment of money. 

In Forest, a testator had named his son trustee and sole beneficiary of his estate having no provisions for his common-law wife of 19 years. Despite there being an order specifically prohibiting the dissipation of the estate, the son dissipated a significant amount of the estate assets. The Trial Judge having made a finding of contempt, ordered the son committed to jail for 9 months unless he purged contempt within 28 days by paying the common-law wife. The Court of Appeal noted, following a review of the law, that there are other means by which support orders can be enforced.    

In 2002, the C.A. in Murano v. Murano, [2002] O.J. No. 3632 relied on the reasoning in Forest and held that there was no exception for family law matters. 

In today’s and tomorrow’s blog I will touch upon the case of Dickie v. Dickie, [2007] S.C.J. No. 8, [2006] 78 O.R. (3d)1 (Ont. C.A.), in which the C.A. and Supreme Court of Canada (“S.C.C”) deal with the availability of a contempt motion in respect of the failure of a party to comply with alleged orders requiring the payment of money.

Today’s blog will set out the background to Dickie; tomorrow’s blog will deal with the decisions of the C.A. and the S.C.C.

The case involves a dispute between husband and wife. Before the C.A. was the appeal by the husband from an order finding him in contempt of Court for failing to comply with orders requiring him to secure support obligations by providing an irrevocable letter of credit and to post security for costs. The motion Judge imposed a sentence of 45 days in jail for that contempt, which the husband served immediately. The husband pursued his appeal arguing that the motion’s Judge had no jurisdiction under Rule 60.11 of the Rules of Civil Procedure to make a contempt order because the underlying orders were orders requiring him to make a payment of money.  The wife brought a preliminary motion before the C.A. submitting that the Court should refuse to entertain the appeal because of the husband’s wilful disregard for orders of the Court.

Thanks for reading. Part II tomorrow.

Craig