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, the Ontario Bar Association held a very interesting seminar on "Passing of Accounts: Getting Cost Effective Results". 

Craig Vander Zee of this office gave a presentation on trials in a contested passing.  I was particularly interested in the comments he made in his paper about the use of expert evidence on a contested passing.  The court has the discretion to determine whether expert evidence should be introduced and will consider the necessity of such evidence, particularly in terms of the witness’s credentials or experience.

Expert evidence can be extremely helpful when the issues in dispute relate to such issues as trustee investments or the value of estate assets.  For example, when a beneficiary is displeased with the return on an investment a trustee has made, expert evidence can be helpful in persuading a court that the investment was a prudent one (or was an unwise one, as the case may be) or, if there is a dispute over the amount for which an asset was sold, an expert opinion on value can be helpful in determining what, if any, damages resulted from the sale. 

It is important to remember that when counsel wishes to rely on an expert opinion, the opinion and the information forming the basis of the opinion might have to be disclosed to opposing counsel.  However, counsel generally will not be required to disclose the opinion if it was prepared in contemplation of litigation. 

Have a great weekend!

Megan F. Connolly

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In cases where a deceased has failed to make adequate provision for the support of a dependant, the dependant has the option of bringing a dependant support claim under Part V of the Succession Law Reform Act.  The court then has the discretion to make such an order as it deems fit to provide for the proper support of the dependant. 

However, as anyone who has been involved in litigation knows, it can take a long time resolve.  For someone who was dependant on someone and is not receiving support after his or her death, having to wait until the litigation has been resolved before receiving any more support can create a significant financial hardship. 

Part 64 of the SLRA provides the court with the discretion to make an order for interim support in situations where the applicant is in need of and is entitled to support but where there are matters with respect to the claim for support that the court has not yet determined.  When determining whether to award interim support, the court will generally give a broad interpretation to the phrase “entitled to support” so as to avoid denying interim relief where a dependant needs it but it is too early in the proceeding to have determined the issues that have been raised on their merits. 

Of course, there is nothing to prevent an estate trustee from making interim payments to dependants who are also beneficiaries of an estate.  Getting the estate trustee to voluntarily make the payments will be less costly than having to obtain an order compelling them to do so.

Have a Great Day!

Megan F. Connolly

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Listen to Considerations Regarding Testamentary Trusts and Charitable Gifting Issues

This week on Hull on Estates and Succession Planning, Ian and Suzana discuss considerations that must be taken into account while preparing Testamentary Trusts and issues surrounding charitable gifting.

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Listen to The Lesser Rules of Estate Litigation

This week on Hull on Estates, David Smith and Justin de Vries discuss the less-known rules (Rules 8-11) of estate litigation.

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As anyone who has been involved in litigation, either as a party or as a lawyer, will know it can be a lengthy, expensive, and frustrating process.

A recently released report by Coulter Osborne, the former associate chief justice of Ontario, advocates for a court system which is faster, more accessible, and more affordable to litigants than the one currently in place. An overarching principle of the report is the court and the parties to litigation must deal with a case in a way that is proportionate to what is involved, the judicial importance of the case, and the complexity of the proceeding.

All told, the report contained eighty-one recommendations including the following:

? The number of judges in the courts in Brampton, Newmarket, Hamilton, and Toronto should be increased;

? The limit in small claims court should be raised from $10,000 to $15,000 and, within two years, to $25,000;

? The limit for claims under simplified procedure should be raised to $100,000;

? A committee should be established to study the needs of self-represented litigants; and

? Parties and their counsel should be encouraged to increase their use of technology to share information electronically, thus decreasing the time and money involved in a matter.

The recommendations contained in the report are detailed, comprehensive and, if implemented, have the potential to vastly improve access to justice and the allocation of court resources in Ontario. It will be interesting to see how committed the government is to implementing the recommendations.

Have a great day!
Megan F. Connolly

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It seems with increasing environmental disasters, marked climate change and the media buzz resulting from the release of An Inconvenient Truth, that environmental consciousness has risen to an all-time high in North America.   While lots of us do our part at home i.e. by recycling, composting and unplugging unused electrical items, more could be done at the workplace. 

I found a write-up on this issue in this week’s Globe and Mail, which noted an astounding claim by GreenPrint Technologies (a company that sells software to eliminate unnecessary pages before printing), that Americans use enough sheets of paper each year to build a ten-foot high wall that would stretch from New York to Tokyo and beyond.  

Despite the 20^th Century predictions of a paperless office, it seems we are far from achieving that goal, particularly in the legal arena where people may be more fearful of relying solely on computer systems to store important documents, and where hard copies of file materials are often required to conduct our practice. 

I wonder whether a truly paperless office is realistic given the nature of our work.  Perhaps the best we can hope for is to significantly reduce our paper usage.  A start may be to send e-mails ending with a message along the lines of “Print only when necessary”, which environmentalists reportedly say have real value.   Other options are to cut down on extending e-mail trails and to avoid sending written communications in multiple forms.

Have a great weekend,

Natalia

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This is the title of an interesting article I read in Perspective (Fall 2007 issue) that reviews some steps and considerations that may help strike the right balance for your family when estate planning, which I have touched upon below.   

1. Talk about the future – ask your children how they see your estate being distributed, correct imperceptions and incorporate others, let them know you do not want a dispute over your estate, and be realistic.

2. Deal with differences – if your children have achieved different levels of monetary success, consider the following questions:

1. Have the opportunities been equal? Take this into account to avoid future resentments.

2. Are current circumstances beyond a beneficiary’s control? If an heir has a medical or physical infirmity you may wish to balance the amount gifted with other benefits they receive.  Think about creating a trust for a vulnerable person suffering from substance abuse or other addiction to ensure ongoing financial structure.

3. Are lifestyle choices a factor?  If you oppose a lifestyle choice, rather than exclude that person consider stipulations on the gift that could allow it to be used for purposes consistent with your family values.

4. What about your family business? If your goal is to maintain the family business and family harmony, one solution is to issue different classes of shares so there is equal ownership and those working in the business retain control.

3. Your Way – it is important that your family understand your thinking in order to avoid misunderstandings and potential litigation, which you can convey to them via a family meeting or a family letter with follow up discussion.

Have a good day,

Natalia

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The fifth annual Intensive Wills and Estates Workshop is coming up!  It was recently announced in the Osgoode Professional Development circular, and is touted as an interactive workshop designed for practitioners wanting to update their knowledge and hone their skills in estate planning and administration. 

Some of the things you will learn are:

· how to take more comprehensive instructions and notes

· techniques for substantiating capacity

· effective strategies for using a roadmap and checklist when drafting

· how to avoid negligence claims when executing a Will

· strategies to avoid or lessen probate fees and estate tax liabilities

· how to handle situations where a challenge to a Will is anticipated

· methods to protect yourself when acting as an estate solicitor in both testate and  intestate situations

· how to manage unusual applications for Certificates of Appointment

The workshop is being led by Jordan Atin, barrister & solicitor (and associate counsel to Hull & Hull LLP), and will be taking place over three Wednesday evenings - January 30, February 6 and February 13, 2008 – from 6:30 p.m. to 9:30 p.m.  

As the nature of the workshop is interactive, it allows for lots of questions and discussion.   Participants will critically analyze and apply the law to the issues covered, and will receive insight from leading practitioners in the area.  They will also be given valuable precedents. 

You can register at www.osgoodepd.ca.  See you there!

Natalia  

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In the latest edition of CCH Will Power (November 2007, No. 155) a Court of Quebec decision in Molnar v. Kovacs was discussed, where a gift was compelled to be returned due to ingratitude.

The mother in this case owned a house and subsequently bought a mobile home with monies loaned to her, guaranteed by a mortgage on her house.  Pursuant to the mortgage agreement, the mother was liable for the loan even if the ownership of the house was subsequently transferred.  The mother moved into the mobile home, and her son and his girlfriend began living in the house, paying rent to the mother of $400/month (which amount covered the mortgage payments). 

The mother later agreed to give the house to her son, evidenced by a signed deed of donation.  The mother then moved back into the house, living there for a time with her son and his girlfriend. The son continued to make the $400 monthly payments to the mother.

Relations between the mother and her son deteriorated, and the mother moved back into her mobile home.  The son stopped making the monthly payments to the mother, and the mother ultimately commenced proceedings against her son to get her house back, based on her son’s ingratitude (pursuant to a provision of the Quebec Civil Code (art. 1836)).

The Court held that by stopping the monthly payments the son demonstrated “seriously reprehensible” behaviour towards his mother (particularly given her age, modest income and ongoing obligations to meet her mortgage payments), ordered that he return the house to his mother and declared that the mother was the owner of the house retroactively to the date of the donation of the house.

Have a good day,

Natalia Angelini  

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Listen to The Potential of The Testamentary Trust

This week on Hull on Estate and Succession Planning, Ian and Suzana continue to focus on testamentary trusts, the most common estate-planning step after the simple will.

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Last week Justin de Vries blogged on the all too common situation where family members of an incapable person feel frustrated and marginalized while a loved one is being legally cared for by someone they do not like or trust.  While reading a recent article in the Globe and Mail by Rebecca Dube, I couldn’t help but see how the feelings of frustration and marginalization can be exacerbated by the complicating circumstance of a loved one striking up new romance. 

Ms. Dube notes that it is common for people with various forms of dementia to forget that they are married and to fall in love with another person.  The forgotten spouse is usually left either struggling with the new state of affairs or coming to a place of acceptance.  The latter may be a difficult thing to accomplish.  However, Sandra Day O’Connor, a retired Judge of the U.S. Supreme Court, has done exactly that.  Her husband of over 50 years recently moved into a nursing home and, after initially dealing with depression, commenced a relationship with a woman there who, like him, suffers from Alzheimer’s.  While Ms. O’Connor reportedly felt relieved that her husband finally was content in his nursing home, others may have a harder time getting over the grief and anger of losing their spouse in this way.

Ms. Dube’s article reminds us of how important it is to recognize that people with dementia still feel emotion and continue to have a need for love and intimacy.  The difficulty, particularly for a spouse who is also the legal caregiver of their incapable partner, is not letting the devastation felt in such circumstances get in the way of their decision-making, which must be guided by what is in the best interests of the incapable person.

Have a good day,

Natalia Angelini  

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I read an article in this week's Maclean’s magazine that more and more of Canada's "Super Rich" are drafting family value statements. According to the article, approximately $3 trillion (though the figure varies depending on the source) will be transferred in the coming decades to the next generation. The Super-Rich are particularly concerned that their children, as beneficiaries of this wealth transfer, will take the easy way out and decide not to work or give back to the community. Warren Buffet received a great deal of press when he stated publicly that he would not leave his fortune to his children. Instead, the Bill and Melinda Gates Foundation was the recipient of Mr. Buffet’s considerable largesse. 

According to the article, a value statement spells out those values that are important to the family and can include values that speak to community, work ethic, and religion. Apparently, the Super Rich are willing to pay various consultants significant amounts of money to get the statement just right. Every family member is asked to participate so that everyone buys into the process and the statement withstands the test of time.

Whether the average Canadian family actually sits down and crafts a family value statement is debatable. However, most families will discuss informally, whether over dinner or around the campfire, the values that motivate them and help them navigate life’s many choices. 

However it is done, it makes good sense for parents to sit down with their children to not only talk about the pending transfer of wealth, but their expectations (and aspirations) as to how their children will spend their inherited wealth. It is a truism that money has always been hard to handle.

Have a good weekend.

Justin

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In our rapidly aging society, powers of attorney for personal care and property are now widespread and their importance is recognized by the general public. A family member or friend can also apply to the court to be appointed guardian of the person or the person's property if powers of attorney have not been executed. However, family members often find themselves in a situation where a loved one is being legally cared for by a family member, or friend of the incapable person, who they no longer like or trust. 

A common complaint that I hear is from family members or friends who feel excluded from participating in or influencing decisions regarding the incapable person, particularly when it comes to personal care.  

However, under the Substitute Decisions Act, 1992, which generally governs the rights of an incapable person, any person, with leave, can seek directions from the court on any question arising under a power of attorney (the same is true regarding a court appointed guardian). Pursuant to sections 39 and 68 of the Act, the court may give such directions as it considers to be for the benefit of the incapable person and consistent with the Act.

Section 66(1) of the Act sets out the duties of an attorney for personal care (section 32 is the corresponding section for an attorney for property). In general, the attorney is required to exercise his or her duties and powers with diligence and in good faith. 

Section 66(6) also states that an attorney must foster regular personal contact between the incapable person and supportive family members and friends. Moreover, section 66(7) states that the attorney shall consult with supportive family members and friends who are in regular contact with the incapable person, as well as the incapable person’s caregivers. 

The requirements of section 66, coupled with the ability to seek directions from the court, offer family members and friends the means to ensure that they remain involved with their loved ones and are not simply sidelined. Proceeding to court is always expensive. However, where there is genuine concern and frustration that the incapable person is not being properly cared for and/or his or her finances are being squandered, recourse can be had to the courts.

Ciao!

Justin

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Listen to Getting Off the Record

This week on Hull on Estates, Sean Graham and Natalia Angelini dicuss the unfortunate circumstances that usually accompany the process of getting off the record.

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There has been some controversy as to whether a Will challenge is subject to a limitation period under the new Limitations Act, 2002, which came into force January 1, 2004. 

In her excellent paper presented at the 10^th Annual Estates and Trusts Summit last week, Anne Werker states that in her view no limitation period applies to Will challenges.  Not even the absolute 15 year limitation period set out in the Limitations Act, 2002 applies. In other words, a Will challenge is not statute-barred for being out of time. Keep in mind that the Limitations Act, 2002 was hailed at the time as bringing under one roof a myriad of limitation periods and imposing an almost universal 2 year limitation period (subject only to reasonable discoverability).

According to Anne, the Limitations Act, 2002 will not bar an application for a judicial declaration regarding the validity of the Will where, for example, there are grounds discovered subsequent to the issuing of a certificate of appointment of estate trustee, such as a later Will, or evidence that brings the Will into question.

However, Anne does acknowledge that the return of an issued certificate of appointment of estate trustee is not automatic when a Will challenge is launched after a certificate of appointment has been issued.  A party may rely on equitable relief such as laches (failure to act) or acquisition (concurrence). As Anne points out in her paper:

“When a Certificate of Appointment of Estate Trustee has already been issued, on notice to the interested parties, and if the grounds to challenge the Will are weak, unexplained delay will be a significant factor in whether the Court exercises discretion to allow a Will challenge to proceed.”

No doubt, the courts will eventually be asked to consider limitation periods and Will challenges, but in the interim Anne’s paper has made a valuable contribution to the debate.

À demain

Justin

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Last week, I presented a paper at the 10th Annual Estates and Trusts Summit on Dependant Support Claims. Afterwards, my colleague, Jordan Atin, brought an interesting case to my attention regarding the definition of "dependant" under Part V of the Succession Law Reform Act ("SLRA").

In Re Cooper *, the trial judge held that the applicant, Mrs. Hampton, had failed to fit herself within the definition of a "dependant" as defined in the Act. Mrs. Hampton appealed to the Divisional Court, which ultimately allowed the appeal.

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Listen to Anticipating Issues in Trust Arrangements

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss trust planning options and anticipating issues that may arise in the future.

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 In Kaplun v. Kaplun, Brown J. of the Ontario S.C.J. reminded all counsel of certain basic expectations that a court has of counsel who appear in Motions Court:

1.      Be on time and ready to start at 10:00 a.m. Tardiness displays a lack of respect for the court, its staff, and fellow counsel;

2.      Counsel should always be courteous and civil to opposing counsel.

3.      Ill feelings that may exist between clients, particularly during litigation, should not influence counsel in their conduct and demeanour towards opposing counsel.

4.      When scheduling a motion, counsel should consult the responding side before setting a date.

5.      Requests for an adjournment should be communicated to opposing counsel well in advance of the hearing date. The not uncommon practice of adjournment by ambush is unacceptable;

6.      Counsel should follow the two basic rules of courtroom etiquette:

(a)   When one counsel is standing to make submissions, the other should sit down. Success in Motions Court does not depend on the last person standing; and

(b)   Avoid "Jack-in-the-box" advocacy. Standing up to interject repeatedly during opposing counsel's oral argument on a motion is rude and wastes time. Counsel should deal with any disputed matter and respond in a reply argument.   

7.      Finally, Brown J. states that for Motions Court to work efficiently and fairly, the court depends upon counsel observing the three “Cs”: courtesy, civility and co-operation.

Thank you for reading.

Justin

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You know a trust has the potential to run off the rails when the beneficiary refers to the trustees as "The Three Musketeers".

After his untimely death in 2003, Dr. Robert Atkins' widow sold his business netting proceeds of some $420 million. In his will, the famous diet guru set up two trusts: (i) a spousal trust that would benefit his wife, holding 90% of his assets, and (ii) a research foundation which would get the remaining 10%.   

Cue the sword clanging of the three musketeers:  a self-described entrepreneur, an accountant, and a lawyer, who befriended Ms. Atkins and became the widow's closest advisors as well as trustees for the spousal trust (replacing the two trustees who had been appointed by Dr. Atkins). It is reported that Ms. Atkins subsequently agreed to pay each of them $1.2 million per year (excluding bonuses), signed them to 10-yr contracts, and allowed each of them to take out a $5 million life insurance policy on her life, naming themselves as beneficiaries.  

Fast forward to a Wall Street Journal online report  that a lawsuit had been filed by the Musketeers accusing Ms. Atkins of improperly firing them.  Ms. Atkins and her new spouse asked for the trio to be removed as her trustees and further sought reimbursement of some of their fees.  The relationship between the Musketeers and Ms. Atkins began to disintegrate in 2006 when Ms. Atkins met her new spouse to be, who himself then became increasingly involved in her finances. When the Musketeers balked at her new spouse's demands to encroach for an additional $100 million for Ms. Atkins (above and beyond her $15 million annual income), he started making noise about having them removed as trustees.  

$420 million.    

That's a lot of bread.

Have a great weekend,

David

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In Monday's blog, I noted the increasing prevalence of new on-line businesses serving to assist estate trustees with the location of estate assets.  Of course, locating the asset is just the first step.  The estate trustee has to then manage the asset.  In most instances this involves liquidating the asset or distributing it in specie to the beneficiaries depending on the testator's intention.

Shares held by a deceased in a private company present a particular challenge to an estate trustee.  Should they be sold or should the estate trustee participate in the business as a going concern?.  This quandry, if the will gives no guidance, is compounded when the deceased holds the majority of shares and leaves a controlling interest in such a corporation.

While not always a simple question to answer, in such circumstances it seems self-evident (and just makes good business sense) for the estate trustee to be a director of the company. In such capacity, the executor is positioned to watch over the management of the business and protect this asset of the estate.  The issue was addressed in an oft-quoted excerpt from Lucking’s Will Trusts (Re) (1967) All E.R. 726, where the Court states:

“Now what steps, if any, does a reasonably prudent man who finds himself a majority shareholder in a private company take with regard to the management of the company’s affairs? He does not, I think, content himself with such information as to the management of the company’s affairs as he is entitled to as a shareholder, but ensures that he is represented on the board.”

Have a great day,

David 

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In the day to day routine of our estate litigation practice, certainly I have become accustomed to working with provincial statutes such as the Succession Law Reform Act.  From a constitutional perspective, estate matters, being matters dealing with "Property and Civil Rights", fall under provincial jurisdiction. 

One area of estates and trusts practice which falls outside of provincial jurisdiction relates to the administration of those estates involving Canada's First Nations.  The Constitution Act, 1867 designates jurisdiction to Parliament over all matters dealing with "Indians and Lands reserved for Indians." Accordingly, a status Indian who is normally resident on a reserve will be under the jurisdiction of the federal Indian Act and the Indian Estates Regulations.

There is some interplay between the jurisdictions.  Section 88 of the Indian Act permits compatible provincial legislation to be incorporated by refererence.  Accordingly, the administration of the estate of a deceased Indian who is not ordinarily resident on a reserve is generally referred to provincial jurisdiction.  There are other situations where provincial legislation is incorporated by reference; for example, child support claims against  such estates.  Lastly, under section 44 of the Act, the Minister of Indian Affairs has the jurisdiction to transfer the administration of (and presumably litigation over) complex estates to provincial jurisdiction. 

Until Tomorrow,

David

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One of the biggest challenges for an executor on the death of a testator is locating all of the estate's assets.  The executor has an obligation to the beneficiaries to secure the deceased's assets in a timely fashion; however, his or her ability to do so may be entirely dependent on whether the deceased left an organized paper trail behind.

The dot com business revolution has now spawned e-services with catchy names such as PrivateMatters.com and YouDeparted.com.  YouDeparted.com, for instance, acts as "an electronic safety-deposit box".  For an annual fee, the site will store critical information that an executor would require access to in order to administer an estate: the location of the Will, a list of internet passwords, the combination to the home safe, etc.  As a member of one of these service providers, a subscriber can enter email messages timed for delivery after his or her death.  When the subscriber dies, the "virtual executor system" sends an email to the subscriber as a safeguard.  After no reply is received, the data is delivered to a designated surviving recepient; presumably, that person will be the executor of the subscriber's estate.  While the subscriber will typically entrust financial details to the service, it is noted that such sites may also provide a means for a testator to convey the precatory advice for such things as the care of a pet that would otherwise accompany the Will in hard copy as a Direction to the executor.   

The long term viability of such services is a matter for debate.  While it is interesting to see business innovations which impact upon our area of the law, they remain susceptible to the security concerns that plague all on-line businesses.  This is a greater than usual concern when the subscriber is entrusting the system with all of his most sensitive financial details.  Still, there will always be on-line devotees willing to have the benefit of this type of service over plain old pen and paper.    

Thanks for reading,

 David

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The Limitations Act, R.S.O. 2002 has now been in force for a number of years. It has been commented that the changes to the limitations laws were designed to "rationalize and modernize a complex area of law" (J. Lee, “An Overview of the Ontario Limitations Act, 2002” (2004) 28 Advocates’ Q. 29 at 29). Notwithstanding this intent, the changes are still causing considerable difficulty for legal practitioners, and their clients.

Yesterday, the Court of Appeal released a decision, Guillemette v. Doucett, in which the provisions of the new Limitations Act were applied in circumstances where a client sought to assess a solicitor's account. The application was brought 33 months after the account was delivered and paid. The solicitor argued that the application for assessment was out of time.

The Court of Appeal stated that the Limitations Act "seeks to simplify and standardize the law of limitation periods in Ontario in part by fixing to general applicable limitation periods", being a basic two year limitation period, and an ultimate limitation period of 15 years.

The Court of Appeal found that the two-year limitation period applied to the assessment of a solicitor's account.

However, the Solicitors Act allows for an extension of time in which to seek an assessment "under special circumstances". The Court of Appeal applied s. 20 of the Limitations Act, which provides that "This Act does not affect the extension, suspension or other variation of a limitation period or other time limit by or under another Act”. Thus, while the two year limitation imposed by the Limitations Act applied, the “special circumstances" exception set out in the Solicitors Act was maintained.

Limitations acts are said to be "statutes of repose". However, it is apparent from this recent Court of Appeal decision that there is not necessarily repose for solicitors.

Thank you for reading. Have a great weekend.

Paul Trudelle

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We often see wills where the testator has taken it upon him or herself to make various changes to an executed will by making handwritten changes on its face. What is the effect of these alterations?

A starting point is s. 18 of the Succession Law Reform Act (“SLRA”). This section provides that an alteration is not effective unless it made in accordance with the provisions of the SLRA regarding due execution, or unless the alteration makes a word or words “no longer apparent”.

If the will is a formal will, holograph alterations are not permitted (although a holograph codicil is permitted).

These principles were applied in the case of Luty v. Magill. There, it was found that handwritten alterations to a will that were undated and that did not totally obscure the original bequest were invalid, but that other alterations that were initialled (initials can constitute a signature for the purposes of the SLRA) and dated were considered holograph codicils, and were therefore valid.

With respect to obliteration, if the original words cannot be read, by holding the will up to the light or by using a magnifying glass, (but without the assistance of any other mechanical aids) then the words will be considered to be revoked, regardless of when they were obliterated.

Altered wills will usually require an application for the opinion, advice and direction of the court. Testators should be cautioned as to the requirements for validly altering a will so that the costs of such a court application can be avoided.

Thanks for reading,

Paul Trudelle